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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED JANUARY 1, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 FOR THE TRANSITION PERIOD FROM  TO
 COMMISSION FILE NUMBER 333-168065
 
 TOPS HOLDING CORPORATION
  
 Delaware
    
    26-1252536(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)6363 Main Street,
    
    (716) 635-5000Williamsville, New York 14221
    
    (Telephone Number)(Address of principal executive office, including zip code)
 None
 None
 o þ
 þ o
 þ o
 o þ
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### Table of Contents



TOPS HOLDING CORPORATION
 TABLE OF CONTENTS
 PART IITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    5ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    13ITEM 2. PROPERTIES
    
    
    13ITEM 3. LEGAL PROCEEDINGS
    
    
    14ITEM 4. (RESERVED)
    
    
    14PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    14ITEM 6. SELECTED FINANCIAL DATA
    
    
    15ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
 AND RESULTS OF OPERATIONS
    
    
    16ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    29ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAIndependent Auditors Report
    
    
    31Consolidated Balance Sheets as of January 1, 2011 and January 2, 2010
    
    
    32Consolidated Statements of Operations for the years ended January 1, 2011, January 2, 2010 and December 27, 2008
    
    
    33Consolidated Statements of Changes in Shareholders (Deficit) Equity for the years ended January 1, 2011, January 2, 2010 and December 27, 2008
    
    
    34Consolidated Statements of Cash Flows for the years ended January 1, 2011, January 2, 2010 and December 27, 2008
    
    
    35Notes to Consolidated Financial Statements
    
    
    36ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
AND FINANCIAL DISCLOSURE
    
    
    66ITEM 9A. CONTROLS AND PROCEDURES
    
    
    66ITEM 9B. OTHER INFORMATION
    
    
    66
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TOPS HOLDING CORPORATION
 TABLE OF CONTENTS (CONTINUED)
 PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    67ITEM 11. EXECUTIVE COMPENSATION
    
    
    69ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    81ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    82ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    83PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    84SIGNATURES
    
    
    87Exhibit 12.1Exhibit 14.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   ii




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FORWARD-LOOKING STATEMENTS
 Forward-Looking Statements
  
    
    risks of claims relating to the Acquisition (as defined herein) that may not have been
properly discharged in the bankruptcy process;
    
    the severity of current economic conditions and the impact on consumer demand and
spending and our pricing strategy;
    
    pricing and market strategies, the expansion, consolidation and other activities of
competitors, and our ability to respond to the promotional practices of competitors;
    
    our ability to effectively increase or maintain our profit margins;
    
    the success of our expansion and renovation plans;
    
    fluctuations in utility, fuel and commodity prices which could impact consumer spending
and buying habits and the cost of doing business;
    
    risks inherent in our motor fuel operations;
    
    our exposure to local economies and other adverse conditions due to our geographic
concentration;
    
    risks of natural disasters and severe weather conditions;
    
    supply problems with our suppliers and vendors;
    
    our relationships with unions and unionized employees, and the terms of future
collective bargaining agreements or labor strikes;
    
    increased operating costs resulting from rising employee benefit costs or pension
funding obligations;
    
    changes in, or the failure or inability to comply with, laws and governmental
regulations applicable to the operation of our pharmacy and other businesses;
    
    the adequacy of our insurance coverage against claims of our customers in connection
with our pharmacy services;
    
    estimates of the amount and timing of payments under our self-insurance policies;
    
    risks of liability under environmental laws and regulations;
    
    our ability to maintain and improve our information technology systems;
    
    events that give rise to actual or potential food contamination, drug contamination or
food-borne illness or any adverse publicity relating to these types of concerns, whether or
not valid;
    
    threats or potential threats to security;
    
    our ability to retain key personnel;
    
    risks of data security breaches or losses of confidential customer information;
    
    risks relating to our substantial indebtedness;
    
    litigation claims or legal proceedings against us;
    
    decisions by our controlling shareholders that may conflict with the interests of the
holders of our equity and debt; and
    
    other factors discussed under Risk Factors and elsewhere in this 10-K.
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PART I
 
 ITEM 1. BUSINESS
 Tops
 Tops P&C Quality Markets
  EMPLOYEES
  STORE PROFILE AND LOCATION
 Tops, P&C Quality Markets Tops
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NumberMarket
    
    of StoresBuffalo, NY
    
    
    54Syracuse / Mid State, NY
    
    
    34Rochester, NY
    
    
    23Northern Pennsylvania
    
    
    17Total Supermarkets
    
    
    128
  NumberSquare Feet
    
    of Stores75,000 and above
    
    
    2250,000 to 74,999
    
    
    3825,000 to 49,999
    
    
    52Under 25,000
    
    
    16Total
    
    
    128
  COMPETITION
  SEGMENTS
   MERCHANDISING
 Tops Tops Tim Hortons
  - 3 -




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SOURCES OF SUPPLY
     LICENSES AND TRADEMARKS
 Tops Tops
Friendly Markets Tops
 GOVERNMENT REGULATION
   - 4 -




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ENVIRONMENTAL MATTERS
    
 ITEM 1A. RISK FACTORS
 The risk factors below highlight certain risks and uncertainties that could affect our business.
Other risks and uncertainties are described throughout this report. Any of these risks and
uncertainties, as well as other risks and uncertainties, could adversely affect our business and
financial results.
 We may be subject to and adversely affected by claims that were not properly discharged in the
bankruptcy court order authorizing the Acquisition, amounts that we may owe in connection with the
Acquisition, an inability to recover amounts owed to us in connection with the Acquisition or other
post-bankruptcy operational risks.
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There can be no assurance that we will realize the expected long-term benefits from our acquisition
of Penn Traffic.
  General economic conditions that impact consumer spending could adversely affect us.
   Increased competition could adversely affect us.
  Low profit margins could adversely affect us.
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Unsuccessful expansion and renovation plans could adversely affect us.
  Increases in utility, fuel and commodity prices could adversely affect us.
  Availability and wholesale price of gasoline and retail gasoline prices could adversely affect us.
  The geographic concentration of our supermarkets creates a heavy exposure to the risks of the local
economy and other local adverse conditions.
  Severe weather, natural disasters and adverse climate changes may materially adversely affect our
business.
  We rely on a principal supplier for a substantial amount of our products.
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Prolonged labor disputes with unionized employees and increases in labor costs could adversely
affect us.
     We currently contribute to an underfunded multiemployer pension plan for employees represented by
the Local One.
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Various aspects of our business are subject to federal, state and local laws and regulations. The
impact of these regulations and our compliance with them may require additional capital
expenditures and could materially adversely affect our ability to conduct our business as planned.
   Certain risks are inherent in providing pharmacy services, and our insurance may not be adequate to
cover any claims against us.
  If the number or severity of claims for which we are self-insured increases, or we are required to
accrue or pay additional amounts because the claims prove to be more severe than our recorded
liabilities, we may be materially adversely affected.
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Compliance with and potential liability under environmental laws could have a material adverse
effect on us. The storage and sale of petroleum products could cause disruptions and could expose
us to potentially significant liabilities.
      Any difficulties we experience with respect to our information technology systems could lead to
significant costs or losses.
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Food and drug safety concerns and related unfavorable publicity may adversely affect us.
  Threats or potential threats to security may materially adversely affect us.
  We are heavily dependent on our key personnel.
  If we experience a data security breach and confidential customer information is disclosed, we may
be subject to penalties and experience negative publicity, which could affect our customer
relationships and have a material adverse effect on our business.
  Our substantial indebtedness could adversely affect our financial health and our ability to operate
our business.
  
    
    make it more difficult for us to satisfy our obligations with respect to our
outstanding indebtedness;
    
    limit our ability to borrow additional funds, or to sell assets to raise funds, if
needed, for working capital, capital expenditures, acquisitions or other purposes;
    
    increase our vulnerability to adverse economic and industry conditions;
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
    
    require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing funds available for operations, future
business opportunities or other purposes, such as funding our working capital and
capital expenditures;
    
    limit our flexibility in planning for, or reacting to, changes in the business and
industry in which we operate;
    
    limit our ability to service our indebtedness;
    
    place us at a competitive disadvantage compared to any less leveraged competitors;
and
    
    prevent us from raising the funds necessary to repurchase outstanding notes tendered
to us upon the occurrence of certain changes of control, which would constitute a
default under the indenture governing our outstanding notes.
  Litigation may materially adversely affect our businesses.
  Morgan Stanley Private Equity (MSPE) and private equity affiliates of HSBC Private Equity
Advisors LLC (HSBC) own the majority of our capital stock, which allows them to have significant
influence over substantially all matters requiring shareholder approval.
   Our ability to generate cash depends on many factors beyond our control, and we may not be able to
generate the cash required to service our indebtedness.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 Tops P&C Quality Markets Tops
 OWNED PROPERTIES
  LEASED PROPERTIES
    LOCATIONS
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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. (RESERVED)
 
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES   - 14 -




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ITEM 6. SELECTED FINANCIAL DATA
  Tops Holding Corporation
    
    
    
    Tops Markets, LLCFiscal
    
    
    
    Fiscal2007
    
    
    
    2007Fiscal
    
    
    Fiscal
    
    
    Fiscal
    
    
    Successor
    
    
    
    Predecessor
    
    
    Fiscal2010
    
    
    2009
    
    
    2008
    
    
    Period
    
    
    
    Period
    
    
    2006(52 weeks) (3)
    
    
    (53 weeks)
    
    
    (52 weeks)
    
    
    (4 weeks)
    
    
    
    (48 weeks) (4)
    
    
    (52 weeks) (4)Statements of
Operations Data:Inside sales
    
    $
    2,107,524
    
    
    $
    1,579,448
    
    
    $
    1,542,054
    
    
    $
    126,079
    
    
    
    $
    1,406,794
    
    
    $
    1,523,063Gasoline sales
    
    
    150,012
    
    
    
    116,160
    
    
    
    158,178
    
    
    
    10,732
    
    
    
    
    119,966
    
    
    
    110,697Net sales
    
    
    2,257,536
    
    
    
    1,695,608
    
    
    
    1,700,232
    
    
    
    136,811
    
    
    
    
    1,526,760
    
    
    
    1,633,760Operating income
(loss)
    
    
    10,633
    
    
    
    34,490
    
    
    
    28,779
    
    
    
    4,786
    
    
    
    
    (6,812
    )
    
    
    8,741Net (loss) income
    
    
    (26,954
    )
    
    
    (25,693
    )
    
    
    (10,844
    )
    
    
    984
    
    
    
    
    (52,097
    )
    
    
    (115,815
    )Balance Sheet Data:Total assets
    
    
    680,351
    
    
    
    592,848
    
    
    
    619,694
    
    
    
    641,102
    
    
    
    
    N/A
    
    
    
    673,563Long-term liabilities;
including
obligations under
capital lease and
financing
obligations
    
    
    561,909
    
    
    
    486,305
    
    
    
    400,313
    
    
    
    407,103
    
    
    
    
    N/A
    
    
    
    458,418Total shareholders
(deficit) equity
    
    
    (65,511
    )
    
    
    (38,801
    )
    
    
    87,729
    
    
    
    100,581
    
    
    
    
    N/A
    
    
    
    (118,818
    )Supermarket Operating
Data:Number of
supermarkets at
end of fiscal year
    
    
    127
    
    
    
    71
    
    
    
    71
    
    
    
    71
    
    
    
    
    71
    
    
    
    72Average weekly
inside ID sales per
supermarket (1)
    
    
    418,465
    
    
    
    418,511
    
    
    
    416,434
    
    
    
    442,668
    
    
    
    
    411,752
    
    
    
    405,161Inside ID sales
increase (1) (2)
    
    
    0.1
    %
    
    
    0.5
    %
    
    
    1.2
    %
    
    
    N/A
    
    
    
    
    N/A
    
    
    
    N/ANumber of gas
stations at end of
fiscal year
    
    
    35
    
    
    
    31
    
    
    
    28
    
    
    
    26
    
    
    
    
    26
    
    
    
    26Motor fuel gallons
sold (in thousands)
    
    
    57,079
    
    
    
    52,540
    
    
    
    50,124
    
    
    
    3,668
    
    
    
    
    45,793
    
    
    
    29,681Other Financial Data:Net cash provided by
(used in):Operating
activities
    
    $
    49,458
    
    
    $
    66,813
    
    
    $
    81,067
    
    
    $
    24,572
    
    
    
    $
    21,677
    
    
    $
    (3,491
    )Investing
activities
    
    
    (113,933
    )
    
    
    (36,693
    )
    
    
    (56,237
    )
    
    
    (298,172
    )
    
    
    
    (6,988
    )
    
    
    7,586Financing
activities
    
    
    62,172
    
    
    
    (40,717
    )
    
    
    (28,437
    )
    
    
    307,526
    
    
    
    
    (30,141
    )
    
    
    (29,485
    )Total depreciation
and amortization
    
    
    77,315
    
    
    
    65,285
    
    
    
    55,530
    
    
    
    3,760
    
    
    
    
    42,368
    
    
    
    56,048Capital expenditures
    
    
    49,663
    
    
    
    28,080
    
    
    
    35,298
    
    
    
    198
    
    
    
    
    7,201
    
    
    
    41,753
 (1)
    
    We define inside ID sales as the change in year-over-year inside sales (net sales
excluding gasoline sales), excluding franchise revenue, for ID stores. We include a
supermarket in the inside ID sales base in its thirteenth full period of operation.(2)
    
    To calculate the Inside ID sales increase for Fiscal 2010 and Fiscal 2009, we have
used the most comparable 52-week periods. When comparing Fiscal 2009 to Fiscal 2008, we
have excluded the 53rd week of Fiscal 2009. When comparing Fiscal 2010 to Fiscal 2009, we
have excluded the 1st week of Fiscal 2009.(3)
    
    Fiscal 2010 includes the operating results of the acquired Penn Traffic supermarkets
following the January 29, 2010 Acquisition.(4)
    
    The operating results during these periods represent those of Tops Markets, LLC under
the ownership of Koninklijke Ahold N.V.
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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 The following discussion should be read in conjunction with our consolidated financial statements
and related notes and other financial information appearing elsewhere in this 10-K. This 10-K
contains forward-looking statements that involve risks and uncertainties. Our actual results may
differ from those indicated in the forward-looking statements. See Forward-Looking Statements on
page 1 of this 10-K and Risk Factors under Item 1A in Part I of this 10-K.
 COMPANY OVERVIEW
 Tops
  Tops P&C and Quality Markets
 BASIS OF PRESENTATION
  RECENT AND FUTURE EVENTS AFFECTING OUR RESULTS OF OPERATIONS AND THE COMPARABILITY OF REPORTED
RESULTS OF OPERATIONS
 Acquisition of Penn Traffic
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Debt Refinancing
    Issuance of Common Stock
  Dividend
  General Economic Conditions
   RESULTS OF OPERATIONS
 Fiscal 2010 compared with Fiscal 2009
 Executive Summary
   - 17 -




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Net Sales
  (Dollars in thousands)
 Fiscal 2010
    
    
    Fiscal 2009(52 weeks)
    
    
    (53 weeks)
    
    
    $ Change
    
    
    % ChangeInside sales
    
    $
    2,107,524
    
    
    $
    1,579,448
    
    
    $
    528,076
    
    
    
    33.4
    %Gasoline sales
    
    
    150,012
    
    
    
    116,160
    
    
    
    33,852
    
    
    
    29.1
    %Net sales
    
    $
    2,257,536
    
    
    $
    1,695,608
    
    
    $
    561,928
    
    
    
    33.1
    %
 rd
  Gross Profit
  (Dollars in thousands)
 Fiscal 2010
    
    
    % of
    
    
    Fiscal 2009
    
    
    % of
    
    
    $
    
    
    %(52 weeks)
    
    
    Net Sales
    
    
    (53 weeks)
    
    
    Net Sales
    
    
    Change
    
    
    ChangeCost of goods sold
    
    $
    (1,579,016
    )
    
    
    69.9
    %
    
    $
    (1,185,344
    )
    
    
    69.9
    %
    
    $
    393,672
    
    
    
    33.2
    %Distribution costs
    
    
    (44,829
    )
    
    
    2.0
    %
    
    
    (33,852
    )
    
    
    2.0
    %
    
    
    10,977
    
    
    
    32.4
    %Gross profit
    
    $
    633,691
    
    
    
    28.1
    %
    
    $
    476,412
    
    
    
    28.1
    %
    
    $
    157,279
    
    
    
    33.0
    %
  Operating Expenses
  (Dollars in thousands)
 Fiscal 2010
    
    
    % of
    
    
    Fiscal 2009
    
    
    % of
    
    
    $
    
    
    %(52 weeks)
    
    
    Net Sales
    
    
    (53 weeks)
    
    
    Net Sales
    
    
    Change
    
    
    ChangeWages, salaries and
benefits
    
    $
    310,800
    
    
    
    13.8
    %
    
    $
    224,958
    
    
    
    13.3
    %
    
    $
    85,842
    
    
    
    38.2
    %Selling and general
expenses
    
    
    104,841
    
    
    
    4.6
    %
    
    
    73,474
    
    
    
    4.3
    %
    
    
    31,367
    
    
    
    42.7
    %Administrative expenses
    
    
    102,754
    
    
    
    4.6
    %
    
    
    65,013
    
    
    
    3.8
    %
    
    
    37,741
    
    
    
    58.1
    %Rent expense
    
    
    19,135
    
    
    
    0.8
    %
    
    
    13,219
    
    
    
    0.8
    %
    
    
    5,916
    
    
    
    44.8
    %Depreciation and
amortization
    
    
    62,353
    
    
    
    2.8
    %
    
    
    52,727
    
    
    
    3.1
    %
    
    
    9,626
    
    
    
    18.3
    %Advertising
    
    
    23,175
    
    
    
    1.0
    %
    
    
    12,531
    
    
    
    0.7
    %
    
    
    10,644
    
    
    
    84.9
    %Total
    
    $
    623,058
    
    
    
    27.6
    %
    
    $
    441,922
    
    
    
    26.0
    %
    
    $
    181,136
    
    
    
    41.0
    %
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Wages, Salaries and Benefits
  Selling and General Expenses
  Administrative Expenses
  Rent Expense
  Depreciation and Amortization
  Advertising
 P&C Quality Markets Bi-Lo ®
 Bargain Purchase
  Loss on Debt Extinguishment
    - 19 -




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Interest Expense, Net
  Income Tax Benefit (Expense)
    Net Loss
  Fiscal 2009 compared with Fiscal 2008
 Executive Summary
  Net Sales
  (Dollars in thousands)
 Fiscal 2009
    
    
    Fiscal 2008(53 weeks)
    
    
    (52 weeks)
    
    
    $ Change
    
    
    % ChangeInside sales
    
    $
    1,579,448
    
    
    $
    1,542,054
    
    
    $
    37,394
    
    
    
    2.4
    %Gasoline sales
    
    
    116,160
    
    
    
    158,178
    
    
    
    (42,018
    )
    
    
    (26.6
    )%Net sales
    
    $
    1,695,608
    
    
    $
    1,700,232
    
    
    $
    (4,624
    )
    
    
    (0.3
    )%
  - 20 -




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Gross Profit
  (Dollars in thousands)
 Fiscal 2009
    
    
    % of
    
    
    Fiscal 2008
    
    
    % of
    
    
    $
    
    
    %(53 weeks)
    
    
    Net Sales
    
    
    (52 weeks)
    
    
    Net Sales
    
    
    Change
    
    
    ChangeCost of goods sold
    
    $
    (1,185,344
    )
    
    
    69.9
    %
    
    $
    (1,195,850
    )
    
    
    70.3
    %
    
    $
    (10,506
    )
    
    
    (0.9
    )%Distribution costs
    
    
    (33,852
    )
    
    
    2.0
    %
    
    
    (32,882
    )
    
    
    1.9
    %
    
    
    970
    
    
    
    2.9
    %Gross profit
    
    $
    476,412
    
    
    
    28.1
    %
    
    $
    471,500
    
    
    
    27.7
    %
    
    $
    4,912
    
    
    
    1.0
    %
    Operating Expenses
  (Dollars in thousands)
 Fiscal 2009
    
    
    % of
    
    
    Fiscal 2008
    
    
    % of
    
    
    $
    
    
    %(53 weeks)
    
    
    Net Sales
    
    
    (52 weeks)
    
    
    Net Sales
    
    
    Change
    
    
    ChangeWages, salaries and
benefits
    
    $
    224,958
    
    
    
    13.3
    %
    
    $
    223,014
    
    
    
    13.1
    %
    
    $
    1,944
    
    
    
    0.9
    %Selling and general
expenses
    
    
    73,474
    
    
    
    4.3
    %
    
    
    81,587
    
    
    
    4.8
    %
    
    
    (8,113
    )
    
    
    (9.9
    )%Administrative expenses
    
    
    65,013
    
    
    
    3.8
    %
    
    
    63,575
    
    
    
    3.7
    %
    
    
    1,438
    
    
    
    2.3
    %Rent expense
    
    
    13,219
    
    
    
    0.8
    %
    
    
    13,114
    
    
    
    0.8
    %
    
    
    105
    
    
    
    0.8
    %Depreciation and
amortization
    
    
    52,727
    
    
    
    3.1
    %
    
    
    50,732
    
    
    
    3.0
    %
    
    
    1,995
    
    
    
    3.9
    %Advertising
    
    
    12,531
    
    
    
    0.7
    %
    
    
    10,699
    
    
    
    0.6
    %
    
    
    1,832
    
    
    
    17.1
    %Total
    
    $
    441,922
    
    
    
    26.0
    %
    
    $
    442,721
    
    
    
    26.0
    %
    
    $
    (799
    )
    
    
    (0.2
    )%
 Wages, Salaries and Benefits
 rd
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##### Table of Contents



Selling and General Expenses
  Administrative Expenses
  Rent Expense
  Depreciation and Amortization
  Advertising
  Loss on Debt Extinguishment
   Interest Expense, Net
   - 22 -




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##### Table of Contents



Income Taxes (Expense) Benefit
     Net Loss
  LIQUIDITY AND CAPITAL RESOURCES
     - 23 -




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##### Table of Contents



Cash Flows Information
  (Dollars in thousands)
 Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Cash provided by (used in):Operating activities
    
    $
    49,458
    
    
    $
    66,813
    
    
    $
    81,067Investing activities
    
    
    (113,933
    )
    
    
    (36,693
    )
    
    
    (56,237
    )Financing activities
    
    
    62,172
    
    
    
    (40,717
    )
    
    
    (28,437
    )
     - 24 -




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##### Table of Contents



Contractual Obligations
  (Dollars in thousands)
 Payments due by Period2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    TotalLong-term debt:Notes(1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    
    
    
    $
    350,000Other long-term debt
    
    
    402
    
    
    
    434
    
    
    
    17,295
    
    
    
    280
    
    
    
    167
    
    
    
    
    
    
    
    18,578Interest(2)
    
    
    55,647
    
    
    
    53,612
    
    
    
    51,481
    
    
    
    49,361
    
    
    
    39,213
    
    
    
    36,329
    
    
    
    285,643Operating
leases(3)
    
    
    24,921
    
    
    
    25,570
    
    
    
    25,740
    
    
    
    25,853
    
    
    
    25,822
    
    
    
    115,161
    
    
    
    243,067Capital leases(3)
    
    
    11,095
    
    
    
    12,908
    
    
    
    14,045
    
    
    
    12,562
    
    
    
    12,099
    
    
    
    120,602
    
    
    
    183,311Purchase
obligations(4)
    
    
    160,709
    
    
    
    160,519
    
    
    
    111,644
    
    
    
    15,328
    
    
    
    15,118
    
    
    
    29,949
    
    
    
    493,267Other
liabilities(5)
    
    
    56,459
    
    
    
    822
    
    
    
    795
    
    
    
    764
    
    
    
    705
    
    
    
    2,873
    
    
    
    62,418Total
    
    $
    309,233
    
    
    $
    253,865
    
    
    $
    221,000
    
    
    $
    104,148
    
    
    $
    443,124
    
    
    $
    304,914
    
    
    $
    1,636,284
 (1)
    
    No principal amounts are due on the senior secured notes until October 15, 2015. Assumes
aggregate principal amount of $350.0 million of notes are outstanding until maturity.(2)
    
    Amount primarily includes contractual interest payments related to the senior secured notes,
capital leases and other long-term debt.(3)
    
    Some of our lease agreements provide us with an option to renew. We have not included
renewal options in our future minimum lease amounts for renewals that are not reasonably
assured. Our future operating lease obligations will change if we exercise these renewal
options and if we enter into additional operating or capital lease agreements.
  - 25 -




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##### Table of Contents



(4)
    
    In addition to the purchase obligations reflected in the table above, we enter into supply
contracts to purchase products for resale in the ordinary course of business. This category
of contracts covers a broad spectrum of products and sometimes includes specific merchandising
obligations relative to those products. These supply contracts typically include either a
volume
 commitment or a fixed expiration date, pricing terms based on the vendors published
list price, termination provisions, and other standard contractual considerations. Our
obligation related to these contracts is typically limited to return of unearned allowances
and therefore no amounts have been included above. Purchase obligations above relate to the
outsourcing of a major portion of our information system functions and pharmacy inventory
procurement through long-term agreements, as noted below:
 
    
    In July 2010, we extended our existing IT outsourcing agreement with HP through
December 31, 2017 to provide a wide range of information systems services. Under
the agreement, HP provides data center operations, mainframe processing, business
applications and systems development to enhance the our customer service and
efficiency. The charges under this agreement are based upon the services requested
at predetermined rates.
    
    Effective December 1, 2010, we extended the term of our existing supply contract
with McKesson through January 1, 2014 for the supply of substantially all of our prescription drugs and other health and beauty care products requirements.
We are required to purchase a minimum of $400 million of product during the period
from December 1, 2010 to January 1, 2014.
 (5)
    
    Other liabilities include health and welfare benefits and multiemployer pension plan
contributions under collective bargaining agreements, as well as other pension and
post-retirement benefits.
 Multiemployer Pension Plans
    Off-Balance Sheet Arrangements
  Inflation
  CRITICAL ACCOUNTING POLICIES
  Vendor Allowances
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##### Table of Contents



Inventory Valuation
    Valuation of Tradename
 Tops
 Tops Tops
 Tops
 Valuation of Long-lived Assets
  
    
    significant under-performance of a store in relation to expectations;
 
    
    significant negative industry or economic trends; and
 
    
    significant changes or planned changes in our use of the assets.
  - 27 -




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##### Table of Contents



Acquisition Accounting
   Leases
  Self-Insurance Programs
     - 28 -




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##### Table of Contents



Income Taxes
  Recent Accounting PronouncementsNot Yet Adopted
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     (Dollars in thousands)
 Expected Fiscal Year of Maturity2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    Fair ValueDebtFixed rate
    
    $
    402
    
    
    $
    434
    
    
    $
    2,295
    
    
    $
    280
    
    
    $
    350,167
    
    
    $
    
    
    
    $
    393,398Average interest rate
    
    
    10.1
    %
    
    
    10.1
    %
    
    
    10.1
    %
    
    
    10.1
    %
    
    
    10.1
    %
    
    
    N/AVariable rate
    
    $
    
    
    
    $
    
    
    
    $
    15,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    15,000Average interest rate
    
    
    N/A
    
    
    
    N/A
    
    
    
    5.1
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
 COMMODITY PRICE RISK
   - 29 -




---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
   
 Independent Auditors Report
    
    
    31Consolidated Balance Sheets as of January 1, 2011 and January 2, 2010
    
    
    32Consolidated Statements of Operations for the years ended January 1, 2011, January 2, 2010 and
December 27, 2008
    
    
    33Consolidated Statements of Changes in Shareholders (Deficit) Equity for the years ended January 1, 2011,
January 2, 2010 and December 27, 2008
    
    
    34Consolidated Statements of Cash Flows for the years ended January 1, 2011, January 2, 2010
and December 27, 2008
    
    
    35Notes to Consolidated Financial Statements
    
    
    36
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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  - 31 -




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##### Table of Contents



TOPS HOLDING CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  January 1, 2011
    
    
    January 2, 2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    17,419
    
    
    $
    19,722Accounts receivable, net (Note 3)
    
    
    57,044
    
    
    
    49,457Inventory, net
    
    
    117,328
    
    
    
    82,272Prepaid expenses and other current assets
    
    
    14,093
    
    
    
    13,535Assets held for sale
    
    
    650
    
    
    
    Income taxes refundable
    
    
    200
    
    
    
    760Current deferred tax assets (Note 11)
    
    
    2,265
    
    
    
    5,986Total current assets
    
    
    208,999
    
    
    
    171,732Property and equipment, net (Note 4)
    
    
    378,575
    
    
    
    333,416Intangible assets, net (Note 5)
    
    
    79,072
    
    
    
    76,356Other assets (Note 6)
    
    
    13,705
    
    
    
    11,344Total assets
    
    $
    680,351
    
    
    $
    592,848Liabilities and Shareholders DeficitCurrent liabilities:Accounts payable
    
    $
    93,311
    
    
    $
    68,462Accrued expenses and other current liabilities (Note 7)
    
    
    79,123
    
    
    
    68,334Current portion of capital lease obligations (Note 8)
    
    
    11,095
    
    
    
    8,186Current portion of long-term debt (Note 9)
    
    
    402
    
    
    
    362Total current liabilities
    
    
    183,931
    
    
    
    145,344Capital lease obligations (Note 8)
    
    
    172,216
    
    
    
    175,340Long-term debt (Note 9)
    
    
    365,262
    
    
    
    288,194Other long-term liabilities
    
    
    21,099
    
    
    
    16,785Non-current deferred tax liabilities (Note 11)
    
    
    3,354
    
    
    
    5,986Total liabilities
    
    
    745,862
    
    
    
    631,649Shareholders deficit:Common shares ($0.001 par value; 300,000 authorized shares at January 1,
2011, 200,000 authorized shares at January 2, 2010, 144,776 shares
issued & outstanding at January 1, 2011, 100,000 shares issued &
outstanding at January 2, 2010) (Note 12)
    
    
    
    
    
    
    Paid-in capital
    
    
    (2,668
    )
    
    
    (3,383
    )Accumulated deficit
    
    
    (62,507
    )
    
    
    (35,553
    )Accumulated other comprehensive (loss) income, net of tax
    
    
    (336
    )
    
    
    135Total shareholders deficit
    
    
    (65,511
    )
    
    
    (38,801
    )Total liabilities and shareholders deficit
    
    $
    680,351
    
    
    $
    592,848
   - 32 -




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##### Table of Contents



TOPS HOLDING CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Net sales
    
    $
    2,257,536
    
    
    $
    1,695,608
    
    
    $
    1,700,232Cost of goods sold
    
    
    (1,579,016
    )
    
    
    (1,185,344
    )
    
    
    (1,195,850
    )Distribution costs
    
    
    (44,829
    )
    
    
    (33,852
    )
    
    
    (32,882
    )Gross profit
    
    
    633,691
    
    
    
    476,412
    
    
    
    471,500Operating expenses:Wages, salaries and benefits
    
    
    (310,800
    )
    
    
    (224,958
    )
    
    
    (223,014
    )Selling and general expenses
    
    
    (104,841
    )
    
    
    (73,474
    )
    
    
    (81,587
    )Administrative expenses (inclusive of stock-based
compensation expense of $715, $1,085, and $532)
    
    
    (102,754
    )
    
    
    (65,013
    )
    
    
    (63,575
    )Rent expense, net
    
    
    (19,135
    )
    
    
    (13,219
    )
    
    
    (13,114
    )Depreciation and amortization
    
    
    (62,353
    )
    
    
    (52,727
    )
    
    
    (50,732
    )Advertising
    
    
    (23,175
    )
    
    
    (12,531
    )
    
    
    (10,699
    )Total operating expenses
    
    
    (623,058
    )
    
    
    (441,922
    )
    
    
    (442,721
    )Operating income
    
    
    10,633
    
    
    
    34,490
    
    
    
    28,779Bargain purchase
    
    
    15,681
    
    
    
    
    
    
    
    Loss on debt extinguishment
    
    
    (1,041
    )
    
    
    (6,770
    )
    
    
    (2,228
    )Interest expense, net
    
    
    (61,231
    )
    
    
    (48,028
    )
    
    
    (43,711
    )Loss before income taxes
    
    
    (35,958
    )
    
    
    (20,308
    )
    
    
    (17,160
    )Income tax benefit (expense)
    
    
    9,004
    
    
    
    (5,385
    )
    
    
    6,316Net loss
    
    $
    (26,954
    )
    
    $
    (25,693
    )
    
    $
    (10,844
    )
   - 33 -




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##### Table of Contents



TOPS HOLDING CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS (DEFICIT) EQUITY
  Additional
    
    
    Retained
    
    
    AccumulatedPaid-In
    
    
    Earnings
    
    
    Other
    
    
    TotalCommon Stock
    
    
    (Deficit)
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    (Loss) Income
    
    
    (Deficit) EquityBalance at December 30, 2007
    
    
    100,000
    
    
    $
    
    
    
    $
    100,000
    
    
    $
    984
    
    
    $
    (403
    )
    
    $
    100,581Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,844
    )
    
    
    
    
    
    
    (10,844
    )Change in fair value of interest rate swap through November
16, 2008, net of tax benefit of $1,796
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,740
    )
    
    
    (2,740
    )Reclassification adjustment on interest rate swap, net of tax
expense of $200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    305Retirement obligations adjustments, net of tax benefit of $69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )
    
    
    (105
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,384
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    
    
    
    
    532Balance at December 27, 2008
    
    
    100,000
    
    
    
    
    
    
    
    100,532
    
    
    
    (9,860
    )
    
    
    (2,943
    )
    
    
    87,729Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,693
    )
    
    
    
    
    
    
    (25,693
    )Reclassification adjustment on interest rate swap, net of tax
expense of $1,861
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,838
    
    
    
    2,838Retirement obligations adjustments, net of tax expense of $157
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    240
    
    
    
    240Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,615
    )Dividend
    
    
    
    
    
    
    
    
    
    
    (105,000
    )
    
    
    
    
    
    
    
    
    
    
    (105,000
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,085
    
    
    
    
    
    
    
    
    
    
    
    1,085Balance at January 2, 2010
    
    
    100,000
    
    
    
    
    
    
    
    (3,383
    )
    
    
    (35,553
    )
    
    
    135
    
    
    
    (38,801
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,954
    )
    
    
    
    
    
    
    (26,954
    )Retirement obligations adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471
    )
    
    
    (471
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,425
    )Issuance of common stock
    
    
    44,776
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    30,000Dividend
    
    
    
    
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    
    
    
    
    (30,000
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    715
    
    
    
    
    
    
    
    
    
    
    
    715Balance at January 1, 2011
    
    
    144,776
    
    
    $
    
    
    
    $
    (2,668
    )
    
    $
    (62,507
    )
    
    $
    (336
    )
    
    $
    (65,511
    )
   - 34 -




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##### Table of Contents



TOPS HOLDING CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Cash flows provided by operating activities:Net loss
    
    $
    (26,954
    )
    
    $
    (25,693
    )
    
    $
    (10,844
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    77,315
    
    
    
    65,285
    
    
    
    55,530Bargain purchase
    
    
    (15,681
    )
    
    
    
    
    
    
    Deferred income taxes
    
    
    (9,199
    )
    
    
    5,351
    
    
    
    (6,968
    )Amortization of deferred financing costs
    
    
    2,367
    
    
    
    1,304
    
    
    
    1,247LIFO inventory valuation adjustment
    
    
    2,055
    
    
    
    249
    
    
    
    6,938Loss on debt extinguishment
    
    
    1,041
    
    
    
    6,770
    
    
    
    2,228Stock-based compensation expense
    
    
    715
    
    
    
    1,085
    
    
    
    532Interest rate swap settlement
    
    
    
    
    
    
    5,613
    
    
    
    Interest rate swap interest paid
    
    
    
    
    
    
    3,146
    
    
    
    Impact of interest rate swap on deferred tax assets
    
    
    
    
    
    
    2,070
    
    
    
    Change in fair value of interest rate swap
    
    
    
    
    
    
    (1,256
    )
    
    
    1,666Gain on legal settlement
    
    
    
    
    
    
    
    
    
    
    (2,100
    )Other
    
    
    988
    
    
    
    860
    
    
    
    151Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (7,382
    )
    
    
    (9,411
    )
    
    
    6,552(Increase) decrease in inventories
    
    
    (6,239
    )
    
    
    (594
    )
    
    
    1,797Decrease (increase) in prepaid expenses and other current
assets
    
    
    1,796
    
    
    
    (4,517
    )
    
    
    1,520Decrease (increase) in income taxes refundable
    
    
    560
    
    
    
    (760
    )
    
    
    Increase in accounts payable
    
    
    24,267
    
    
    
    13,482
    
    
    
    3,092Increase in accrued expenses and other current liabilities
    
    
    917
    
    
    
    3,733
    
    
    
    16,182Increase in other long-term liabilities
    
    
    2,892
    
    
    
    96
    
    
    
    3,544Net cash provided by operating activities
    
    
    49,458
    
    
    
    66,813
    
    
    
    81,067Cash flows used in investing activities:Acquisition of Penn Traffic assets (Note 2)
    
    
    (85,023
    )
    
    
    
    
    
    
    Cash paid for property and equipment
    
    
    (49,663
    )
    
    
    (28,080
    )
    
    
    (35,298
    )Proceeds from sale of assets
    
    
    20,753
    
    
    
    
    
    
    
    Interest rate swap settlement
    
    
    
    
    
    
    (5,613
    )
    
    
    Interest rate swap interest paid
    
    
    
    
    
    
    (3,146
    )
    
    
    Purchase of Members interest in Tops Markets, LLC, net of
cash acquired
    
    
    
    
    
    
    
    
    
    
    (20,639
    )Other
    
    
    
    
    
    
    146
    
    
    
    (300
    )Net cash used in investing activities
    
    
    (113,933
    )
    
    
    (36,693
    )
    
    
    (56,237
    )Cash flows provided by (used in) financing activities:Proceeds from long-term debt borrowings
    
    
    112,125
    
    
    
    270,474
    
    
    
    35,000Repayments of long-term debt borrowings
    
    
    (36,377
    )
    
    
    (200,936
    )
    
    
    (48,633
    )Proceeds from issuance of common stock
    
    
    30,000
    
    
    
    
    
    
    
    Dividend to shareholders
    
    
    (30,000
    )
    
    
    (105,000
    )
    
    
    Borrowings on ABL Facility
    
    
    348,737
    
    
    
    76,600
    
    
    
    Repayments on ABL Facility
    
    
    (347,737
    )
    
    
    (62,600
    )
    
    
    Deferred financing costs incurred
    
    
    (5,769
    )
    
    
    (12,011
    )
    
    
    (4,871
    )Principal payments on capital leases
    
    
    (9,294
    )
    
    
    (7,287
    )
    
    
    (6,434
    )Change in bank overdraft position
    
    
    487
    
    
    
    43
    
    
    
    (3,499
    )Net cash provided by (used in) financing activities
    
    
    62,172
    
    
    
    (40,717
    )
    
    
    (28,437
    )Net decrease in cash and cash equivalents
    
    
    (2,303
    )
    
    
    (10,597
    )
    
    
    (3,607
    )Cash and cash equivalents-beginning of period
    
    
    19,722
    
    
    
    30,319
    
    
    
    33,926Cash and cash equivalents-end of period
    
    $
    17,419
    
    
    $
    19,722
    
    
    $
    30,319
   - 35 -




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##### Table of Contents



TOPS HOLDING CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. THE COMPANY, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 The Company
 Tops
 Tops P&C and Quality Markets
 Fiscal Year
  Basis of Presentation and Principles of Consolidation
  Use of Estimates
  Consolidated Statements of Cash Flows Supplemental Disclosures
   - 36 -




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##### Table of Contents



Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Cash paid during the year for:Interest, net of amounts capitalized
    
    $
    56,933
    
    
    $
    37,222
    
    
    $
    40,912Income taxes
    
    
    151
    
    
    
    435
    
    
    
    478Non-cash items:Assets acquired under capital leases
    
    
    5,349
    
    
    
    5,759
    
    
    
    936Impact of SERP liability adjustment on property and equipment
    
    
    
    
    
    
    1,999
    
    
    
    Unpaid capital expenditures
    
    
    6,107
    
    
    
    2,349
    
    
    
    5,968
 Concentration of Credit Risk
  Accounts Receivable
  Fair Value of Financial Instruments
       Inventories
    - 37 -




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##### Table of Contents



Property and Equipment
  Asset
    
    Useful LivesLand and land improvements
    
    IndefiniteBuildings
    
    30  40 yearsLeasehold improvements
    
    Lesser of 7  20 years or remaining lease termEquipment
    
    3  10 yearsAutomobiles
    
    3  10 yearsIT software and equipment
    
    3  5 years
 Long-Lived Assets
  Intangible Assets
    Asset
    
    Weighted Average Amortization PeriodAcquired Penn Traffic Intangible Assets:Favorable/unfavorable lease rights
    
    7.9 yearsTradenames
    
    8.5 yearsCustomer relationships
    
    11.0 yearsOther Intangible Assets:Tradename
    
    Indefinite lifeCustomer relationships
    
    8.0 yearsFavorable/unfavorable lease rights
    
    9.3 yearsFranchise agreements
    
    11.0 yearsOther
    
    4.0 years
  - 38 -




---



##### Table of Contents



Deferred Financing Costs
  Leases
 Classification
  Operating Leases
  Lease Incentives
  Rental Income
  Asset Retirement Obligations
   - 39 -




---



##### Table of Contents



Guarantees
   Insurance Programs
  Employee Benefits
  Revenue Recognition
    Cost of Goods Sold and Distribution Costs
  Vendor Allowances
   - 40 -




---



##### Table of Contents



Selling and General Expenses
  Administrative Expenses
     Advertising
  Income Taxes
   - 41 -




---



##### Table of Contents



Stock-Based Compensation
  Other Comprehensive (Loss) Income
  Recently Issued Accounting Pronouncements
  Segments
    - 42 -




---



##### Table of Contents



Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalNon-perishables(1)
    
    $
    1,307,304
    
    
    
    57.9
    %
    
    $
    966,297
    
    
    
    57.0
    %
    
    $
    944,126
    
    
    
    55.5
    %Perishables(2)
    
    
    605,684
    
    
    
    26.8
    %
    
    
    438,607
    
    
    
    25.9
    %
    
    
    425,224
    
    
    
    25.0
    %Pharmacy
    
    
    179,518
    
    
    
    8.0
    %
    
    
    160,868
    
    
    
    9.5
    %
    
    
    158,929
    
    
    
    9.4
    %Fuel
    
    
    150,012
    
    
    
    6.6
    %
    
    
    116,160
    
    
    
    6.9
    %
    
    
    158,178
    
    
    
    9.3
    %Other(3)
    
    
    15,018
    
    
    
    0.7
    %
    
    
    13,676
    
    
    
    0.7
    %
    
    
    13,775
    
    
    
    0.8
    %$
    2,257,536
    
    
    
    100.0
    %
    
    $
    1,695,608
    
    
    
    100.0
    %
    
    $
    1,700,232
    
    
    
    100.0
    %
 (1)
    
    Non-perishables consist of grocery, dairy, frozen, general merchandise, health and
beauty care and other non-perishable related products.(2)
    
    Perishables consist of produce, meat, seafood, bakery, deli, floral, prepared foods and
other perishable related products.(3)
    
    Other primarily consists of franchise income and service commission income, such as
lottery, money orders and money transfers. 2. BUSINESS ACQUISITION
       - 43 -




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##### Table of Contents



Initial
    
    
    
    
    
    
    FinalEstimate
    
    
    Adjustments
    
    
    AllocationAssets acquired:Inventory
    
    $
    32,792
    
    
    $
    (1,920
    )
    
    $
    30,872Accounts receivable
    
    
    
    
    
    
    205
    
    
    
    205Prepaid expenses
    
    
    2,354
    
    
    
    
    
    
    
    2,354Property and equipment
    
    
    63,878
    
    
    
    (10,096
    )
    
    
    53,782Favorable/unfavorable lease rights
    
    
    6,589
    
    
    
    434
    
    
    
    7,023Tradenames
    
    
    4,200
    
    
    
    
    
    
    
    4,200Customer relationships
    
    
    1,100
    
    
    
    600
    
    
    
    1,700Assets held for sale
    
    
    22,791
    
    
    
    (160
    )
    
    
    22,631Total assets acquired
    
    
    133,704
    
    
    
    (10,937
    )
    
    
    122,767Liabilities assumed:Accrued expenses and other current liabilities
    
    
    5,891
    
    
    
    471
    
    
    
    6,362Liabilities held for sale
    
    
    1,585
    
    
    
    (135
    )
    
    
    1,450Deferred tax liability
    
    
    13,717
    
    
    
    (3,429
    )
    
    
    10,288Other long-term liabilities
    
    
    253
    
    
    
    (22
    )
    
    
    231Capital lease obligations
    
    
    6,314
    
    
    
    (2,582
    )
    
    
    3,732Total liabilities assumed
    
    
    27,760
    
    
    
    (5,697
    )
    
    
    22,063Bargain purchase
    
    
    (20,921
    )
    
    
    5,240
    
    
    
    (15,681
    )Acquisition price
    
    $
    85,023
    
    
    $
    
    
    
    $
    85,023
  Unaudited Pro Forma Financial Information
  Fiscal 2010
    
    
    Fiscal 2009(52 weeks)
    
    
    (53 weeks)Net sales
    
    $
    2,266,927
    
    
    $
    2,257,232Operating income
    
    
    12,814
    
    
    
    3,097Net loss
    
    
    (47,843
    )
    
    
    (70,194
    )
   - 44 -




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##### Table of Contents



3. ACCOUNTS RECEIVABLE, NET
  January 1, 2011
    
    
    January 2, 2010Vendor receivables
    
    $
    32,202
    
    
    $
    25,362Credit and debit card receivables
    
    
    9,097
    
    
    
    9,693Pharmacy receivables
    
    
    8,610
    
    
    
    8,338Other receivables
    
    
    7,788
    
    
    
    6,454Allowance for doubtful accounts
    
    
    (653
    )
    
    
    (390
    )Total accounts receivable, net
    
    $
    57,044
    
    
    $
    49,457
 4. PROPERTY AND EQUIPMENT, NET
  January 1, 2011
    
    
    January 2, 2010Land
    
    $
    10,211
    
    
    $
    6,651Land improvements
    
    
    10,913
    
    
    
    3,541Buildings
    
    
    58,627
    
    
    
    38,178Leasehold improvements
    
    
    77,016
    
    
    
    52,058Equipment
    
    
    153,166
    
    
    
    108,835IT software and equipment
    
    
    34,667
    
    
    
    33,046Total at cost
    
    
    344,600
    
    
    
    242,309Accumulated depreciation
    
    
    (128,924
    )
    
    
    (77,925
    )215,676
    
    
    
    164,384Property, equipment and automobiles under capital leases, net of
accumulated depreciation
    
    
    162,899
    
    
    
    169,032Property and equipment, net
    
    $
    378,575
    
    
    $
    333,416
  January 1, 2011
    
    
    January 2, 2010Land
    
    $
    48,829
    
    
    $
    48,517Building
    
    
    145,829
    
    
    
    141,724Equipment
    
    
    7,948
    
    
    
    5,675Automobiles
    
    
    2,606
    
    
    
    1,333Total at cost
    
    
    205,212
    
    
    
    197,249Accumulated depreciation
    
    
    (42,313
    )
    
    
    (28,217
    )Capital lease assets, net
    
    $
    162,899
    
    
    $
    169,032
   - 45 -




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##### Table of Contents



5. INTANGIBLE ASSETS, NET
  WeightedGross
    
    
    
    
    
    
    Net
    
    
    AverageCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AmortizationJanuary 1, 2011
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    PeriodAcquired Penn Traffic intangible assets:Favorable/unfavorable lease rights
    
    $
    7,023
    
    
    $
    (899
    )
    
    $
    6,124
    
    
    
    7.9Tradename
    
    
    4,200
    
    
    
    (700
    )
    
    
    3,500
    
    
    
    8.5Customer relationships
    
    
    1,700
    
    
    
    (300
    )
    
    
    1,400
    
    
    
    11.0Other intangible assets:Tradename
    
    
    41,011
    
    
    
    
    
    
    
    41,011
    
    
    Indefinite lifeCustomer relationships
    
    
    26,051
    
    
    
    (14,931
    )
    
    
    11,120
    
    
    
    8.0Favorable/unfavorable lease rights
    
    
    14,369
    
    
    
    (7,003
    )
    
    
    7,366
    
    
    
    9.3Franchise agreements
    
    
    11,538
    
    
    
    (3,242
    )
    
    
    8,296
    
    
    
    11.0Other
    
    
    497
    
    
    
    (242
    )
    
    
    255
    
    
    
    4.0$
    106,389
    
    
    $
    (27,317
    )
    
    $
    79,072
    
    
    
    9.0
 Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingJanuary 2, 2010
    
    Amount
    
    
    Amortization
    
    
    AmountTradename
    
    $
    41,011
    
    
    $
    
    
    
    $
    41,011Customer relationships
    
    
    26,051
    
    
    
    (9,880
    )
    
    
    16,171Favorable/unfavorable lease rights
    
    
    14,369
    
    
    
    (4,800
    )
    
    
    9,569Franchise agreements
    
    
    11,538
    
    
    
    (2,196
    )
    
    
    9,342Other
    
    
    407
    
    
    
    (144
    )
    
    
    263$
    93,376
    
    
    $
    (17,020
    )
    
    $
    76,356
    2011
    
    $
    8,5792012
    
    
    6,8622013
    
    
    6,0182014
    
    
    5,2182015
    
    
    3,983Thereafter
    
    
    7,401
 6. OTHER ASSETS
    - 46 -




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##### Table of Contents



7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  January 1, 2011
    
    
    January 2, 2010Wages, taxes and benefits
    
    $
    18,918
    
    
    $
    15,813Lottery
    
    
    10,083
    
    
    
    7,565Interest payable
    
    
    8,318
    
    
    
    6,936Property and equipment expenditures
    
    
    6,107
    
    
    
    2,349Union medical, pension and 401(k)
    
    
    4,598
    
    
    
    3,029Gift cards
    
    
    4,271
    
    
    
    3,685Money orders
    
    
    3,651
    
    
    
    4,855Professional and legal fees
    
    
    3,640
    
    
    
    2,556Utilities
    
    
    2,980
    
    
    
    2,378Sales and use tax
    
    
    2,101
    
    
    
    1,117Repairs and maintenance
    
    
    2,054
    
    
    
    984Advertising
    
    
    1,920
    
    
    
    874Self-insurance reserves
    
    
    1,406
    
    
    
    1,406Vacation
    
    
    1,110
    
    
    
    4,873Financed insurance policies
    
    
    1,040
    
    
    
    2,220Retirement obligations
    
    
    869
    
    
    
    879Real estate taxes
    
    
    705
    
    
    
    901Other
    
    
    5,352
    
    
    
    5,914$
    79,123
    
    
    $
    68,334
 8. LEASES
   - 47 -




---



##### Table of Contents



Capital
    
    
    Operating
    
    
    Future ExpectedLeases
    
    
    Leases
    
    
    Sub-lease Income2011
    
    $
    31,206
    
    
    $
    24,921
    
    
    $
    4,5702012
    
    
    31,013
    
    
    
    25,570
    
    
    
    4,2612013
    
    
    30,047
    
    
    
    25,740
    
    
    
    3,0462014
    
    
    26,463
    
    
    
    25,853
    
    
    
    1,4932015
    
    
    24,026
    
    
    
    25,822
    
    
    
    1,057Thereafter
    
    
    156,931
    
    
    
    115,161
    
    
    
    1,325Total minimum lease payments
    
    
    299,686
    
    
    $
    243,067
    
    
    $
    15,752Less amounts representing interest
    
    
    (116,375
    )Present value of net minimum lease payments
    
    
    183,311Less current obligations
    
    
    (11,095
    )Long-term obligations
    
    $
    172,216
  9. DEBT
  January 1, 2011
    
    
    January 2, 2010Senior Notes
    
    $
    350,000
    
    
    $
    275,000Discount on Senior Notes, net
    
    
    (2,914
    )
    
    
    (4,399
    )ABL Facility
    
    
    15,000
    
    
    
    14,000Other loans
    
    
    2,400
    
    
    
    2,565Mortgage note payable
    
    
    1,178
    
    
    
    1,390Total debt
    
    
    365,664
    
    
    
    288,556Current portion
    
    
    (402
    )
    
    
    (362
    )Total long-term debt
    
    $
    365,262
    
    
    $
    288,194
    - 48 -




---



##### Table of Contents



2011
    
    $
    4022012
    
    
    4342013
    
    
    17,2952014
    
    
    2802015
    
    
    350,167Thereafter
    
    
    Total debt
    
    $
    368,578
  10. DERIVATIVE INSTRUMENTS
    - 49 -




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##### Table of Contents



11. INCOME TAXES
  Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Current:Federal
    
    $
    192
    
    
    $
    
    
    
    $
    531State
    
    
    3
    
    
    
    34
    
    
    
    121Total current
    
    
    195
    
    
    
    34
    
    
    
    652Deferred:Federal
    
    
    (19,476
    )
    
    
    (7,068
    )
    
    
    (5,757
    )State
    
    
    (1,624
    )
    
    
    (1,477
    )
    
    
    (1,211
    )Change in valuation allowance
    
    
    11,901
    
    
    
    13,896
    
    
    
    Total deferred
    
    
    (9,199
    )
    
    
    5,351
    
    
    
    (6,968
    )Total income tax (benefit) expense
    
    $
    (9,004
    )
    
    $
    5,385
    
    
    $
    (6,316
    )
  Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Statutory federal income tax benefit
    
    $
    (12,585
    )
    
    $
    (7,108
    )
    
    
    (6,006
    )State income tax benefit, net of federal benefit
    
    
    (1,622
    )
    
    
    (938
    )
    
    
    (709
    )Valuation allowance
    
    
    11,901
    
    
    
    13,896
    
    
    
    Non-taxable gain on bargain purchase
    
    
    (5,489
    )
    
    
    
    
    
    
    Benefit of federal tax credits
    
    
    (1,182
    )
    
    
    (889
    )
    
    
    ASC 740 adjustment
    
    
    192
    
    
    
    81
    
    
    
    71Non-deductible expenses
    
    
    170
    
    
    
    338
    
    
    
    328Other
    
    
    (389
    )
    
    
    5
    
    
    
    $
    (9,004
    )
    
    $
    5,385
    
    
    $
    (6,316
    )
  - 50 -




---



##### Table of Contents



January 1, 2011
    
    
    January 2, 2010Current deferred tax assets:Inventory and other reserves
    
    $
    104
    
    
    $
    622Prepaid taxes, insurance and service contracts
    
    
    1,096
    
    
    
    1,761Accrued vacation and bonus compensation
    
    
    442
    
    
    
    4,820Other assets
    
    
    2,828
    
    
    
    2,552Valuation allowance
    
    
    (2,205
    )
    
    
    (3,769
    )Current net deferred tax assets
    
    
    2,265
    
    
    
    5,986Non-current deferred tax (liabilities) assets:Capital leases
    
    
    8,567
    
    
    
    8,359Property and equipment depreciation
    
    
    (11,231
    )
    
    
    (7,653
    )Intangible assets
    
    
    (16,078
    )
    
    
    (14,416
    )Federal and state net operating loss carryforwards and federal credits
    
    
    38,472
    
    
    
    17,267Valuation allowance
    
    
    (23,592
    )
    
    
    (10,127
    )Other
    
    
    508
    
    
    
    584Non-current net deferred tax liabilities
    
    
    (3,354
    )
    
    
    (5,986
    )Net deferred tax liabilities
    
    $
    (1,089
    )
    
    $
    
      - 51 -




---



##### Table of Contents



Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Beginning balance
    
    $
    947
    
    
    $
    947
    
    
    $
    947Additions based on tax positions related to the current year
    
    
    
    
    
    
    
    
    
    
    Reductions based on tax positions related to the current year
    
    
    (755
    )
    
    
    
    
    
    
    Settlements
    
    
    (192
    )
    
    
    
    
    
    
    Reductions due to lapse of statute of limitations
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    $
    
    
    
    $
    947
    
    
    $
    947
  12. SHAREHOLDERS DEFICIT
        - 52 -




---



##### Table of Contents



Weighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber of
    
    
    Price Per
    
    
    Term
    
    
    IntrinsicShares
    
    
    Share
    
    
    (In Years)
    
    
    ValueOutstanding  December 30, 2007
    
    
    
    
    
    $
    Granted
    
    
    7,250
    
    
    
    1,000Outstanding  December 27, 2008
    
    
    7,250
    
    
    
    1,000Granted
    
    
    300
    
    
    
    1,333Outstanding  January 2, 2010
    
    
    7,550
    
    
    
    413Granted
    
    
    4,470
    
    
    
    1,040Forfeited
    
    
    (555
    )
    
    
    400Outstanding  January 1, 2011
    
    
    11,465
    
    
    
    658
    
    
    
    4.9
    
    
    $
    4,377Expected to vest  January 1, 2011
    
    
    11,465
    
    
    
    658
    
    
    
    4.9
    
    
    $
    4,377Options exercisable  January 1, 2011
    
    
    
    
    
    $
    
    Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008Estimated life in years
    
    
    6.2
    
    
    
    5.0
    
    
    
    7.0Expected volatility
    
    
    37.6
    %
    
    
    38.5
    %
    
    
    38.8
    %Expected dividends
    
    
    
    
    
    
    
    
    
    
    Risk-free rate
    
    
    1.6
    %
    
    
    1.8
    %
    
    
    3.1
    %
   13. RELATED PARTY TRANSACTIONS
   - 53 -




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##### Table of Contents



14. RETIREMENT PLANS
 Defined Benefit Plans
   Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)SERP:Interest cost
    
    $
    234
    
    
    $
    276
    
    
    $
    59Net pension cost
    
    $
    234
    
    
    $
    276
    
    
    $
    59Other Post-Retirement Plans:Interest cost
    
    $
    112
    
    
    $
    181
    
    
    $
    160Service cost
    
    
    3
    
    
    
    3
    
    
    
    3Net pension cost
    
    $
    115
    
    
    $
    184
    
    
    $
    163
  OtherPost-RetirementSERP
    
    
    Plans2011
    
    $
    623
    
    
    $
    2462012
    
    
    579
    
    
    
    2432013
    
    
    555
    
    
    
    2402014
    
    
    528
    
    
    
    2362015
    
    
    497
    
    
    
    208Subsequent five years
    
    
    1,966
    
    
    
    907
   - 54 -




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##### Table of Contents



Other Post-SERP
    
    
    Retirement PlansBenefit obligation  December 28, 2008
    
    $
    1,861
    
    
    $
    3,126Interest cost
    
    
    276
    
    
    
    181Service cost
    
    
    
    
    
    
    3Actuarial loss (gain)
    
    
    546
    
    
    
    (881
    )Total disbursements
    
    
    (734
    )
    
    
    (102
    )Liability adjustment
    
    
    3,145
    
    
    
    Benefit obligation  January 2, 2010
    
    
    5,094
    
    
    
    2,327Interest cost
    
    
    234
    
    
    
    112Service cost
    
    
    
    
    
    
    3Actuarial loss
    
    
    207
    
    
    
    194Total disbursements
    
    
    (667
    )
    
    
    (146
    )Benefit obligation  January 1, 2011
    
    $
    4,868
    
    
    $
    2,490
   SERP
    
    
    Other Post-Retirement PlansJanuary 1, 2011
    
    
    January 2, 2010
    
    
    January 1, 2011
    
    
    January 2, 2010Accrued expenses and other
current liabilities
    
    $
    623
    
    
    $
    641
    
    
    $
    246
    
    
    $
    238Other long-term liabilities
    
    
    4,245
    
    
    
    4,453
    
    
    
    2,244
    
    
    
    2,089Recognized liability
    
    $
    4,868
    
    
    $
    5,094
    
    
    $
    2,490
    
    
    $
    2,327
   SERP
    
    Other Post-Retirement PlansJanuary 1, 2011
    
    January 2, 2010
    
    January 1, 2011
    
    January 2, 20104.70%
    
    4.90%
    
    4.70%
    
    5.20%
  Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008SERP
    
    
    4.90
    %
    
    
    5.90
    %
    
    
    5.80
    %Other post-retirement plans
    
    
    5.20
    %
    
    
    6.00
    %
    
    
    6.10
    %
    - 55 -




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##### Table of Contents



January 1, 2011
    
    
    January 2, 2010Initial health care cost trend rate.
    
    
    7.50
    %
    
    
    8.00
    %Ultimate health care cost trend rate
    
    
    5.00
    %
    
    
    5.00
    %Year to reach ultimate trend rate
    
    
    2016
    
    
    
    2015
  Increase
    
    
    DecreaseEffect on SERP
    
    
    N/A
    
    
    
    N/AEffect on other post-retirement plans
    
    $
    
    
    
    $
    
 Other Benefit Plans
   15. COMMITMENTS AND CONTINGENCIES
 Purchase Commitments
      - 56 -




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##### Table of Contents



Asset Retirement Obligations
  Balance  December 27, 2008
    
    $
    1,533Accretion of liability
    
    
    156Incremental obligations incurred
    
    
    45Balance  January 2, 2010
    
    
    1,734Obligations of acquired Penn Traffic stores
    
    
    231Accretion of liability
    
    
    183Incremental obligations incurred
    
    
    188Balance  January 1, 2011
    
    $
    2,336
 Environmental Liabilities
  Collective Bargaining Agreements
  Legal Proceedings
   16. GUARANTOR FINANCIAL STATEMENTS
     - 57 -




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
JANUARY 1, 2011
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash
equivalents
    
    $
    
    
    
    $
    16,689
    
    
    $
    730
    
    
    $
    
    
    
    $
    17,419Accounts receivable,
net
    
    
    
    
    
    
    43,696
    
    
    
    13,348
    
    
    
    
    
    
    
    57,044Intercompany
receivables
    
    
    
    
    
    
    2,850
    
    
    
    13,091
    
    
    
    (15,941
    )
    
    
    Inventory, net
    
    
    
    
    
    
    80,060
    
    
    
    37,268
    
    
    
    
    
    
    
    117,328Prepaid expenses and
other current assets
    
    
    
    
    
    
    11,445
    
    
    
    2,648
    
    
    
    
    
    
    
    14,093Assets held for sale
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    650Income taxes
refundable
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    200Current deferred tax
assets
    
    
    
    
    
    
    1,657
    
    
    
    
    
    
    
    608
    
    
    
    2,265Total current assets
    
    
    
    
    
    
    156,597
    
    
    
    67,735
    
    
    
    (15,333
    )
    
    
    208,999Property and
equipment, net
    
    
    
    
    
    
    309,856
    
    
    
    68,719
    
    
    
    
    
    
    
    378,575Intangible assets, net
    
    
    
    
    
    
    68,048
    
    
    
    11,024
    
    
    
    
    
    
    
    79,072Other assets
    
    
    
    
    
    
    13,705
    
    
    
    3,041
    
    
    
    (3,041
    )
    
    
    13,705Investment in
subsidiaries
    
    
    (75,094
    )
    
    
    104,799
    
    
    
    
    
    
    
    (29,705
    )
    
    
    Total assets
    
    $
    (75,094
    )
    
    $
    653,005
    
    
    $
    150,519
    
    
    $
    (48,079
    )
    
    $
    680,351Liabilities and
Shareholders (Deficit)
EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    69,881
    
    
    $
    23,430
    
    
    $
    
    
    
    $
    93,311Intercompany
payables
    
    
    2,850
    
    
    
    13,091
    
    
    
    
    
    
    
    (15,941
    )
    
    
    Accrued expenses and
other current
liabilities
    
    
    544
    
    
    
    62,099
    
    
    
    17,224
    
    
    
    (744
    )
    
    
    79,123Current portion of
capital lease
obligations
    
    
    
    
    
    
    10,754
    
    
    
    341
    
    
    
    
    
    
    
    11,095Current portion of
long-term debt
    
    
    
    
    
    
    402
    
    
    
    
    
    
    
    
    
    
    
    402Current deferred tax
liabilities
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    (11
    )
    
    
    Total current liabilities
    
    
    3,394
    
    
    
    156,227
    
    
    
    41,006
    
    
    
    (16,696
    )
    
    
    183,931Capital lease
obligations
    
    
    
    
    
    
    168,743
    
    
    
    3,473
    
    
    
    
    
    
    
    172,216Long-term debt
    
    
    
    
    
    
    368,303
    
    
    
    
    
    
    
    (3,041
    )
    
    
    365,262Other long-term
liabilities
    
    
    
    
    
    
    17,941
    
    
    
    3,158
    
    
    
    
    
    
    
    21,099Non-current deferred
tax liabilities
tax liabilities
    
    
    
    
    
    
    16,078
    
    
    
    (1,917
    )
    
    
    (10,807
    )
    
    
    3,354Total liabilities
    
    
    3,394
    
    
    
    727,292
    
    
    
    45,720
    
    
    
    (30,544
    )
    
    
    745,862Total shareholders
(deficit) equity
    
    
    (78,488
    )
    
    
    (74,287
    )
    
    
    104,799
    
    
    
    (17,535
    )
    
    
    (65,511
    )Total liabilities and
shareholders (deficit)
equity
    
    $
    (75,094
    )
    
    $
    653,005
    
    
    $
    150,519
    
    
    $
    (48,079
    )
    
    $
    680,351
  - 58 -




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
JANUARY 2, 2010
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash
equivalents
    
    $
    
    
    
    $
    19,712
    
    
    $
    10
    
    
    $
    
    
    
    $
    19,722Accounts receivable,
net
    
    
    
    
    
    
    49,457
    
    
    
    
    
    
    
    
    
    
    
    49,457Intercompany
receivables
    
    
    
    
    
    
    1,900
    
    
    
    2,306
    
    
    
    (4,206
    )
    
    
    Inventory, net
    
    
    
    
    
    
    82,272
    
    
    
    
    
    
    
    
    
    
    
    82,272Prepaid expenses
    
    
    
    
    
    
    13,535
    
    
    
    
    
    
    
    
    
    
    
    13,535Income taxes
refundable
    
    
    
    
    
    
    760
    
    
    
    
    
    
    
    
    
    
    
    760Current deferred tax
assets
    
    
    751
    
    
    
    5,805
    
    
    
    
    
    
    
    (570
    )
    
    
    5,986Total current assets
    
    
    751
    
    
    
    173,441
    
    
    
    2,316
    
    
    
    (4,776
    )
    
    
    171,732Property and
equipment, net
    
    
    
    
    
    
    333,416
    
    
    
    
    
    
    
    
    
    
    
    333,416Intangible assets, net
    
    
    
    
    
    
    76,356
    
    
    
    
    
    
    
    
    
    
    
    76,356Other assets
    
    
    
    
    
    
    11,344
    
    
    
    3,041
    
    
    
    (3,041
    )
    
    
    11,344Investment in
subsidiaries
    
    
    (37,652
    )
    
    
    1,145
    
    
    
    
    
    
    
    36,507
    
    
    
    Total assets
    
    $
    (36,901
    )
    
    $
    595,702
    
    
    $
    5,357
    
    
    $
    28,690
    
    
    $
    592,848Liabilities and
Shareholders (Deficit)
EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    68,462
    
    
    $
    
    
    
    $
    
    
    
    $
    68,462Intercompany payables.
    
    
    1,900
    
    
    
    2,306
    
    
    
    
    
    
    
    (4,206
    )
    
    
    Accrued expenses and
other current
liabilities
    
    
    
    
    
    
    64,866
    
    
    
    4,212
    
    
    
    (744
    )
    
    
    68,334Current portion of
Capital lease
obligations
    
    
    
    
    
    
    8,186
    
    
    
    
    
    
    
    
    
    
    
    8,186Current portion of
long-
term debt
    
    
    
    
    
    
    362
    
    
    
    
    
    
    
    
    
    
    
    362Total current liabilities
    
    
    1,900
    
    
    
    144,182
    
    
    
    4,212
    
    
    
    (4,950
    )
    
    
    145,344Capital lease
obligations
    
    
    
    
    
    
    175,340
    
    
    
    
    
    
    
    
    
    
    
    175,340Long-term debt
    
    
    
    
    
    
    291,235
    
    
    
    
    
    
    
    (3,041
    )
    
    
    288,194Other long-term
liabilities
    
    
    
    
    
    
    16,785
    
    
    
    
    
    
    
    
    
    
    
    16,785Noncurrent deferred
tax
liabilities
    
    
    
    
    
    
    5,986
    
    
    
    
    
    
    
    
    
    
    
    5,986Total liabilities
    
    
    1,900
    
    
    
    633,528
    
    
    
    4,212
    
    
    
    (7,991
    )
    
    
    631,649Total shareholders
(deficit)
equity
    
    
    (38,801
    )
    
    
    (37,826
    )
    
    
    1,145
    
    
    
    36,681
    
    
    
    (38,801
    )Total liabilities and
shareholders (deficit)
equity
    
    $
    (36,901
    )
    
    $
    595,702
    
    
    $
    5,357
    
    
    $
    28,690
    
    
    $
    592,848
  - 59 -




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL 2010
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,704,977
    
    
    $
    553,742
    
    
    $
    (1,183
    )
    
    $
    2,257,536Cost of goods sold
    
    
    
    
    
    
    (1,208,582
    )
    
    
    (370,434
    )
    
    
    
    
    
    
    (1,579,016
    )Distribution costs
    
    
    
    
    
    
    (31,899
    )
    
    
    (12,930
    )
    
    
    
    
    
    
    (44,829
    )Gross profit
    
    
    
    
    
    
    464,496
    
    
    
    170,378
    
    
    
    (1,183
    )
    
    
    633,691Operating expenses:Wages, salaries and
benefits
    
    
    
    
    
    
    (223,276
    )
    
    
    (87,524
    )
    
    
    
    
    
    
    (310,800
    )Selling and general
expenses
    
    
    
    
    
    
    (71,629
    )
    
    
    (34,395
    )
    
    
    1,183
    
    
    
    (104,841
    )Administrative
expenses
    
    
    (2,208
    )
    
    
    (81,425
    )
    
    
    (19,121
    )
    
    
    
    
    
    
    (102,754
    )Rent expense, net
    
    
    
    
    
    
    (9,493
    )
    
    
    (9,642
    )
    
    
    
    
    
    
    (19,135
    )Depreciation and
amortization
    
    
    
    
    
    
    (55,005
    )
    
    
    (7,348
    )
    
    
    
    
    
    
    (62,353
    )Advertising
    
    
    
    
    
    
    (15,819
    )
    
    
    (7,356
    )
    
    
    
    
    
    
    (23,175
    )Total operating
expenses
    
    
    (2,208
    )
    
    
    (456,647
    )
    
    
    (165,386
    )
    
    
    1,183
    
    
    
    (623,058
    )Operating (loss)
income
    
    
    (2,208
    )
    
    
    7,849
    
    
    
    4,992
    
    
    
    
    
    
    
    10,633Bargain purchase
    
    
    
    
    
    
    
    
    
    
    15,681
    
    
    
    
    
    
    
    15,681Loss on debt
extinguishment
    
    
    
    
    
    
    (1,041
    )
    
    
    
    
    
    
    
    
    
    
    (1,041
    )Interest expense, net
    
    
    
    
    
    
    (61,125
    )
    
    
    (106
    )
    
    
    
    
    
    
    (61,231
    )Equity (loss) income
from
subsidiaries
    
    
    (36,970
    )
    
    
    18,631
    
    
    
    
    
    
    
    18,339
    
    
    
    (Loss) income
before income
taxes
    
    
    (39,178
    )
    
    
    (35,686
    )
    
    
    20,567
    
    
    
    18,339
    
    
    
    (35,958
    )Income tax expense
    
    
    (751
    )
    
    
    (1,284
    )
    
    
    (1,936
    )
    
    
    12,975
    
    
    
    9,004Net (loss) income
    
    $
    (39,929
    )
    
    $
    (36,970
    )
    
    $
    18,631
    
    
    $
    31,314
    
    
    $
    (26,954
    )
  - 60-




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL 2009
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,696,015
    
    
    $
    546
    
    
    $
    (953
    )
    
    $
    1,695,608Cost of goods sold
    
    
    
    
    
    
    (1,185,344
    )
    
    
    
    
    
    
    
    
    
    
    (1,185,344
    )Distribution costs
    
    
    
    
    
    
    (33,852
    )
    
    
    
    
    
    
    
    
    
    
    (33,852
    )Gross profit
    
    
    
    
    
    
    476,819
    
    
    
    546
    
    
    
    (953
    )
    
    
    476,412Operating expenses:Wages, salaries and
benefits
    
    
    
    
    
    
    (224,958
    )
    
    
    
    
    
    
    
    
    
    
    (224,958
    )Selling and general
expenses
    
    
    
    
    
    
    (74,176
    )
    
    
    (251
    )
    
    
    953
    
    
    
    (73,474
    )Administrative expenses
    
    
    (2,036
    )
    
    
    (62,923
    )
    
    
    (54
    )
    
    
    
    
    
    
    (65,013
    )Rent expense, net
    
    
    
    
    
    
    (13,219
    )
    
    
    
    
    
    
    
    
    
    
    (13,219
    )Depreciation and
amortization
    
    
    
    
    
    
    (52,727
    )
    
    
    
    
    
    
    
    
    
    
    (52,727
    )Advertising
    
    
    
    
    
    
    (12,531
    )
    
    
    
    
    
    
    
    
    
    
    (12,531
    )Total operating
expenses
    
    
    (2,036
    )
    
    
    (440,534
    )
    
    
    (305
    )
    
    
    953
    
    
    
    (441,922
    )Operating (loss)
income
    
    
    (2,036
    )
    
    
    36,285
    
    
    
    241
    
    
    
    
    
    
    
    34,490Loss on debt
extinguishment
    
    
    
    
    
    
    (6,770
    )
    
    
    
    
    
    
    
    
    
    
    (6,770
    )Interest (expense) income,
net
    
    
    
    
    
    
    (48,279
    )
    
    
    251
    
    
    
    
    
    
    
    (48,028
    )Equity (loss) income from
subsidiaries
    
    
    (24,033
    )
    
    
    297
    
    
    
    
    
    
    
    23,736
    
    
    
    (Loss) income before
income taxes
    
    
    (26,069
    )
    
    
    (18,467
    )
    
    
    492
    
    
    
    23,736
    
    
    
    (20,308
    )Income tax benefit
(expense)
    
    
    376
    
    
    
    (5,566
    )
    
    
    (195
    )
    
    
    
    
    
    
    (5,385
    )Net (loss) income
    
    $
    (25,693
    )
    
    $
    (24,033
    )
    
    $
    297
    
    
    $
    23,736
    
    
    $
    (25,693
    )
  - 61 -




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL 2008
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,700,432
    
    
    $
    315
    
    
    $
    (515
    )
    
    $
    1,700,232Cost of goods sold
    
    
    
    
    
    
    (1,195,850
    )
    
    
    
    
    
    
    
    
    
    
    (1,195,850
    )Distribution costs
    
    
    
    
    
    
    (32,882
    )
    
    
    
    
    
    
    
    
    
    
    (32,882
    )Gross profit
    
    
    
    
    
    
    471,700
    
    
    
    315
    
    
    
    (515
    )
    
    
    471,500Operating expenses:Wages, salaries and
benefits
    
    
    
    
    
    
    (223,014
    )
    
    
    
    
    
    
    
    
    
    
    (223,014
    )Selling and general
expenses
    
    
    
    
    
    
    (83,162
    )
    
    
    1,060
    
    
    
    515
    
    
    
    (81,587
    )Administrative expenses
    
    
    (1,482
    )
    
    
    (62,048
    )
    
    
    (45
    )
    
    
    
    
    
    
    (63,575
    )Rent expense, net
    
    
    
    
    
    
    (13,114
    )
    
    
    
    
    
    
    
    
    
    
    (13,114
    )Depreciation and
amortization
    
    
    
    
    
    
    (50,732
    )
    
    
    
    
    
    
    
    
    
    
    (50,732
    )Advertising
    
    
    
    
    
    
    (10,699
    )
    
    
    
    
    
    
    
    
    
    
    (10,699
    )Total operating
expenses
    
    
    (1,482
    )
    
    
    (442,769
    )
    
    
    1,015
    
    
    
    515
    
    
    
    (442,721
    )Operating (loss)
income
    
    
    (1,482
    )
    
    
    28,931
    
    
    
    1,330
    
    
    
    
    
    
    
    28,779Loss on debt
extinguishment
    
    
    
    
    
    
    (2,228
    )
    
    
    
    
    
    
    
    
    
    
    (2,228
    )Interest (expense) income,
net
    
    
    
    
    
    
    (43,768
    )
    
    
    57
    
    
    
    
    
    
    
    (43,711
    )Equity (loss) income from
subsidiaries
    
    
    (9,738
    )
    
    
    838
    
    
    
    
    
    
    
    8,900
    
    
    
    (Loss) income before
income taxes
    
    
    (11,220
    )
    
    
    (16,227
    )
    
    
    1,387
    
    
    
    8,900
    
    
    
    (17,160
    )Income tax benefit
(expense)
    
    
    376
    
    
    
    (6,489
    )
    
    
    (549
    )
    
    
    
    
    
    
    6,316Net (loss) income
    
    $
    (10,844
    )
    
    $
    (9,738
    )
    
    $
    838
    
    
    $
    8,900
    
    
    $
    (10,844
    )
  - 62 -




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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Fiscal 2010
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet cash (used in) provided
by operating activities
    
    $
    (950
    )
    
    $
    37,783
    
    
    $
    12,625
    
    
    $
    
    
    
    $
    49,458Cash flows used in investing
activities:Acquisition of the Penn
Traffic Company
    
    
    
    
    
    
    
    
    
    
    (85,023
    )
    
    
    
    
    
    
    (85,023
    )Cash paid for property and
equipment
    
    
    
    
    
    
    (28,081
    )
    
    
    (21,582
    )
    
    
    
    
    
    
    (49,663
    )Proceeds from sale of
assets
    
    
    
    
    
    
    
    
    
    
    20,753
    
    
    
    
    
    
    
    20,753Investment in
subsidiaries
    
    
    
    
    
    
    (85,023
    )
    
    
    
    
    
    
    85,023
    
    
    
    Change in
intercompany
receivables position
    
    
    
    
    
    
    (950
    )
    
    
    (10,786
    )
    
    
    11,736
    
    
    
    Net cash used in
investing activities
    
    
    
    
    
    
    (114,054
    )
    
    
    (96,638
    )
    
    
    96,759
    
    
    
    (113,933
    )Cash flows provided by financing
activities:Proceeds from long-term debt borrowings
    
    
    
    
    
    
    112,125
    
    
    
    
    
    
    
    
    
    
    
    112,125Repayments of long-term debt borrowings
    
    
    
    
    
    
    (36,377
    )
    
    
    
    
    
    
    
    
    
    
    (36,377
    )Borrowings on ABL
Facility
    
    
    
    
    
    
    348,737
    
    
    
    
    
    
    
    
    
    
    
    348,737Repayments on ABL
Facility
    
    
    
    
    
    
    (347,737
    )
    
    
    
    
    
    
    
    
    
    
    (347,737
    )Proceeds from issuance
of common stock
    
    
    30,000
    
    
    
    30,000
    
    
    
    
    
    
    
    (30,000
    )
    
    
    30,000Dividend
    
    
    (30,000
    )
    
    
    (30,000
    )
    
    
    
    
    
    
    30,000
    
    
    
    (30,000
    )Principal payments on
capital leases
    
    
    
    
    
    
    (9,004
    )
    
    
    (290
    )
    
    
    
    
    
    
    (9,294
    )Deferred financing
costs incurred
    
    
    
    
    
    
    (5,769
    )
    
    
    
    
    
    
    
    
    
    
    (5,769
    )Capital contribution
    
    
    
    
    
    
    
    
    
    
    85,023
    
    
    
    (85,023
    )
    
    
    Change in
intercompany
payables position
    
    
    950
    
    
    
    10,786
    
    
    
    
    
    
    
    (11,736
    )
    
    
    Change in bank
overdraft position
    
    
    
    
    
    
    487
    
    
    
    
    
    
    
    
    
    
    
    487Net cash provided by
financing activities
    
    
    950
    
    
    
    73,248
    
    
    
    84,733
    
    
    
    (96,759
    )
    
    
    62,172Net (decrease) increase in
cash and cash equivalents
    
    
    
    
    
    
    (3,023
    )
    
    
    720
    
    
    
    
    
    
    
    (2,303
    )Cash and cash equivalents 
beginning of year
    
    
    
    
    
    
    19,712
    
    
    
    10
    
    
    
    
    
    
    
    19,722Cash and cash equivalents 
end of year
    
    $
    
    
    
    $
    16,689
    
    
    $
    730
    
    
    $
    
    
    
    $
    17,419
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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Fiscal 2009
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet cash (used in) provided
by operating activities
    
    $
    (950
    )
    
    $
    67,881
    
    
    $
    (118
    )
    
    $
    
    
    
    $
    66,813Cash flows provided by
(used in) investing
activities:Cash paid for property
and
equipment
    
    
    
    
    
    
    (28,080
    )
    
    
    
    
    
    
    
    
    
    
    (28,080
    )Interest rate swap
settlement
    
    
    
    
    
    
    (5,613
    )
    
    
    
    
    
    
    
    
    
    
    (5,613
    )Interest rate swap
interest paid
    
    
    
    
    
    
    (3,146
    )
    
    
    
    
    
    
    
    
    
    
    (3,146
    )Change in
intercompany
receivables position
    
    
    
    
    
    
    (950
    )
    
    
    118
    
    
    
    832
    
    
    
    Dividend
    
    
    105,000
    
    
    
    
    
    
    
    
    
    
    
    (105,000
    )
    
    
    Other
    
    
    
    
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    146Net cash provided
by (used in)
investing
activities
    
    
    105,000
    
    
    
    (37,643
    )
    
    
    118
    
    
    
    (104,168
    )
    
    
    (36,693
    )Cash flows (used in)
provided by financing
activities:Proceeds from long-term debt borrowings
    
    
    
    
    
    
    270,474
    
    
    
    
    
    
    
    
    
    
    
    270,474Repayments of long-term debt borrowings
    
    
    
    
    
    
    (200,936
    )
    
    
    
    
    
    
    
    
    
    
    (200,936
    )Dividend
    
    
    (105,000
    )
    
    
    (105,000
    )
    
    
    
    
    
    
    105,000
    
    
    
    (105,000
    )Borrowings on ABL
Facility
    
    
    
    
    
    
    76,600
    
    
    
    
    
    
    
    
    
    
    
    76,600Repayments on ABL
Facility
    
    
    
    
    
    
    (62,600
    )
    
    
    
    
    
    
    
    
    
    
    (62,600
    )Deferred financing
costs incurred
    
    
    
    
    
    
    (12,011
    )
    
    
    
    
    
    
    
    
    
    
    (12,011
    )Principal payments on
capital leases
    
    
    
    
    
    
    (7,287
    )
    
    
    
    
    
    
    
    
    
    
    (7,287
    )Change in
intercompany
payables position
    
    
    950
    
    
    
    (118
    )
    
    
    
    
    
    
    (832
    )
    
    
    Change in bank
overdraft position
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    43Net cash (used in)
provided by
financing
activities
    
    
    (104,050
    )
    
    
    (40,835
    )
    
    
    
    
    
    
    104,168
    
    
    
    (40,717
    )Net decrease in cash and
cash equivalents
    
    
    
    
    
    
    (10,597
    )
    
    
    
    
    
    
    
    
    
    
    (10,597
    )Cash and cash equivalents 
beginning of year
    
    
    
    
    
    
    30,309
    
    
    
    10
    
    
    
    
    
    
    
    30,319Cash and cash equivalents 
end of year
    
    $
    
    
    
    $
    19,712
    
    
    $
    10
    
    
    $
    
    
    
    $
    19,722
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##### Table of Contents



TOPS HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Fiscal 2008
 Tops Holding
    
    
    
    
    
    
    GuarantorCorporation
    
    
    Tops Markets, LLC
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet cash (used in) provided
by operating activities
    
    $
    (950
    )
    
    $
    76,552
    
    
    
    5,465
    
    
    
    
    
    
    
    81,067Cash flows used in
investing activities:Cash paid for property
and
equipment
    
    
    
    
    
    
    (35,298
    )
    
    
    
    
    
    
    
    
    
    
    (35,298
    )Purchase in Members
interest in Tops
Markets, LLC
    
    
    
    
    
    
    (20,639
    )
    
    
    
    
    
    
    
    
    
    
    (20,639
    )Intercompany loan
    
    
    
    
    
    
    
    
    
    
    (3,041
    )
    
    
    3,041
    
    
    
    Change in
intercompany
receivables position
    
    
    
    
    
    
    (950
    )
    
    
    (2,424
    )
    
    
    3,374
    
    
    
    Investment in
subsidiaries
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    10
    
    
    
    Other
    
    
    
    
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    (300
    )Net cash (used in)
provided by
investing
activities
    
    
    
    
    
    
    (57,197
    )
    
    
    (5,465
    )
    
    
    6,425
    
    
    
    (56,237
    )Cash flows provided by
(used in) financing
activities:Proceeds from long-term debt borrowings
    
    
    
    
    
    
    38,041
    
    
    
    
    
    
    
    (3,041
    )
    
    
    35,000Repayments of long-term debt borrowings
    
    
    
    
    
    
    (48,633
    )
    
    
    
    
    
    
    
    
    
    
    (48,633
    )Deferred financing
costs incurred
    
    
    
    
    
    
    (4,871
    )
    
    
    
    
    
    
    
    
    
    
    (4,871
    )Principal payments on
capital leases
    
    
    
    
    
    
    (6,434
    )
    
    
    
    
    
    
    
    
    
    
    (6,434
    )Change in bank
overdraft position
    
    
    
    
    
    
    (3,499
    )
    
    
    
    
    
    
    
    
    
    
    (3,499
    )Change in
intercompany
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    payables position
    
    
    950
    
    
    
    2,424
    
    
    
    
    
    
    
    (3,374
    )Capital contribution
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    (10
    )
    
    
    Net cash provided
by (used in)
financing
activities
    
    
    950
    
    
    
    (22,972
    )
    
    
    10
    
    
    
    (6,425
    )
    
    
    (28,437
    )Net (decrease) increase in
cash and cash equivalents
    
    
    
    
    
    
    (3,617
    )
    
    
    10
    
    
    
    
    
    
    
    (3,607
    )Cash and cash equivalents 
beginning of year
    
    
    
    
    
    
    33,926
    
    
    
    
    
    
    
    
    
    
    
    33,926Cash and cash equivalents 
end of year
    
    $
    
    
    
    
    30,309
    
    
    $
    10
    
    
    
    
    
    
    $
    30,319
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##### Table of Contents



17. QUARTERLY DATA

(UNAUDITED)
 16-week
    
    
    12-week
    
    
    12-week
    
    
    12-weekperiod ended
    
    
    period ended
    
    
    period ended
    
    
    period endedFiscal 2010
    
    April 24, 2010
    
    
    July 17, 2010
    
    
    October 9, 2010
    
    
    January 1, 2011Net sales
    
    $
    665,015
    
    
    $
    541,833
    
    
    $
    519,859
    
    
    $
    530,829Gross profit
    
    
    193,759
    
    
    
    150,633
    
    
    
    146,901
    
    
    
    142,398Operating (loss) income (1)
    
    
    (2,882
    )
    
    
    5,373
    
    
    
    6,448
    
    
    
    1,694Income tax benefit (expense) (2)
    
    
    9,913
    
    
    
    (214
    )
    
    
    397
    
    
    
    (1,092
    )Net income (loss) (3)
    
    
    3,294
    
    
    
    (8,915
    )
    
    
    (7,556
    )
    
    
    (13,777
    )
 16-week
    
    
    12-week
    
    
    12-week
    
    
    13-weekperiod ended
    
    
    period ended
    
    
    period ended
    
    
    period endedFiscal 2009
    
    April 18, 2009
    
    
    July 11, 2009
    
    
    October 3, 2009
    
    
    January 2, 2010Net sales
    
    $
    505,758
    
    
    $
    392,187
    
    
    $
    373,216
    
    
    $
    424,447Gross profit
    
    
    145,068
    
    
    
    110,692
    
    
    
    105,334
    
    
    
    115,318Operating income
    
    
    9,082
    
    
    
    12,730
    
    
    
    6,960
    
    
    
    5,718Income tax benefit (expense) (4)
    
    
    720
    
    
    
    (590
    )
    
    
    1,159
    
    
    
    (6,674
    )Net (loss) income (5)
    
    
    (2,940
    )
    
    
    2,413
    
    
    
    (873
    )
    
    
    (24,293
    )
 (1)
    
    The operating (loss) income for the 16-week period ended April 24, 2010, 12-week period
ended July 17, 2010, 12-week period ended October 9, 2010 and 12-week period ended January
1, 2011 include integration costs, legal expenses associated with the FTCs review of the
acquired supermarkets and other one-time legal and professional fees related to the
Acquisition totaling $17.4 million, $5.9 million, $5.0 million and $2.4 million,
respectively.(2)
    
    The income tax benefit for the 16-week period ended April 24, 2010 includes a $10.3
million reversal of valuation allowance that was established in Fiscal 2009 as a result of
the recognition of a deferred tax liability that resulted from the bargain purchase
associated with the Acquisition.(3)
    
    The net income for the 16-week period ended April 24, 2010 includes a $15.7 million
bargain purchase related to excess of net assets acquired over the purchase(4)
    
    The income tax expense for the 13-week period ended January 2, 2010 includes a $13.7
million dollar charge related to a net deferred tax assets valuation allowance.(5)
    
    The net income (loss) for the 12-week period ended July 11, 2009 and October 3, 2009
include a gain (loss) on debt extinguishment of $0.5 million and $(7.3) million,
respectively. 
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE  
 ITEM 9A. CONTROLS AND PROCEDURES
   
 ITEM 9B. OTHER INFORMATION
   - 66 -




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 EXECUTIVE OFFICERS AND DIRECTORS
  Directors and executive officers
    
    Age
    
    
    Principal occupation or positionGary Matthews
    
    
    53
    
    
    ChairmanFrank Curci
    
    
    59
    
    
    President, Chief Executive Officer and DirectorKevin Darrington
    
    
    43
    
    
    Chief Operating OfficerWilliam R. Mills
    
    
    54
    
    
    Senior Vice President, Chief Financial OfficerLynne Burgess
    
    
    62
    
    
    Senior Vice President, General Counsel and SecretaryJohn Persons
    
    
    44
    
    
    Senior Vice President, OperationsJack Barrett
    
    
    63
    
    
    Senior Vice President, Human Resources, Assistant SecretaryEric Fry
    
    
    44
    
    
    DirectorEric Kanter
    
    
    36
    
    
    DirectorGregory Josefowicz
    
    
    59
    
    
    DirectorStacey Rauch
    
    
    53
    
    
    Director
 Gary Matthews .
 Frank Curci . Tops
 Kevin Darrington . Tops
 William R. Mills.
  - 67 -




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##### Table of Contents



Lynne Burgess. Tops
 John Persons . Tops
 Jack Barrett . Tops Tops
 Eric Fry .
 Eric Kanter .
 Gregory Josefowicz .
 Stacey Rauch.
 AUDIT COMMITTEE
   - 68 -




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##### Table of Contents



CODE OF ETHICS
  ADDITIONAL INFORMATION
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
 COMPENSATION DISCUSSION AND ANALYSIS
   What is our compensation philosophy?
  What are the key principles that influenced our Fiscal 2010 compensation decisions?
  
    
    Our Compensation Committee reviews individual and corporate performance, business
results and general information related to compensation at other private companies in
setting the compensation level for our CEO and CFO. A similar process is used in formulating the recommendations to the Compensation
Committee for the compensation levels of the other named executive officers.
  - 69 -




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##### Table of Contents




    
    We use both subjective and objective measures of performance in setting the annual
incentive compensation levels for named executive officers. The primary objective measure
that we use is adjusted EBITDA. We also have the discretion to make adjustments to annual
incentive compensation levels based on business considerations or individual performance
as described below.
    
    We do not provide special retirement arrangements or significant personal benefits for
our named executive officers.
 What are the components of our compensation program?
  
    
    Total compensation consisting of:
 
    
    Base salary;
 
    
    Annual cash bonus awards; and
 
    
    Long-term equity incentive awards;
 
    
    Participation in broad-based retirement, health and welfare benefits;
 
    
    Severance and change of control protections; and
 
    
    Limited perquisites.
 How do we determine the portion of total compensation allocated to base salary?
  How did we determine the amount of the annual cash bonus for Fiscal 2010 that we paid to each of
our named executive officers?
     - 70 -




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##### Table of Contents



Actual FiscalPerformance Measure
    
    Target Level ($)
    
    
    2010 Results ($)Adjusted EBITDA
    
    
    143,244
    
    
    
    133,384
 What types of long term incentive programs do we maintain for our named executive officers?
   What other significant policies apply to our named executive officers?
 Retirement and Other Benefits.
 Severance and Change of Control Arrangements.
  - 71 -




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##### Table of Contents



Forgiveness of Loan for Relocation Expenses.
 Compensation Committee Report
  
  - 72 -




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##### Table of Contents



EXECUTIVE COMPENSATION
  SUMMARY COMPENSATION TABLE
 Change inPensionValue andNon-Equity
    
    
    NonqualifiedIncentive
    
    
    DeferredStock
    
    
    Option
    
    
    Plan
    
    
    Compensation
    
    
    All OtherSalary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($)
    
    
    ($) (1)
    
    
    ($)
    
    
    ($) (2)
    
    
    ($) (3)
    
    
    ($)
    
    
    ($) (4)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)Frank Curci
    
    
    2010
    
    
    
    516,341
    
    
    
    
    
    
    
    
    
    
    
    282,519
    
    
    
    389,544
    
    
    
    
    
    
    
    43,331
    
    
    
    1,231,735President, Chief Executive
    
    
    2009
    
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000
    
    
    
    
    
    
    
    31,431
    
    
    
    931,431Officer and DirectorKevin Darrington
    
    
    2010
    
    
    
    339,423
    
    
    
    
    
    
    
    
    
    
    
    181,420
    
    
    
    194,775
    
    
    
    
    
    
    
    219,125
    
    
    
    934,743Chief Operating Officer (5)
    
    
    2009
    
    
    
    300,000
    
    
    
    254,916
    
    
    
    
    
    
    
    
    
    
    
    144,000
    
    
    
    
    
    
    
    20,489
    
    
    
    719,405William R. Mills
    
    
    2010
    
    
    
    42,308
    
    
    
    
    
    
    
    
    
    
    
    438,513
    
    
    
    25,000
    
    
    
    
    
    
    
    15,473
    
    
    
    521,294Senior Vice President,
Chief Financial OfficerJohn Persons
    
    
    2010
    
    
    
    262,882
    
    
    
    
    
    
    
    
    
    
    
    147,453
    
    
    
    122,429
    
    
    
    
    
    
    
    27,498
    
    
    
    560,262Senior Vice President,
    
    
    2009
    
    
    
    240,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,200
    
    
    
    
    
    
    
    16,261
    
    
    
    371,461OperationsJack Barrett
    
    
    2010
    
    
    
    214,119
    
    
    
    
    
    
    
    
    
    
    
    43,557
    
    
    
    96,296
    
    
    
    
    
    
    
    28,835
    
    
    
    382,807Senior Vice President,
    
    
    2009
    
    
    
    210,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,800
    
    
    
    
    
    
    
    20,447
    
    
    
    331,247Human ResourcesLynne Burgess
    
    
    2010
    
    
    
    79,327
    
    
    
    55,000
    
    
    
    
    
    
    
    248,327
    
    
    
    37,671
    
    
    
    
    
    
    
    55,754
    
    
    
    476,079Senior Vice President,
General Counsel and
SecretaryPatrick Curran
    
    
    2010
    
    
    
    243,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,983
    
    
    
    
    
    
    
    25,258
    
    
    
    377,376Senior Vice President,
    
    
    2009
    
    
    
    240,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,200
    
    
    
    
    
    
    
    16,095
    
    
    
    371,295Sales and Marketing (6)
 
 (1)
    
    Mr. Darringtons bonus amount represents the Companys forgiveness of a five-year
loan that the Company made to Mr. Darrington in 2009 in connection with his relocation
expenses. The Board of Directors discretionarily decided to forgive this loan and any
interest accrued thereon based on Mr. Darringtons performance and service during 2009.
This decision was formalized under a March 2010 board resolution. Ms. Burgess bonus
represents a signing bonus received by her in connection with her hire. She is required to
repay this amount to the extent her employment terminates prior to January 1, 2012.  - 73 -




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##### Table of Contents



(2)
    
    Amounts reflect the aggregate grant date fair value of stock option awards. The fair
value of each option grant is estimated based on the fair market value on the date of grant
and using the Black-Scholes option pricing model. For a more detailed discussion on the
valuation model and assumptions used to calculate the fair value of our options, refer to
Note 12 to the consolidated financial statements.(3)
    
    These amounts represent cash paid in respect of our annual cash bonus plan for
performance in the applicable fiscal year.(4)
    
    These amounts represent health and welfare premiums, life insurance premiums, short-term
disability premiums, long-term disability premiums, 401(k) matching contributions and the
Companys incremental cost of the named executive officers use of a company car, taxable
relocation expenses, and certain tax gross up payments. For Mr. Darrington, this includes a
payment of $186,879 provided to him in 2010 to compensate him for taxes that he is expected to
incur as a result of the loan forgiveness reported in 2009. For Mr. Mills, this includes a
relocation tax gross up in the amount of $2,511. For Ms. Burgess, this includes a
relocation tax gross up in the amount of $5,003 and a sign on bonus tax gross up in the
amount of $32,187.(5)
    
    Mr. Darrington also served as our chief financial officer for most of Fiscal 2010, until
Mr. Mills was appointed chief financial officer on December 1, 2010.(6)
    
    Mr. Currans employment with us terminated effective December 31, 2010, prior to the end
of Fiscal 2010.  - 74 -




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##### Table of Contents



EQUITY AND NON-EQUITY INCENTIVE PLANS
  GRANTS OF PLAN-BASED AWARDS
 All Other
    
    
    
    
    
    
    Grant DateOption Awards:
    
    
    
    
    
    
    Fair ValueEstimated Possible Payouts Under Non-
    
    
    Number of
    
    
    Option
    
    
    of StockEquity Incentive Plan Awards
    
    
    Securities
    
    
    Exercise
    
    
    and OptionThreshold
    
    
    Target
    
    
    Maximum
    
    
    Underlying
    
    
    Price
    
    
    AwardsName
    
    ($) (1)
    
    
    ($) (1)
    
    
    ($) (1)
    
    
    Options
    
    
    ($)
    
    
    ($) (2)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)Frank Curci
    
    
    
    
    
    
    524,992
    
    
    
    
    
    
    
    707
    
    
    
    1,040
    
    
    
    282,519Kevin Darrington
    
    
    
    
    
    
    262,500
    
    
    
    
    
    
    
    454
    
    
    
    1,040
    
    
    
    181,420William R. Mills
    
    
    
    
    
    
    27,555
    
    
    
    
    
    
    
    1,000
    
    
    
    1,040
    
    
    
    438,513John Persons
    
    
    
    
    
    
    165,000
    
    
    
    
    
    
    
    369
    
    
    
    1,040
    
    
    
    147,453Jack Barrett
    
    
    
    
    
    
    129,780
    
    
    
    
    
    
    
    109
    
    
    
    1,040
    
    
    
    43,557Lynne Burgess
    
    
    
    
    
    
    50,769
    
    
    
    
    
    
    
    555
    
    
    
    1,040
    
    
    
    248,327Patrick Curran
    
    
    
    
    
    
    146,877
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    Represents annual incentive award targets under our annual cash bonus plan. The awards for
the named executive officers did not have threshold or maximum amounts.(2)
    
    Amounts reflect the aggregate grant date fair value of stock option awards. The fair value
of each option grant is estimated based on the fair market value on the date of grant and
using the Black-Scholes option pricing model. For a more detailed discussion on the valuation
model and assumptions used to calculate the fair value of our options, refer to Note 12 to the
consolidated financial statements. 2007 STOCK INCENTIVE PLAN
    - 75 -




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 Option AwardsEquityIncentive PlanNumber of
    
    
    Number of
    
    
    Awards:Securities
    
    
    Securities
    
    
    Number ofUnderlying
    
    
    Underlying
    
    
    SecuritiesUnexercised
    
    
    Unexercised
    
    
    Underlying
    
    
    Option
    
    
    OptionOptions
    
    
    Options
    
    
    Unexercised
    
    
    Exercise Price
    
    
    ExpirationName
    
    Exercisable
    
    
    Unexerciseable
    
    
    Unearned Options
    
    
    ($)
    
    
    Date(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)Frank Curci
    
    
    
    
    
    
    3,000
    (1)
    
    
    
    
    
    
    400
    (8)
    
    
    1/24/2018
    
    
    
    707
    (2)
    
    
    
    
    
    
    1,040
    
    
    
    10/5/2020Kevin Darrington
    
    
    
    
    
    
    1,667
    (3)
    
    
    
    
    
    
    400
    (8)
    
    
    3/3/2018
    
    
    
    454
    (2)
    
    
    
    
    
    
    1,040
    
    
    
    10/5/2020William R. Mills
    
    
    
    
    
    
    1,000
    (4)
    
    
    
    
    
    
    1,040
    
    
    
    11/1/2020John Persons
    
    
    
    
    
    
    1,111
    (5)
    
    
    
    
    
    
    400
    (8)
    
    
    2/14/2018
    
    
    
    369
    (2)
    
    
    
    
    
    
    1,040
    
    
    
    10/5/2020Jack Barrett
    
    
    
    
    
    
    389
    (6)
    
    
    
    
    
    
    400
    (8)
    
    
    11/19/2018
    
    
    
    109
    (2)
    
    
    
    
    
    
    1,040
    
    
    
    10/5/2020Lynne Burgess
    
    
    
    
    
    
    555
    (7)
    
    
    
    
    
    
    1,040
    
    
    
    9/13/2020
 (1)
    
    Stock options granted on January 24, 2008 that are scheduled to vest in three equal
annual installments on January 24, 2011, 2012, and 2013.(2)
    
    Stock options granted on October 5, 2010 that are scheduled to vest in four equal
annual installments on October 5, 2011, 2012, 2013, and 2014.(3)
    
    Stock options granted on March 3, 2008 that are scheduled to vest in three equal annual
installments on March 3, 2011, 2012, and 2013.(4)
    
    Stock options granted on November 1, 2010 that are scheduled to vest in three equal
annual installments on November 1, 2013, 2014, and 2015.(5)
    
    Stock options granted on February 14, 2008 that are scheduled to vest in three equal
annual installments on February 14, 2011, 2012, 2013.(6)
    
    Stock options granted on November 19, 2008 that are scheduled to vest in three equal
annual installments on November 19, 2011, 2012, and 2013.(7)
    
    Stock options granted on September 13, 2010 that are scheduled to vest in three equal
annual installments on September 13, 2013, 2014, and 2015.(8)
    
    The exercise price of these stock option awards was decreased from $1,000 to $400 as of
October 27, 2009 in connection with a refinancing and related extraordinary dividend paid
by the Company to its shareholders in October 2009. This modification was enacted in order
to equitably adjust awards in order to preserve the aggregate intrinsic value of the stock
options immediately after the recapitalization transaction. For more information regarding
the recapitalization and the adjustment of the stock option grants, please see Note 12 of
the consolidated financial statements included elsewhere in this 10-K. RETIREMENT ARRANGEMENTS FOR NAMED EXECUTIVE OFFICERS
   - 76 -




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##### Table of Contents



EMPLOYMENT
  Frank Curci
  Kevin Darrington
  William R. Mills
  John Persons
   - 77 -




---



##### Table of Contents



Jack Barrett
  Lynne Burgess
  Patrick Curran
   - 78 -




---



##### Table of Contents



POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
  Value ofUnvestedValue of
    
    
    Special
    
    
    PresentUnvested
    
    
    Cash
    
    
    Value
    
    
    OtherEquity-
    
    
    Retention
    
    
    of Health /
    
    
    CompensationBased
    
    
    Bonus
    
    
    Welfare
    
    
    orSeverance
    
    
    Awards
    
    
    Awards
    
    
    Benefits
    
    
    Payments
    
    
    Total($) (1)
    
    
    ($) (2)
    
    
    ($) (3)
    
    
    ($) (4)
    
    
    ($) (5)
    
    
    ($)Involuntary without
causeFrank Curci
    
    
    524,992
    
    
    
    
    
    
    
    
    
    
    
    6,435
    
    
    
    
    
    
    
    531,427Kevin Darrington.
    
    
    350,000
    
    
    
    
    
    
    
    
    
    
    
    9,594
    
    
    
    
    
    
    
    359,594William R. Mills
    
    
    275,000
    
    
    
    
    
    
    
    
    
    
    
    10,362
    
    
    
    
    
    
    
    285,362John Persons
    
    
    274,996
    
    
    
    
    
    
    
    
    
    
    
    10,696
    
    
    
    
    
    
    
    285,692Jack Barrett
    
    
    216,299
    
    
    
    
    
    
    
    
    
    
    
    6,435
    
    
    
    
    
    
    
    222,734Lynne Burgess
    
    
    275,000
    
    
    
    
    
    
    
    
    
    
    
    3,219
    
    
    
    
    
    
    
    278,219Patrick Curran
(7)
    
    
    294,795
    
    
    
    
    
    
    
    
    
    
    
    6,435
    
    
    
    
    
    
    
    301,230Death and disabilityFrank Curci
    
    
    
    
    
    
    
    
    
    
    1,350,000
    
    
    
    
    
    
    
    129,038
    
    
    
    1,479,038Kevin Darrington
    
    
    
    
    
    
    
    
    
    
    750,150
    
    
    
    
    
    
    
    85,290
    
    
    
    835,440William R. Mills
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,540
    
    
    
    66,540John Persons
    
    
    
    
    
    
    
    
    
    
    499,950
    
    
    
    
    
    
    
    66,539
    
    
    
    566,489Jack Barrett
    
    
    
    
    
    
    
    
    
    
    175,001
    
    
    
    62,500
    (8)
    
    
    51,865
    
    
    
    289,366Lynne Burgess
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,540
    
    
    
    66,540Patrick Curran
(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Termination without
cause within one
year after a change
of control(6)Frank Curci
    
    
    524,992
    
    
    
    1,920,000
    
    
    
    1,350,000
    
    
    
    6,435
    
    
    
    
    
    
    
    3,801,427Kevin Darrington
    
    
    350,000
    
    
    
    1,066,880
    
    
    
    750,150
    
    
    
    9,594
    
    
    
    
    
    
    
    2,176,624William R. Mills
    
    
    275,000
    
    
    
    
    
    
    
    
    
    
    
    10,362
    
    
    
    
    
    
    
    285,362John Persons
    
    
    274,996
    
    
    
    711,040
    
    
    
    499,950
    
    
    
    10,696
    
    
    
    
    
    
    
    1,496,682Jack Barrett
    
    
    216,299
    
    
    
    248,890
    
    
    
    175,001
    
    
    
    6,435
    
    
    
    
    
    
    
    646,625Lynne Burgess
    
    
    275,000
    
    
    
    
    
    
    
    
    
    
    
    3,219
    
    
    
    
    
    
    
    278,219Patrick Curran
(7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    Includes one times the annual base salary. The Company may also, at its discretion,
pay a termination-year bonus prorated to correspond with the portion of the year ending at
termination.(2)
    
    Unvested equity-based awards are calculated based on the fair market value of our
common stock as of January 1, 2011 of $1,040 per share. The treatment upon termination for
each type of equity award is further described under the heading 2007 Stock Incentive
Plan following the Grants of Plan-Based Awards table.(3)
    
    Includes the accelerated payment of the unvested portion of the special cash retention
bonus awards.(4)
    
    Includes the estimated value of allowing continued participation in our health and
welfare plans for a period of one year. These benefits may be terminated within one year
if the named executive officer obtains coverage from a new employer.(5)
    
    Represents an arrangement under which, if a named executive officer terminates
employment due to disability, the Company will pay the executive an amount equal to the
difference between the benefits received by the executive under the Companys short-term
disability program and his or her full salary amount until the Companys long-term
disability insurance coverage begins. Payments listed in this column apply only in the
event of the named executive officers termination due to disability.  - 79 -




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##### Table of Contents



(6)
    
    If the named executive officers employment is terminated within one year after a
change of control, then the unvested special cash retention bonus amount must be paid. On
the other hand, the Board of Directors has the discretion to pay unvested bonus amounts
upon a change of control to the extent the change of control constitutes a change in the
ownership or effective control of the Company or of a sale of substantially all of the
assets of the Company and the Board of Directors makes such payments under all similar
plans or arrangements.(7)
    
    Mr. Currans employment was terminated effective December 31, 2010. The numbers
reflected above show what Mr. Curran is entitled to pursuant to his separation agreement.(8)
    
    This amount represents payment under a life insurance policy. DIRECTOR COMPENSATION
 Fees EarnedOr Paid in Cash
    
    
    Option Awards
    
    
    TotalName
    
    ($) (1)
    
    
    ($) (2)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)Gary Matthews
    
    
    
    
    
    
    
    
    
    
    Eric Fry
    
    
    
    
    
    
    
    
    
    
    Gregory Josefowicz
    
    
    60,000
    
    
    
    15,185
    
    
    
    75,185Eric Kanter
    
    
    
    
    
    
    
    
    
    
    Stacey Rauch
    
    
    15,000
    
    
    
    109,968
    
    
    
    124,968
 
 (1)
    
    External Directors receive an annual cash retainer of $60,000.(2)
    
    The fair value of each option grant is estimated based on the fair market value on the
date of grant and using the Black-Scholes option pricing model. For a more detailed
discussion on the valuation model and assumptions used to calculate the fair value of our
options, refer to Note 12 to the consolidated financial statements. Director Compensation
  Equity-Based Awards
  Annual Compensation
  Compensation Committee Interlocks and Insider Participation
   - 80 -




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##### Table of Contents



ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  Number of Shares
    
    
    Percentage ofName of beneficial owner
    
    Beneficially Owned
    
    
    Outstanding SharesVarious funds affiliated with Morgan Stanley Private Equity
    
    
    103,671
    
    
    
    71.6
    %1585 Broadway, 39th Floor

New York, NY 10036HSBC Equity Partners USA, LP
    
    
    23,019
    
    
    
    15.9
    %c/o HSBC Capital (USA) Inc. 
452 Fifth Avenue

New York, NY 10018HSBC Private Equity Partners II USA, LP
    
    
    5,791
    
    
    
    4.0
    %c/o HSBC Capital (USA) Inc. 
452 Fifth Avenue

New York, NY 10018Turbic, Inc.
    
    
    7,239
    
    
    
    5.0
    %P.O. Box No. 7776
New Providence, BahamasBegain Company Limited
    
    
    4,477
    
    
    
    3.1
    %46/F, Sun Hung Kai Centre 
30 Harbour Road

Wanchai, Hong KongGary Matthews(1)(2)
    
    
    0
    
    
    
    *Frank Curci(1)
    
    
    579
    
    
    
    *Kevin Darrington(1)
    
    
    0
    
    
    
    *William R. Mills(1)
    
    
    0
    
    
    
    *Lynne Burgess(1)
    
    
    0
    
    
    
    *John Persons(1)
    
    
    0
    
    
    
    *Jack Barrett(1)
    
    
    0
    
    
    
    *Eric Fry (1)(2)
    
    
    0
    
    
    
    *Eric Kanter(1)(2)
    
    
    0
    
    
    
    *Gregory Josefowicz(1)
    
    
    0
    
    
    
    *Stacey Rauch(1)
    
    
    0
    
    
    
    *All directors and executive officers as a group (10 persons)(1)
    
    
    579
    
    
    
    *
 
 *
    
    Less than 1%(1)
    
    The address for each of our directors and executive officers is c/o Tops Markets, LLC,
6363 Main Street, Williamsville, New York, 14221.(2)
    
    Mr. Matthews and Mr. Fry are managing directors and Mr. Kanter is an executive director of
MSPE. See table above for information on the beneficial ownership of shares of our common
stock by Morgan Stanley Private Equity. Messrs. Matthews, Fry and Kanter expressly disclaim
beneficial ownership of such shares.  - 81 -




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Policy with Respect to Approval of Related Party Transactions
  Transaction and Monitoring Fee Agreement
   Shareholders Agreement
  Transition Services Agreement, Agency Agreement and Interim Operating Agreement with Penn Traffic
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##### Table of Contents



Transition Services Agreement with Ahold Affiliate
  Loan to Company Executive
  DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees
  Fiscal 2010
    
    
    Fiscal 2009(52 weeks)
    
    
    (53 weeks)Audit services
    
    $
    1,120
    
    
    $
    651Audit-related services
    
    
    430
    
    
    
    351Tax services
    
    
    11
    
    
    
    21Total
    
    $
    1,561
    
    
    $
    1,023
  Audit Services.
 Audit-Related Services
  - 83 -




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##### Table of Contents



Tax Services.
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1)
    
    Consolidated Financial Statements: See Item 8 of Part II of this 10-K.(2)
    
    Financial Statement Schedules.
 a.
    
    Schedule I  Condensed Financial Information of Tops Holding Corporationb.
    
    Schedule II  Valuation and Qualifying Accountsc.
    
    All other schedules are omitted because they are not required or do not
apply, or the required information is included elsewhere in the consolidated
financial statements or notes thereto.
  Exhibit No.2.1
(a)
    
    Asset Purchase Agreement, dated as of January 7, 2010, by and between Tops Markets, LLC (or its
assignee(s)) and The Penn Traffic Company and its affiliated entities.2.2
(a)
    
    Amendment, dated as of January 29, 2010, of Asset Purchase Agreement, dated as of January 7, 2010,
by and among Tops Markets, LLC (or its assignee(s)) and The Penn Traffic Company and its affiliated
entities.3.1
(a)
    
    Amended and Restated Certificate of Incorporation of Tops Holding Corporation.3.2
(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Tops Holding
Corporation.3.3
(a)
    
    By-Laws of Tops Holding Corporation.3.4
(a)
    
    Articles of Organization of Tops Markets, LLC.3.5
(a)
    
    Amended and Restated Operating Agreement of Tops Markets, LLC.3.6
(a)
    
    Articles of Organization of Tops PT, LLC.3.7
(a)
    
    Operating Agreement of Tops PT, LLC.3.8
(a)
    
    Articles of Organization of Tops Gift Card Company, LLC.3.9
(a)
    
    Operating Agreement of Tops Gift Card Company, LLC.4.1
(a)
    
    Indenture, dated October 9, 2009, between Tops Holding Corporation and Tops Markets, LLC, the
guarantors named therein and U.S. Bank National Association, as trustee.
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##### Table of Contents



Exhibit No.4.2
    (a)

    First Supplemental Indenture, dated January 29, 2010, among Tops Holding Corporation and Tops
Markets, LLC, the guarantors named therein, and U.S. Bank National Association, as trustee.4.3
    (a)

    Second Supplemental Indenture, dated February 12, 2010, among Tops Holding Corporation and Tops
Markets, LLC, the guarantors named therein, and U.S. Bank National Association, as trustee.4.4
    (a)

    Registration Rights Agreement, dated October 9, 2009 between Tops Holding Corporation, Tops
Markets, LLC, Morgan Stanley & Co. Incorporated, Banc of America Securities LLC and HSBC
Securities (USA) Inc.4.5
    (a)

    Registration Rights Agreement, dated February 12, 2010 between Tops Holding Corporation, Tops
Markets, LLC, Morgan Stanley & Co. Incorporated and Banc of America Securities LLC.4.6
    (a)

    Intercreditor Agreement, dated as of October 9, 2009, by and among Bank of America, N.A., as Initial
ABL Agent, and U.S. Bank National Association, as Collateral Agent, and acknowledged by Tops
Holding Corporation, Tops Markets, LLC, and the other persons signatory thereto.4.7
    (a)

    Supplement to the Intercreditor Agreement, dated as of January 29, 2010, by and among Bank of
America, N.A., as Initial ABL Agent, and U.S. Bank National Association, as Collateral Agent, and
acknowledged by Tops Holding Corporation, Tops Markets, LLC, and the other persons signatory
thereto.4.8
    (a)

    The Security Agreement, dated as of October 9, 2009 among the Issuers, the Guarantors and U.S. Bank
National Association, as collateral agent.4.9
    (a)

    Supplement No. 1 to the Security Agreement, dated as of January 29, 2010 among the Issuers, the
Guarantors and U.S. Bank National Association, as collateral agent.4.10
    (a)

    Trademark Security Agreement, dated as of October 9, 2009, among Tops Markets, LLC, as grantor, and
U.S. Bank National Association, as collateral agent.4.11
    (a)

    Trademark Security Agreement, dated as of January 29, 2010, among Tops PT, LLC, as grantor, and U.S.
Bank National Association, as collateral agent.4.12
    (a)

    Amended and Restated Shareholders Agreement, dated as of January 29, 2010, among Tops Holding
Corporation and the shareholders identified therein.10.1
    (a)

    Credit Agreement, dated as of October 9, 2009, among Tops Markets, LLC, as borrower, the guarantors
party thereto, the various lenders and agents party thereto and Bank of America N.A., as
administrative
agent.10.2
    (a)

    Amendment to the Credit Agreement, dated as of January 29, 2010, among Tops Markets, LLC, as
borrower, the guarantors party thereto, the various lenders and agents party thereto and Bank of
America
N.A., as administrative agent.10.3
    (a)

    Joinder Agreement to the Credit Agreement, dated as of January 29, 2010, between Tops PT, LLC and
Bank of America N.A., as administrative agent and collateral agent, swing line lender and L/C issuer
under the Credit Agreement.
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##### Table of Contents



Exhibit No.10.4
    (c)
    
    
    The Supply Agreement, dated as of November 12, 2009 between Tops Markets, LLC and C&S
Wholesale Grocers and the other parties thereto.10.5
    (a)
    
    
    Tops Holding Corporation 2007 Stock Incentive Plan, dated as of January 24, 2008.10.6
    (a)
    
    
    Amendment No. 1, dated as of October 27, 2009, of Tops Holding Corporation 2007 Stock Incentive
Plan, dated as of January 24, 2008.10.7
    (a)
    
    
    Form of Stock Option Agreement of Tops Holding Corporation.10.8
    (a)
    
    
    Form of Bonus Award Agreement of Tops Holding Corporation.10.9
    (a)
    
    
    Independent Director Compensation Policy of Tops Holding Corporation.10.10
    (a)
    
    
    Executive Employment Agreement, dated as of November 12, 2007, between Tops Holding Corporation
and Frank Curci.10.11
    (a)
    
    
    Executive Employment Agreement, dated as of January 24, 2008, between Tops Markets, LLC and
Kevin Darrington.10.12
    (a)
    
    
    Executive Employment Agreement, dated as of March 25, 2008, between Tops Markets, LLC and
Patrick J. Curran.10.13
    (b)
    
    
    Executive Employment Agreement, dated as of May 1, 2010, between Tops Markets, LLC and
John Persons.10.14
    (b)
    
    
    Executive Employment Agreement, dated as of May 1, 2010, between Tops Markets, LLC and
Jack Barrett.10.15
    (b)
    
    
    Executive Employment Agreement, dated as of August 25, 2010, between Tops Markets, LLC and
Lynne Burgess.10.16
    (d)
    
    
    Amendment No. 2, dated as of October 5, 2010, of Tops Holding Corporation 2007 Stock Incentive
Plan, dated as of January 24, 2008.10.17
    (e)
    
    
    Executive Employment Agreement, dated as of October 7, 2010, between Tops Markets, LLC and
William R. Mills.10.18
    (f)
    
    
    Separation Agreement, Waiver and General Release, dated as of October 21, 2010, by and among Tops
Holding Corporation, Tops Markets, LLC and Patrick Curran.12.1
    
    
    
    Computation of Ratio of Earnings to Fixed Charges.14.1
    
    
    
    Code of Ethics.21.1
    (a)
    
    
    List of Subsidiaries (as of July 9, 2010).31.1
    
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
  - 86 -




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##### Table of Contents




    
    Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application
for confidential treatment pursuant to the Securities Act of 1933, as amended.(a)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-4 filed on July 12, 2010.(b)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-4/A filed on September 3, 2010.(c)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-4/A filed on September 30, 2010.(d)
    
    Incorporated herein by reference to the Companys Form 8-K filed on October 12, 2010.(e)
    
    Incorporated herein by reference to the Companys Form 8-K filed on October 14, 2010.(f)
    
    Incorporated herein by reference to the Companys Form 8-K filed on October 27, 2010. 
 SIGNATURES
  TOPS HOLDING CORPORATIONBy:
    
    /s/ William R. Mills

William R. MillsSenior Vice President, Chief Financial OfficerMarch 31, 2011
  Signature
    
    Title/s/ Frank Curci

Frank Curci
    
    President, Chief Executive Officer and Director/s/ William R. Mills

William R. Mills
    
    Senior Vice President, Chief Financial Officer/s/ David Langless

David Langless
    
    Vice President, Chief Accounting Officer/s/ Gary Matthews

Gary Matthews
    
    Chairman/s/ Eric Fry

Eric Fry
    
    Director/s/ Gregory Josefowicz

Gregory Josefowicz
    
    Director/s/ Eric Kanter

Eric Kanter
    
    Director/s/ Stacey Rauch

Stacey Rauch
    
    Director
  - 87 -




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##### Table of Contents



Schedule I
 TOPS HOLDING COPRORATION
CONDENSED FINACIAL INFORMATION OF TOPS HOLDING CORPORATION
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
 January 1, 2011
    
    
    January 2, 2010AssetsCurrent assets:Current deferred tax assets
    
    $
    
    
    
    $
    751Total current assets
    
    
    
    
    
    
    751Investment in subsidiary
    
    
    (75,094
    )
    
    
    (37,652
    )Total assets
    
    $
    (75,094
    )
    
    $
    (36,901
    )Liabilities and Shareholders DeficitCurrent liabilities:Intercompany payable
    
    $
    2,850
    
    
    $
    1,900Total current liabilities
    
    
    3,394
    
    
    
    1,900Total liabilities
    
    
    3,394
    
    
    
    1,900Total shareholders deficit
    
    
    (78,448
    )
    
    
    (38,801
    )Total liabilities and shareholders deficit
    
    $
    (75,094
    )
    
    $
    (36,901
    )
  - 88 -




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##### Table of Contents



Schedule I
 TOPS HOLDING COPRORATION
CONDENSED FINACIAL INFORMATION OF TOPS HOLDING CORPORATION
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS
 Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Equity loss from subsidiary
    
    $
    (36,970
    )
    
    $
    (24,033
    )
    
    $
    (9,738
    )Operating expenses:Administrative expenses
    
    
    (2,208
    )
    
    
    (2,036
    )
    
    
    (1,482
    )Total operating expenses
    
    
    (2,208
    )
    
    
    (2,036
    )
    
    
    (1,482
    )Loss before income taxes
    
    
    (39,178
    )
    
    
    (26,069
    )
    
    
    (11,220
    )Income tax (expense) benefit.
    
    
    (751
    )
    
    
    376
    
    
    
    376Net loss
    
    $
    (39,929
    )
    
    $
    (25,693
    )
    
    $
    (10,844
    )
  - 89 -




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##### Table of Contents



Schedule I
 TOPS HOLDING COPRORATION
CONDENSED FINANCIAL INFORMATION OF TOPS HOLDING CORPORATION
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
 Fiscal 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Net cash used in operating activities
    
    $
    (950
    )
    
    $
    (950
    )
    
    $
    (950
    )Cash flows provided by investing activities:Dividend
    
    
    
    
    
    
    105,000
    
    
    
    Investment in subsidiary
    
    
    
    
    
    
    
    
    
    
    Net cash provided by investing activities
    
    
    
    
    
    
    105,000
    
    
    
    Cash flows provided by (used in) financing activities:Proceeds
from issuance of common stock
    
    
    30,000
    
    
    
    
    
    
    
    Dividend
    
    
    (30,000
    )
    
    
    (105,000
    )
    
    
    Change in intercompany payable position
    
    
    950
    
    
    
    950
    
    
    
    950Net cash  provided by (used in) financing activities
    
    
    950
    
    
    
    (104,050
    )
    
    
    950Net change in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents-beginning of period
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents-end of period
    
    $
    
    
    
    $
    
    
    
    $
    
  - 90 -




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##### Table of Contents



Schedule II
 TOPS HOLDING COPRORATION
VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    
    Additions
    
    
    
    
    
    
    Balance atBeginning
    
    
    Charged to Costs
    
    
    
    
    
    
    End ofof Period
    
    
    and Expenses
    
    
    Deductions
    
    
    PeriodFiscal 2008Self-insurance reserves
    
    $
    538
    
    
    $
    5,911
    
    
    $
    (550
    )
    
    $
    5,899LIFO inventory valuation reserve
    
    
    128
    
    
    
    6,938
    
    
    
    
    
    
    
    7,066Fiscal 2009Self-insurance reserves
    
    
    5,899
    
    
    
    4,712
    
    
    
    (2,308
    )
    
    
    8,303LIFO inventory valuation reserve
    
    
    7,066
    
    
    
    249
    
    
    
    
    
    
    
    7,315Valuation allowance for deferred
income tax assets
    
    
    
    
    
    
    13,896
    
    
    
    
    
    
    
    13,896Fiscal 2010Self-insurance reserves
    
    
    8,303
    
    
    
    6,028
    
    
    
    (2,598
    )
    
    
    11,733LIFO inventory valuation reserve
    
    
    7,315
    
    
    
    2,055
    
    
    
    
    
    
    
    9,370Valuation allowance for deferred
income tax assets
    
    
    13,896
    
    
    
    11,901
    
    
    
    
    
    
    
    25,797
  - 91 -