## UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

## FORM 10-QQuarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Fiscal Quarter Ended
July 31, 2004

Commission File Number
1-5287


Pathmark Stores, Inc.
(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

22-2879612(I.R.S. Employer
Identification No.)200 Milik Street
Carteret, New Jersey(Address of principal executive office)

07008(Zip Code)(732) 499-3000(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
Warrants to purchase Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý                        No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý                        No o

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.

Yes ý                        No o

As of September 1, 2004, 30,071,192 shares of the Common Stock were outstanding.





### Part I. Financial Information

#### Item 1. Consolidated Financial Statements

### Pathmark Stores, Inc.
Consolidated Statements of Operations (Unaudited)(in millions, except per share data)

|                                                        | 13 Weeks Ended |  | 26 Weeks Ended
|------------------------------------------------------- | -------------- |  | --------------
|
|Sales                                                   |                |  | $             
|Cost of goods sold                                      |                |  |               
|                                                        |                |  |               
|Gross profit                                            |                |  |               
|Selling, general and administrative expenses            |                |  |               
|Depreciation and amortization                           |                |  |               
|                                                        |                |  |               
|Operating earnings                                      |                |  |               
|Interest expense                                        |                |  |               
|                                                        |                |  |               
|Earnings (loss) before income taxes                     |                |  |               
|Income tax benefit (provision)                          |                |  |               
|                                                        |                |  |               
|Net earnings (loss)                                     |                |  | $             
|                                                        |                |  |               
|Weighted average number of shares outstanding  basic   |                |  |               
|                                                        |                |  |               
|Weighted average number of shares outstanding  diluted |                |  |               
|                                                        |                |  |               
|Net earnings (loss) per share  basic and diluted       |                |  | $             
|                                                        |                |  |               

See notes to consolidated financial statements (unaudited).

2

### Pathmark Stores, Inc.
Consolidated Balance Sheets(in millions, except share and per share amounts)

|                                                                                                                         | (Unaudited) July 31, 2004 |  | January 31,2004
|------------------------------------------------------------------------------------------------------------------------ | ------------------------- |  | ---------------
|ASSETS                                                                                                                   |                           |  |                
|Current assets                                                                                                           |                           | 
|Cash                                                                                                                     |                           |  | $              
|Accounts receivable, net                                                                                                 |                           |  |                
|Merchandise inventories                                                                                                  |                           |  |                
|Due from suppliers                                                                                                       |                           |  |                
|Other current  assets                                                                                                    |                           |  |                
|                                                                                                                         |                           |  |                
|Total current assets                                                                                                     |                           |  |                
|Property and equipment, net                                                                                              |                           |  |                
|Goodwill                                                                                                                 |                           |  |                
|Other noncurrent assets                                                                                                  |                           |  |                
|                                                                                                                         |                           |  |                
|Total assets                                                                                                             |                           |  | $              
|                                                                                                                         |                           |  |                
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                     |                           | 
|Current liabilities                                                                                                      |                           | 
|Accounts payable                                                                                                         |                           |  | $              
|Current maturities of long-term debt                                                                                     |                           |  |                
|Current portion of lease obligations                                                                                     |                           |  |                
|Accrued expenses and other current liabilities                                                                           |                           |  |                
|                                                                                                                         |                           |  |                
|Total current liabilities                                                                                                |                           |  |                
|Long-term debt                                                                                                           |                           |  |                
|Long-term lease obligations                                                                                              |                           |  |                
|Deferred income taxes                                                                                                    |                           |  |                
|Other noncurrent liabilities                                                                                             |                           |  |                
|                                                                                                                         |                           |  |                
|Total liabilities                                                                                                        |                           |  |                
|                                                                                                                         |                           |  |                
|Stockholders equity                                                                                                     |                           | 
|Preferred stock                                                                                                          |                           |  |                
|Authorized: 5,000,000 shares; no shares issued                                                                           |                           | 
|Common stock, par value $0.01 per share                                                                                  |                           |  |                
|Authorized: 100,000,000 shares; issued: 30,099,510
                      shares at July 31, 2004 and at January 31, 2004 |                           | 
|Common stock warrants                                                                                                    |                           |  |                
|Paid-in capital                                                                                                          |                           |  |                
|Accumulated deficit                                                                                                      |                           |  |                
|Accumulated other comprehensive loss                                                                                     |                           |  |                
|Treasury stock, at cost: 28,318 shares at July 31, 2004 and
                      at January 31, 2004                    |                           |  |                
|                                                                                                                         |                           |  |                
|Total stockholders equity                                                                                               |                           |  |                
|                                                                                                                         |                           |  |                
|Total liabilities and stockholders equity                                                                               |                           |  | $              
|                                                                                                                         |                           |  |                

See notes to consolidated financial statements (unaudited).

3

### Pathmark Stores, Inc.
Consolidated Statements of Cash Flows (Unaudited)(in millions)

|                                                                                       | 26 Weeks Ended
|-------------------------------------------------------------------------------------- | --------------
|
|Operating Activities                                                                   |               
|Net earnings (loss)                                                                    |               
|Adjustments to reconcile net earnings (loss) to cash provided by operating activities: |               
|Depreciation and amortization                                                          |               
|Amortization of deferred financing costs                                               |               
|Gain on sale of real estate                                                            |               
|Deferred income tax provision (benefit)                                                |               
|Cash provided by (used for) operating assets and liabilities:                          |               
|Accounts receivable                                                                    |               
|Merchandise inventories                                                                |               
|Due from suppliers                                                                     |               
|Other current assets                                                                   |               
|Other noncurrent assets                                                                |               
|Accounts payable                                                                       |               
|Accrued interest                                                                       |               
|Other accrued expenses and other current liabilities                                   |               
|Other noncurrent liabilities                                                           |               
|                                                                                       |               
|Cash provided by operating activities                                                  |               
|                                                                                       |               
|Investing Activities                                                                   |               
|Capital expenditures, including technology investments                                 |               
|Acquisition of Community Supermarket Corporation                                       |               
|Proceeds from the sale of real estate                                                  |               
|                                                                                       |               
|Cash used for investing activities                                                     |               
|                                                                                       |               
|Financing Activities                                                                   |               
|Borrowings (repayments) under the working capital facility, net                        |               
|Repayments of capital lease obligations                                                |               
|Repayments of other debt, net                                                          |               
|Repayments of the term loan                                                            |               
|Proceeds from lease financings                                                         |               
|                                                                                       |               
|Cash provided by (used for) financing activities                                       |               
|                                                                                       |               
|Increase in cash                                                                       |               
|Cash at beginning of period                                                            |               
|                                                                                       |               
|Cash at end of period                                                                  |               
|                                                                                       |               
|Supplemental Disclosures of Cash Flow Information                                      |               
|Interest paid                                                                          |               
|                                                                                       |               
|Income taxes paid                                                                      |               
|                                                                                       |               
|Noncash Investing and Financing Activities                                             |               
|Capital lease obligations incurred                                                     |               
|                                                                                       |               

See notes to consolidated financial statements (unaudited).

4

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)

##### Note 1. Significant Accounting Policies

Business.
Pathmark Stores,  Inc. (the "Company" or "Pathmark")  operated 142 supermarkets as of July 31, 2004,
primarily in the New York-New Jersey and Philadelphia metropolitan areas.

Basis of
Presentation. The unaudited consolidated financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission (the SEC). In the opinion of management, the consolidated
financial statements included herein reflect all adjustments which are of a normal and
recurring nature and are necessary to present fairly the results of operations and
financial position of the Company. This report should be read in conjunction with the
audited financial statements and notes thereto included in the Companys Annual
Report on Form 10-K for the year ended January 31, 2004.

Principles of
Consolidation. The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are 100% owned. All intercompany transactions
have been eliminated in consolidation.

##### Note 2. Stock-Based Compensation

The Company accounts for
stock-based compensation plans using the intrinsic value recognition and measurement
principles of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees. Since the exercise price of all stock options granted under the
Companys stock-based compensation plans was equal to the market price of the
underlying common stock on the grant date, no stock-based compensation expense is
recognized in the Companys operating results.

The following pro forma
disclosure illustrates the effect on net earnings (loss) and net earnings (loss) per share
as if the Company had applied the fair value recognition provisions of the Financial Accounting Standards Boards (the FASBs)
Statement of Financial Accounting Standards (SFAS) No. 123, as amended by SFAS No. 148 (in millions, except per share amounts):

|                                                                  | 13 Weeks Ended |  | 26 Weeks Ended
|----------------------------------------------------------------- | -------------- |  | --------------
|
|Net earnings (loss), as reported                                  |                |  | $             
|Less: stock-based compensation expense, net of related tax effect |                |  |               
|                                                                  |                |  |               
|Net earnings (loss), pro forma                                    |                |  | $             
|                                                                  |                |  |               
|Weighted average number of shares outstanding  basic             |                |  |               
|                                                                  |                |  |               
|Weighted average number of shares outstanding  diluted           |                |  |               
|                                                                  |                |  |               
|Net earnings (loss) per share  basic and diluted, as reported    |                |  | $             
|Less: stock-based compensation expense, net of related tax effect |                |  |               
|                                                                  |                |  |               
|Net earnings (loss) per share - basic and diluted, pro forma      |                |  | $             
|                                                                  |                |  |               

5

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 3. Long-Term Debt

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

|                                                          | July 31, 2004 |  | January 31,2004
|--------------------------------------------------------- | ------------- |  | ---------------
|Senior subordinated notes                                 |               |  | $              
|Term loan                                                 |               |  |                
|Working capital facility                                  |               |  |                
|Mortgages                                                 |               |  |                
|Other debt                                                |               |  |                
|                                                          |               |  |                
|Total debt                                                |               |  |                
|Less: current maturities and the working capital facility |               |  |                
|                                                          |               |  |                
|Long-term debt                                            |               |  | $              
|                                                          |               |  |                

The Companys credit
agreement (the Credit Agreement) consists of a term loan and a $175 million
revolving working capital facility (including a maximum of $125 million in letters of
credit).
The Company was in
compliance with all Credit Agreement covenants as of July 31, 2004. Based on managements
operating projections for the second half of fiscal 2004, it is probable that at the
end of the third quarter we will not be in compliance with certain covenants in the Credit Agreement for the
four-fiscal quarters ending October 30, 2004, which would be an Event of Default
under the Credit Agreement. However, one of the lenders in our current bank group has agreed to use
its best efforts to arrange for commitments for a facility to completely refinance
the Credit Agreement on or before October 8, 2004. If we complete our
refinancing by the end of the third quarter of fiscal 2004, we believe that cash
flows generated from operations, supplemented by the availability of capital lease
financing and unused borrowing capacity under a new revolving credit agreement,
would be sufficient to provide for our debt service requirements, working capital needs
and capital expenditure program for the foreseeable future. There can be no
assurance, however, that we will be able to complete our planned refinancing of the Credit Agreement prior
to the end of the third quarter or, if we cannot, that our business will be able to
generate cash flow above current levels sufficient to meet required covenant levels under the Credit Agreement. Should we be unable to
timely complete our planned refinancing, we will initiate discussions with the Credit
Agreement lenders to seek relief in connection with our financial covenants.

The Company has
outstanding $350 million aggregate principal amount of 8.75% Senior Subordinated Notes, due 2012 (the Senior Subordinated Notes)
which pay cash interest semi-annually on February 1 and August 1. The Indenture relating to the Senior Subordinated Notes (the Indenture)
contains a number of restrictive covenants, including a restriction on our ability
to declare cash dividends on our common stock. The Company was in compliance with
all related covenants as of July 31, 2004. An Event of Default under the Credit
Agreement would not constitute an Event of Default under the Indenture unless and
until the Credit Agreement lenders accelerate payment thereunder. There are
no credit agency ratings-related triggers in either the  Credit Agreement or in the
Indenture that would adversely impact the cost of borrowings, annual amortization of principal or
related debt maturities.

6

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 4. Interest Expense

Interest expense is
comprised of the following (in millions):

|                                         | 13 Weeks Ended |  | 26 Weeks Ended
|---------------------------------------- | -------------- |  | --------------
|
|Senior subordinated notes                |                |  | $             
|Term loan                                |                |  |               
|Working capital facility                 |                |  |               
|Mortgages                                |                |  |               
|Lease obligations                        |                |  |               
|Amortization of deferred financing costs |                |  |               
|Other                                    |                |  |               
|                                         |                |  |               
|Interest expense                         |                |  | $             
|                                         |                |  |               

The amortization of deferred
financing costs includes $0.5 million in the 13 weeks and 26 weeks ended August 2, 2003
related to the write-off of deferred financing costs resulting from a prepayment of the
term loan.

##### Note 5. Comprehensive Earnings (Loss)

Comprehensive earnings
(loss) is comprised of the following (in millions):

|                                               | 13 Weeks Ended |  | 26 Weeks Ended
|---------------------------------------------- | -------------- |  | --------------
|
|Net earnings (loss)                            |                |  | $             
|Other comprehensive earnings:                  |                | 
|Unrealized gain on cash flow hedge, net of tax |                |  |               
|                                               |                |  |               
|Comprehensive earnings (loss)                  |                |  | $             
|                                               |                |  |               

##### Note 6. Guarantees

In the normal course of
business, the Company has assigned to third parties various leases related to former
businesses that the Company sold as well as former operating Pathmark supermarkets (the
Assigned Leases). When the Assigned Leases were assigned, the Company
generally remained secondarily liable with respect to these lease obligations. As such, if
any of the assignees were to become unable to continue making payments under the Assigned
Leases, the Company could be required to assume the lease obligation. As of July 31, 2004,
67 Assigned Leases remain in place. Assuming that each respective assignee became unable
to continue to make payments under an Assigned Lease, an event the Company believes to be
remote, management estimates its maximum potential obligation with respect to the Assigned
Leases to be approximately $117.6 million, which could be partially or totally offset by
reassigning or subletting such leases. The Company has recognized a liability on its
consolidated balance sheet as of July 31, 2004 of approximately $2.7 million, which
represents certain guarantees attributable to the Companys secondary liability in
connection with Assigned Leases assigned after December 31, 2002.

7

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 7. Benefits

The Company sponsors a
qualified pension plan and several nonqualified pension plans for its associates as well
as retiree health and life insurance benefits, primarily for union groups and retired
non-union associates. The components of net periodic benefit cost (cost reduction) are as
follows (in millions):

Pension Benefits:

|                                    | 13 Weeks Ended |  | 26 Weeks Ended
|----------------------------------- | -------------- |  | --------------
|
|Service cost                        |                |  | $             
|Interest cost                       |                |  |               
|Expected return on plan assets      |                |  |               
|Amortization of prior service costs |                |  |               
|Amortization of losses              |                |  |               
|Retirement incentive program        |                |  |               
|                                    |                |  |               
|Net periodic benefit cost reduction |                |  | $             
|                                    |                |  |               

Other Postretirement Benefits:

|                             | 13 Weeks Ended |  | 26 Weeks Ended
|---------------------------- | -------------- |  | --------------
|
|Service cost                 |                |  | $             
|Interest cost                |                |  |               
|Amortization of losses       |                |  |               
|Retirement incentive program |                |  |               
|                             |                |  |               
|Net periodic benefit cost    |                |  | $             
|                             |                |  |               

In May 2004, the staff of
the FASB, issued FASB Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure Requirements Related to
the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which
superseded FSP No. FAS 106-1. This FSP provides guidance on the accounting for the effects
of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the
Act). FSP No. FAS 106-1 allowed companies to either assess the effect of the
Act on their retirement-related benefit costs and obligations or to defer accounting for
the effects of the Act until authoritative guidance was issued. The Company elected
to defer any accounting for the effects of the Act pursuant to FSP No. FAS 106-1 and made
that election in its fiscal quarter ended May 1, 2004, the first period in which the
plans accounting for the effects of the Act normally would have been reflected in
the Companys financial statements. The Company and its actuarial advisors determined
that benefits provided by the plan as of the date of enactment were at least actuarially
equivalent to Medicare Part D, and, accordingly, the Company will be entitled to the
federal subsidy. The Company performed a measurement of the effects of the Act on its
accumulated postretirement benefit obligation (APBO) as of January 1, 2004,
the date that followed the enactment of the Act.

8

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 7. Benefits  (Continued)

The Company has
elected to early adopt the provisions of FSP No. FAS 106-2 for its second
quarter ended July 31, 2004, and has incorporated the required disclosure
provisions into its financial statements. The Companys APBO as of the
beginning of this fiscal year decreased by $4.5 million as a result of the Act.
This change in the APBO due to the Act is considered an actuarial gain. In
measuring the $4.5 million APBO impact of the Act, the Company projected that
its prescription drug per capita plan costs would, effective on January 1, 2006,
decrease by 20% on average for members of one of its collective-bargaining units
as a result of the federal subsidy and that the Company would use the federal
subsidy to offset plan costs in order to establish retiree contributions, and
there would be no change in participation rates. In measuring the impact of the
Act, the Company projected that all current and future retirees of one of its
collective-bargaining units would receive prescription drug benefits that are at
least actuarially equivalent (as defined in the Act) to Medicare Part D. The
Company based this on a comparison of the value of the prescription drug plan
(net of retiree contribution) compared to Medicare Part D (net of retiree
premium), using an actuarial model of prescription drug expenses for
employer-sponsored medical plans. The effect of applying FSP No. FAS 106-2 had
no cumulative effect on the Companys retained earnings as of January 31,
2004. Accordingly, in applying the guidance in SFAS No. 3, the Company reported
net periodic benefit costs of $350,000 for the first six months of fiscal 2004
representing half of the $0.7 million annual reduction under the Act. Had the
effect of FSP No. FAS 106-2 been applied retroactively to the beginning of
fiscal 2004, net periodic benefit cost for each of the fiscal quarters ended
July 31, 2004 and May 1, 2004 would have been reduced by $0.2 million.

##### Note 8. Goodwill

On February 20, 2004, the
Company purchased the remaining 67% of the common stock of Community Supermarket
Corporation (CSC) that it did not already own from the other
shareholder for $4.5 million in cash (the Acquisition). As a result
of the Acquisition, the Company owns 100% of CSC. CSC has been a tenant under a
lease for a supermarket in Newark, New Jersey (the Newark Store) and
prior to the acquisition, had retained the Company to manage the supermarket for
it. The Acquisition was accounted for utilizing the purchase method, in which
the purchase price was allocated to the fair value of assets acquired and
liabilities assumed, and resulted in additional goodwill of $4.5 million. The
results of operations of CSC are included in the Companys consolidated
financial statements subsequent to the acquisition date.

##### Note 9. Subsequent Event

On August 1, 2004, the
Company was forced to close its store in Upper Darby, Pennsylvania because of
extensive damage to the store when a creek adjacent to the stores parking
lot overflowed and flooded the store during torrential rains. The Company has
insurance coverage, which the Company expects will fully reimburse it for all
property damage, product loss, incremental expenses and business interruption
incurred during the store closure, less the policys $100,000 deductible.
As such, the Company does not expect the losses resulting from the store closure
to have a material impact on third quarter earnings. The store reopened on
September 3, 2004.

9

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 10. Consolidating Financial Information

The following represents
the consolidating financial statements of Pathmark and its 100% owned guarantor and
nonguarantor subsidiaries. The guarantor subsidiaries are comprised of eight 100% owned
entities, including Pathmarks distribution subsidiary, and guarantee on a full and
unconditional and joint and several basis, the Senior Subordinated Notes. The nonguarantor subsidiaries are comprised
of four 100% owned single-purpose entities. Each of those entities owns the real estate on
which a supermarket leased to Pathmark is located.

|                                             | Pathmark | GuarantorSubsidiaries | Non-GuarantorSubsidiaries | Intercompany Elimination | ConsolidatedTotal
|-------------------------------------------- | -------- | --------------------- | ------------------------- | ------------------------ | -----------------
|
|Consolidating Statements of Operations:      |          |                       |                           |                          |                  
|For the 13 Weeks Ended July 31, 2004         |          |                      
|Sales                                        |          |                       | $                         | 1,011.7                  |                  
|Cost of goods sold                           |          |                       |                           | (725.8                   | )                
|                                             |          |                       |                           |                          |                  
|Gross profit (loss)                          |          |                       |                           | 285.9                    |                  
|Selling, general and administrative expenses |          |                       |                           | (250.6                   | )                
|Depreciation and amortization                |          |                       |                           | (19.6                    | )                
|                                             |          |                       |                           |                          |                  
|Operating earnings (loss)                    |          |                       |                           | 15.7                     |                  
|Interest expense                             |          |                       |                           | (15.7                    | )                
|Equity in loss of subsidiaries               |          |                       |                           | (2.3                     | )                
|                                             |          |                       |                           |                          |                  
|Earnings (loss) before income taxes          |          |                       |                           | (2.3                     | )                
|Income tax benefit                           |          |                       |                           | 0.7                      |                  
|                                             |          |                       |                           |                          |                  
|Net earnings (loss)                          |          |                       | $                         | (1.6                     | )                
|                                             |          |                       |                           |                          |                  
|                                            
|For the 13 Weeks Ended August 2, 2003        |          |                      
|Sales                                        |          |                       | $                         | 995.6                    |                  
|Cost of goods sold                           |          |                       |                           | (711.6                   | )                
|                                             |          |                       |                           |                          |                  
|Gross profit (loss)                          |          |                       |                           | 284.0                    |                  
|Selling, general and administrative expenses |          |                       |                           | (234.7                   | )                
|Depreciation and amortization                |          |                       |                           | (19.0                    | )                
|                                             |          |                       |                           |                          |                  
|Operating earnings (loss)                    |          |                       |                           | 30.3                     |                  
|Interest expense                             |          |                       |                           | (16.9                    | )                
|Equity in loss of subsidiaries               |          |                       |                           | (3.0                     | )                
|                                             |          |                       |                           |                          |                  
|Earnings (loss) before income taxes          |          |                       |                           | 10.4                     |                  
|Income tax provision                         |          |                       |                           | (4.2                     | )                
|                                             |          |                       |                           |                          |                  
|Net earnings (loss)                          |          |                       | $                         | 6.2                      |                  
|                                             |          |                       |                           |                          |                  

10

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 10. Consolidating Financial Information  (Continued)

|                                                    | Pathmark | GuarantorSubsidiaries | Non-GuarantorSubsidiaries | Intercompany Elimination | ConsolidatedTotal
|--------------------------------------------------- | -------- | --------------------- | ------------------------- | ------------------------ | -----------------
|
|Consolidating Statements of Operations (Continued): |          |                       |                           |                          |                  
|For the 26 Weeks Ended July 31, 2004                |          |                      
|Sales                                               |          |                       | $                         | 2,001.8                  |                  
|Cost of goods sold                                  |          |                       |                           | (1,437.2                 | )                
|                                                    |          |                       |                           |                          |                  
|Gross profit (loss)                                 |          |                       |                           | 564.6                    |                  
|Selling, general and administrative expenses        |          |                       |                           | (497.7                   | )                
|Depreciation and amortization                       |          |                       |                           | (38.9                    | )                
|                                                    |          |                       |                           |                          |                  
|Operating earnings (loss)                           |          |                       |                           | 28.0                     |                  
|Interest expense                                    |          |                       |                           | (31.6                    | )                
|Equity in loss of subsidiaries                      |          |                       |                           | (1.9                     | )                
|                                                    |          |                       |                           |                          |                  
|Earnings (loss) before income taxes                 |          |                       |                           | (5.5                     | )                
|Income tax benefit                                  |          |                       |                           | 2.1                      |                  
|                                                    |          |                       |                           |                          |                  
|Net earnings (loss)                                 |          |                       | $                         | (3.4                     | )                
|                                                    |          |                       |                           |                          |                  
|                                                   
|For the 26 Weeks Ended August 2, 2003               |          |                      
|Sales                                               |          |                       | $                         | 2,000.3                  |                  
|Cost of goods sold                                  |          |                       |                           | (1,428.0                 | )                
|                                                    |          |                       |                           |                          |                  
|Gross profit (loss)                                 |          |                       |                           | 572.3                    |                  
|Selling, general and administrative expenses        |          |                       |                           | (483.1                   | )                
|Depreciation and amortization                       |          |                       |                           | (38.0                    | )                
|                                                    |          |                       |                           |                          |                  
|Operating earnings (loss)                           |          |                       |                           | 51.2                     |                  
|Interest expense                                    |          |                       |                           | (33.2                    | )                
|Equity in loss of subsidiaries                      |          |                       |                           | (6.1                     | )                
|                                                    |          |                       |                           |                          |                  
|Earnings (loss) before income taxes                 |          |                       |                           | 11.9                     |                  
|Income tax provision                                |          |                       |                           | (4.8                     | )                
|                                                    |          |                       |                           |                          |                  
|Net earnings (loss)                                 |          |                       | $                         | 7.1                      |                  
|                                                    |          |                       |                           |                          |                  

11

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 10. Consolidating Financial Information  (Continued)

|                                           | Pathmark | GuarantorSubsidiaries | Non-GuarantorSubsidiaries | Intercompany Elimination | ConsolidatedTotal
|------------------------------------------ | -------- | --------------------- | ------------------------- | ------------------------ | -----------------
|
|Consolidating Balance Sheets:              |          |                       |                           |                          |                  
|As of July 31, 2004                        |          |                      
|Merchandise inventories                    |          |                       | $                         | 168.9                    |                  
|Other current assets                       |          |                       |                           | 119.1                    |                  
|                                           |          |                       |                           |                          |                  
|Total current assets                       |          |                       |                           | 288.0                    |                  
|Property and equipment, net                |          |                       |                           | 499.0                    |                  
|Goodwill                                   |          |                       |                           | 438.5                    |                  
|Investment in subsidiaries                 |          |                       |                           | 56.3                     |                  
|Other noncurrent assets                    |          |                       |                           | 184.6                    |                  
|                                           |          |                       |                           |                          |                  
|Total assets                               |          |                       | $                         | 1,466.4                  |                  
|                                           |          |                       |                           |                          |                  
|Accounts payable                           |          |                       | $                         | 76.1                     |                  
|Other current liabilities                  |          |                       |                           | 186.7                    |                  
|                                           |          |                       |                           |                          |                  
|Total current liabilities                  |          |                       |                           | 262.8                    |                  
|Long-term debt                             |          |                       |                           | 400.1                    |                  
|Long-term lease obligations                |          |                       |                           | 176.0                    |                  
|Other noncurrent liabilities               |          |                       |                           | 256.4                    |                  
|                                           |          |                       |                           |                          |                  
|Total liabilities                          |          |                       |                           | 1,095.3                  |                  
|Stockholders equity                       |          |                       |                           | 371.1                    |                  
|                                           |          |                       |                           |                          |                  
|Total liabilities and stockholders equity |          |                       | $                         | 1,466.4                  |                  
|                                           |          |                       |                           |                          |                  
|                                          
|As of January 31, 2004                     |          |                      
|Merchandise inventories                    |          |                       | $                         | 163.5                    |                  
|Other current assets                       |          |                       |                           | 141.5                    |                  
|                                           |          |                       |                           |                          |                  
|Total current assets                       |          |                       |                           | 305.0                    |                  
|Property and equipment, net                |          |                       |                           | 496.1                    |                  
|Goodwill                                   |          |                       |                           | 434.0                    |                  
|Investment in subsidiaries                 |          |                       |                           | 58.2                     |                  
|Other noncurrent assets                    |          |                       |                           | 171.1                    |                  
|                                           |          |                       |                           |                          |                  
|Total assets                               |          |                       | $                         | 1,464.4                  |                  
|                                           |          |                       |                           |                          |                  
|Accounts payable                           |          |                       | $                         | 80.0                     |                  
|Other current liabilities                  |          |                       |                           | 168.6                    |                  
|                                           |          |                       |                           |                          |                  
|Total current liabilities                  |          |                       |                           | 248.6                    |                  
|Long-term debt                             |          |                       |                           | 400.4                    |                  
|Long-term lease obligations                |          |                       |                           | 176.1                    |                  
|Other noncurrent liabilities               |          |                       |                           | 264.5                    |                  
|                                           |          |                       |                           |                          |                  
|Total liabilities                          |          |                       |                           | 1,089.6                  |                  
|Stockholders equity                       |          |                       |                           | 374.8                    |                  
|                                           |          |                       |                           |                          |                  
|Total liabilities and stockholders equity |          |                       | $                         | 1,464.4                  |                  
|                                           |          |                       |                           |                          |                  

12

### Pathmark Stores, Inc.
Notes to Consolidated Financial Statements (Unaudited)  (Continued)

##### Note 10. Consolidating Financial Information  (Continued)

|                                                       | Pathmark | GuarantorSubsidiaries | Non-GuarantorSubsidiaries | Intercompany Elimination | ConsolidatedTotal
|------------------------------------------------------ | -------- | --------------------- | ------------------------- | ------------------------ | -----------------
|
|Consolidating Cash Flow Statements:                    |          |                       |                           |                          |                  
|For the 26 Weeks Ended July 31, 2004                   |          |                      
|Operating Activities                                   |          |                      
|Cash provided by operating activities                  |          |                       | $                         | 33.9                     |                  
|                                                       |          |                       |                           |                          |                  
|Investing Activities                                   |          |                      
|Capital expenditures, including technology investments |          |                       |                           | (43.5                    | )                
|Acquisition of Community Supermarket Corporation       |          |                       |                           | (4.5                     | )                
|Proceeds from sale of real estate                      |          |                       |                           | 2.5                      |                  
|                                                       |          |                       |                           |                          |                  
|Cash used for investing activities                     |          |                       |                           | (45.5                    | )                
|                                                       |          |                       |                           |                          |                  
|Financing Activities                                   |          |                      
|Borrowings under the working capital facility, net     |          |                       |                           | 21.1                     |                  
|Repayments of capital lease obligations                |          |                       |                           | (5.6                     | )                
|Repayments of other debt, net                          |          |                       |                           | (1.8                     | )                
|Repayments of the term loan                            |          |                       |                           | (0.1                     | )                
|Intercompany equity transactions                       |          |                       |                           | (0.3                     | )                
|                                                       |          |                       |                           |                          |                  
|Cash provided by (used for) financing activities       |          |                       |                           | 13.3                     |                  
|                                                       |          |                       |                           |                          |                  
|Increase in cash                                       |          |                       |                           | 1.7                      |                  
|Cash at beginning at period                            |          |                       |                           | 8.7                      |                  
|                                                       |          |                       |                           |                          |                  
|Cash at end of period                                  |          |                       | $                         | 10.4                     |                  
|                                                       |          |                       |                           |                          |                  
|                                                      
|For the 26 Weeks Ended August 2, 2003                  |          |                      
|Operating Activities                                   |          |                      
|Cash provided by operating activities                  |          |                       | $                         | 36.7                     |                  
|                                                       |          |                       |                           |                          |                  
|Investing Activities                                   |          |                      
|Capital expenditures, including technology investments |          |                       |                           | (25.4                    | )                
|Proceeds from sale of real estate                      |          |                       |                           | 17.3                     |                  
|                                                       |          |                       |                           |                          |                  
|Cash used for investing activities                     |          |                       |                           | (8.1                     | )                
|                                                       |          |                       |                           |                          |                  
|Financing Activities                                   |          |                      
|Repayments of the term loan                            |          |                       |                           | (18.4                    | )                
|Decrease in capital lease obligations                  |          |                       |                           | (8.9                     | )                
|Borrowings under lease financings                      |          |                       |                           | 1.8                      |                  
|Repayments under the working capital facility, net     |          |                       |                           | (1.0                     | )                
|Repayments of other debt                               |          |                       |                           | (0.3                     | )                
|Intercompany equity transactions                       |          |                       |                           | 0.6                      |                  
|                                                       |          |                       |                           |                          |                  
|Cash used for financing activities                     |          |                       |                           | (26.2                    | )                
|                                                       |          |                       |                           |                          |                  
|Increase in cash                                       |          |                       |                           | 2.4                      |                  
|Cash at beginning at period                            |          |                       |                           | 11.0                     |                  
|                                                       |          |                       |                           |                          |                  
|Cash at end of period                                  |          |                       | $                         | 13.4                     |                  
|                                                       |          |                       |                           |                          |                  

13

### Pathmark Stores, Inc.

#### Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

##### Results of Operations

The following table sets forth selected consolidated statements of operations data (dollars in millions):

|                                                 | 13 Weeks Ended | 26 Weeks Ended
|------------------------------------------------ | -------------- | --------------
|                                                 |                |               
|                                                 |                |               
|Sales                                            |                |               
|                                                 |                |               
|Gross profit                                     |                |               
|Selling, general and administrative     expenses |                |               
|Depreciation and amortization                    |                |               
|                                                 |                |               
|Operating earnings                               |                |               
|Interest expense                                 |                |               
|                                                 |                |               
|Earnings (loss) before income taxes              |                |               
|Income tax benefit (provision)                   |                |               
|                                                 |                |               
|Net earnings (loss)                              |                |               
|                                                 |                |               
|LIFO charge                                      |                |               
|                                                 |                |               

Sales.
Sales in the second quarter of fiscal 2004 were $1,011.7 million, up 1.6% from
$995.6 million in the second quarter of fiscal 2003. The sales increase in the
second quarter of fiscal 2004 was primarily due to a 1.3% increase in same-store
sales (stores open the entire second quarter in both fiscal 2004 and fiscal
2003, including replacement stores and enlargements) and new stores, partially
offset by closed stores. We saw weakening in consumer demand and in our
operating performance in the second half of the second quarter. We believe
same-store sales in the second quarter of fiscal 2004 benefited from increased
promotional spending, offsetting the 1.4% same-store sales decrease in the first
quarter of fiscal 2004. Sales in the first six months of fiscal 2004 were
$2,001.8 million, up 0.1% from $2,000.3 million in the first six months of
fiscal 2003. The sales increase in the first six months of fiscal 2004 was
primarily due to new stores, partially offset by a 0.1% decrease in same-store
sales and by closed stores. The Company operated 142 stores and 143 stores at
the end of the second quarters of fiscal 2004 and fiscal 2003, respectively.

Gross Profit. Gross
profit represents the difference between sales and cost of goods sold, which
includes the cost of inventory sold and the related purchase and distribution
costs, net of vendor allowances and rebates. Gross profit in the second quarter
of fiscal 2004 was $283.7 million or 28.0% of sales compared to $281.7 million
or 28.3% of sales in the second quarter of fiscal 2003. Gross profit in the
first six months of fiscal 2004 was $563.1 million or 28.1% of sales compared to
$567.5 million or 28.4% of sales in the first six months of fiscal 2003. The
decrease in gross profit margin in the second quarter and first six months of
fiscal 2004 was primarily due to the inability to pass on the full cost of
increases in wholesale prices as well as increased promotional spending.

Selling, General and
Administrative Expenses (SG&A). SG&A in the second
quarter of fiscal 2004 was $248.2 million or 24.5% of sales compared to $232.5
million or 23.3% of sales in the second quarter of fiscal 2003. SG&A in the
second quarter of fiscal 2003 included a $12.1 million gain from the disposition
of real estate, partially offset by a $3.0 million charge related to a labor
buyout program in some of our stores and a headcount reduction program in our
corporate office. Excluding the net gain of $9.1 million in the second quarter
of fiscal 2003, SG&A in the second quarter of fiscal 2004 increased by $6.6
million compared to the second quarter of fiscal 2003 primarily due to higher
payroll, health and welfare and pension expenses, partially offset by lower
self-insured liability costs. SG&A in the first six months of fiscal 2004
was $492.8 million or 24.6% of sales compared to $478.7 million or 23.9% of
sales in the first six months of fiscal 2003. SG&A in the first six months
of fiscal 2004 included a $1.2 million gain from the disposition of real estate.
SG&A in the first six months of fiscal 2003 included a $13.7 million gain
from the disposition of real estate, partially offset by a $8.1 million charge
related to a labor buyout program in some of our stores and a headcount
reduction program in our corporate office. Excluding the net gains of $1.2
million and $5.6 million in the first six months of fiscal 2004 and 2003,
respectively, SG&A in the first six months of fiscal 2004 increased by $9.7
million compared to the first six months of fiscal 2003 primarily due to higher
payroll, health and welfare and pension expenses, partially offset by lower
self-insured liability and snow removal costs.

14

### Pathmark Stores, Inc.

Depreciation and
Amortization. Depreciation and amortization in the second quarter of fiscal 2004 were
$21.5 million compared to $21.3 million in the second quarter of fiscal 2003. Depreciation
and amortization in the first six months of fiscal 2004 were $43.0 million compared to
$42.5 million in the first six months of fiscal 2003. The increase in depreciation and
amortization in the second quarter and the first six months of fiscal 2004 was primarily
due to an increase in related property and equipment.

Operating Earnings.
Operating earnings in the second quarter of fiscal 2004 were $14.0 million
compared to $27.9 million in the second quarter of fiscal 2003. Operating
earnings in the first six months of fiscal 2004 were $27.3 million compared to
$46.3 million in the first six months of fiscal 2003. The decrease in operating
earnings in the second quarter of fiscal 2004 was primarily due to higher SG&A.
SG&A in the second quarter of fiscal 2003 included a $12.1 million real estate
gain, partially offset by a $3.0 million labor buyout and headcount reduction
charge. The decrease in operating earnings in the first six months of fiscal
2004 was primarily due to higher SG&A. SG&A in the first six months of 2003
included a $13.7 million real estate gain, partially offset by a $8.1 million
labor buyout and headcount reduction charge.

Interest
Expense. Interest expense was $16.3 million in the second quarter of fiscal
2004 compared to $17.5 million in the second quarter of fiscal 2003. Interest
expense in the first six months of fiscal 2004 was $32.8 million compared to
$34.4 million in the first six months of fiscal 2003. The decrease in interest
expense in the second quarter and the first six months of fiscal 2004 was
primarily due to lower interest rates; interest expense in the second quarter
and first six months of fiscal 2003 included $0.5 million related to the
write-off of deferred financing costs resulting from the repayment of the term
loan.

Income Tax Benefit (Provision).
The income tax benefits of $0.7 million in the second quarter of fiscal 2004 and
$2.1 million in the first six months of fiscal 2004 reflect a provision for
certain state taxes and a change in our estimated effective annual income tax
rate recorded in the second quarter of fiscal 2004. As a result, the effective
tax rates for the second quarter and first six months of fiscal 2004 were
approximately 30.0% and 38.0%, respectively. The income tax provisions of $4.2
million and $4.8 million, respectively, in the second quarter and first six
months of fiscal 2003 were based on an effective income tax rate of 40.3% for
the full fiscal year. The fiscal 2003 income tax provisions were net of the Work
Opportunity Tax Credit (WOTC), which expired on December 31, 2003.
Legislation is pending to reinstate the WOTC retroactive to the beginning of 2004.

Summary of
Operations. The net loss was $1.6 million in the second quarter of fiscal
2004 compared to net earnings of $6.2 million in the second quarter of fiscal
2003. The net loss in the first six months of fiscal 2004 was $3.4 million
compared to net earnings of $7.1 million in the first six months of fiscal 2003.
The decrease in net earnings in the second quarter and the first six months of
fiscal 2004 was primarily due to a decrease in operating earnings, partially
offset by lower interest expenses and lower income tax provisions.

##### Liquidity and Capital Resources

Cash Flows.  The following table sets forth certain
consolidated statements of cash flow data (in millions):

|                             | 26 Weeks Ended
|---------------------------- | --------------
|
|Cash provided by (used for): |               
|Operating activities         |               
|Investing activities         |               
|Financing activities         |               

15

### Pathmark Stores, Inc.

The decrease in cash
provided by operating activities was primarily due to lower earnings and less
cash provided by operating assets and liabilities, partially offset by lower
cash interest payments due to the timing of the cash interest payments under the
Senior Subordinated Notes as compared to the term loan; in fiscal 2003, the
Company issued $150 million of Senior Subordinated Notes and repaid the $150
million of the term loan. The increase in cash used for investing activities was
due to higher capital expenditures and the acquisition of CSC, partially offset
by lower proceeds from the sale of real estate. The increase in cash provided by
financing activities in fiscal 2004 was primarily due to increased borrowings
under the working capital facility; fiscal 2003 included an $18.0 million
prepayment of the term loan.

Debt Service and Liquidity. The Companys
Credit Agreement consists of a term loan (the Term Loan) and a $175
million revolving working capital facility (the Working Capital
Facility) (including a maximum of $125 million in letters of credit). As
of July 31, 2004, borrowings under the Term Loan and the Working Capital
Facility were $45.7 million and $25.6 million, respectively and outstanding
letters of credit were $58.2 million. The Credit Agreement contains certain
covenants which, among other things, place limits on the incurrence of
additional indebtedness, issuance of cash-pay preferred stock, repurchase of
Company stock, incurrence of liens, sale-leaseback transactions, hedging
activities, sale or discount of receivables, investments, loans, advances,
guarantees with affiliates, asset sales, acquisitions, capital expenditures,
mergers and consolidations, changing lines of business, repayments of other
indebtedness, amendments to organizational documents and other matters
customarily restricted in such agreements. In addition, the Credit Agreement
prohibits the payment of cash dividends. The Credit Agreement also contains
certain financial maintenance covenants. The Credit Agreement contains customary
events of default, including without limitation, payment defaults, material
breaches of representations, warranties and covenants, certain events of
bankruptcy and insolvency, and a change of control.

We were in compliance with
all Credit Agreement covenants as of July 31, 2004. Based on managements
operating projections for the second half of fiscal 2004, it is probable that at
the end of the third quarter we will not be in compliance with certain covenants
in the Credit Agreement for the four-fiscal quarters ending October 30, 2004,
which would be an Event of Default under the Credit Agreement. However, one of
the lenders in our existing bank group has agreed to use its best efforts to
arrange for commitments for a facility to completely refinance the Credit
Agreement on or before October 8, 2004. If we complete our refinancing by the
end of the third quarter of fiscal 2004, we believe that cash flows generated
from operations, supplemented by the availability of capital lease financing and
unused borrowing capacity under a new revolving credit agreement, would be
sufficient to provide for our debt service requirements, working capital needs
and capital expenditure program for the foreseeable future. There can be no
assurance, however, that we will be able to complete our planned refinancing
of the Credit Agreement prior to the end of the third quarter or, if we cannot, that our business will
be able to generate cash flow above current levels sufficient to meet required
covenant levels under the Credit Agreement. Should we be unable to timely
complete our planned refinancing, we will initiate discussions with the Credit
Agreement lenders to seek relief in connection with our financial covenants.
There are no credit agency ratings-related triggers in either the Credit
Agreement or in the Indenture relating to the Senior Subordinated Notes that
would adversely impact the cost of borrowings, annual amortization of principal
or related debt maturities.

Borrowings under the Credit
Agreement bear interest at floating rates equal to LIBOR plus an applicable
margin, subject to decrease, depending on the total debt to consolidated EBITDA
ratio. Borrowings under the Working Capital Facility and the Term Loan bear
interest at rates of LIBOR + 3.5% and LIBOR + 4.5%, respectively. We are
required to repay a portion of the borrowing under the Term Loan each year, so
as to retire such indebtedness in its entirety by July 15, 2007. The Working
Capital Facility expires on July 15, 2005. The weighted-average interest rate in
effect on all borrowings under the Term Loan was 5.7% during the first six
months of fiscal 2004.

16

### Pathmark Stores, Inc.

As of July 31, 2004, our remaining Term Loan balance was payable as follows (in millions):

| | Fiscal Years | PrincipalPayments
| | ------------ | -----------------
|
| | 2004         |                  
| | 2005         |                  
| | 2006         |                  
| | 2007         |                  
| |              |                  
| | Total        |                  
| |              |                  

All of the obligations
under the Credit Agreement are guaranteed by the Companys 100% owned
subsidiaries, except our nonguarantor subsidiaries, which are comprised of four
100% owned and consolidated single-purpose entities. Each of these
single-purpose entities owns the real estate on which a supermarket leased to
Pathmark is located. The obligations under the Credit Agreement and those of the
subsidiaries guaranteeing the Credit Agreement are secured by substantially all
of the Companys tangible and intangible assets including, without
limitation, intellectual property, real property, including leasehold interests,
and the capital stock in each of these subsidiaries.

We have outstanding $350
million aggregate principal amount of Senior Subordinated Notes which pay cash
interest semi-annually on February 1 and August 1. The Indenture contains a
number of restrictive covenants, including a restriction on our ability to
declare cash dividends on our common stock. We were in compliance with all
Senior Subordinated Notes covenants as of July 31, 2004. An Event of Default
under the Credit Agreement would not constitute an Event of Default under the
Indenture unless and until the Credit Agreement lenders accelerate payment
thereunder.

Capital
Expenditures. Capital expenditures in the second quarter of fiscal 2004,
including property acquired under capital leases and technology investments,
were $29.1 million compared to $17.8 million in the second quarter of fiscal
2003. Total investments in the first six months of fiscal 2004 were $64.5
million, which were comprised of capital expenditures of $44.9 million, the
Acquisition for $4.5 million and capital leases of $15.1 million compared to
capital expenditures of $30.8 million in the first six months of fiscal 2003.
During the first six months of fiscal 2004, we acquired the Newark Store, opened
one new store, renovated ten stores and closed two stores, one of which was
operated by a joint venture. During the remainder of fiscal 2004, we expect to
complete ten store renovations. Capital expenditures for fiscal 2004, including
property acquired under capital leases, the Acquisition and technology
investments, are expected to be approximately $105 million.

##### Critical Accounting Policies

Our discussion of results
of operations and financial condition relies on our consolidated financial
statements that are prepared based on certain critical accounting policies that
require management to make judgments and estimates that are subject to varying
degrees of uncertainty. We believe that investors need to be aware of these
policies and how they impact our financial statements as a whole, as well as our
related discussion and analysis presented herein. While we believe that these
accounting policies are based on sound measurement criteria, actual future
events can and often do result in outcomes that can be materially different from
these estimates or forecasts. The accounting policies and related risk described
in our Annual Report on Form 10-K for the year ended January 31, 2004 are those
that depend most heavily on these judgments and estimates. As of July 31, 2004,
there have been no material changes to any of the critical accounting policies
contained therein.

17

### Pathmark Stores, Inc.

##### New Accounting Pronouncements

In December 2003, the FASB
issued SFAS No. 132 (revised 2003), Employers Disclosure about
Pensions and Other Postretirement Benefit, an amendment of SFAS No. 87, 88 and
106. This statement revises employers disclosures about pension
plans and other postretirement benefit plans. It requires additional disclosures
to those in the original SFAS No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits, which it replaces, about the
assets, obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans. Effective
with fiscal 2003 year-end reporting, the required information was provided
separately for pension plans and for other postretirement benefit plans.
Effective with fiscal 2004 quarterly reporting, the required information was
provided separately for pension plans and for other postretirement benefit
plans. The adoption of SFAS No. 132 (revised 2003) did not have an impact on our
financial position or results of operations.

In May 2004, the staff
of the FASB issued FSP No. FAS 106-2, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, which superseded FSP No. FAS 106-1. This FSP
provides guidance on the accounting for the effects of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (the Act). FSP No.
FAS 106-1 allowed companies to either assess the effect of the Act on their
retirement-related benefit costs and obligations or to defer accounting for the
effects of the Act until authoritative guidance was issued. We elected to defer
any accounting for the effects of the Act pursuant to FSP No. FAS 106-1 and made
that election in our fiscal quarter ended May 1, 2004, the first period in which
the plans accounting for the effects of the Act normally would have been
reflected in our financial statements. We and our actuarial advisors determined
that benefits provided by the plan as of the date of enactment were at least
actuarially equivalent to Medicare Part D, and, accordingly, we will be entitled
to the federal subsidy. We performed a measurement of the effects of the Act on
our APBO as of January 1, 2004, the date that followed the enactment of the Act.
We have elected to early adopt the provisions of FSP No. FAS 106-2 for our
second quarter ended July 31, 2004, and have incorporated the required
disclosure provisions into our financial statements (see Note 7,
Benefits). Our APBO as of the beginning of this fiscal year
decreased by $4.5 million as a result of the Act. This change in the APBO due to
the Act is considered an actuarial gain. In measuring the $4.5 million APBO
impact of the Act, we projected that our prescription drug per capita plan costs
would, effective on January 1, 2006, decrease by 20% on average for members of
one of our collective-bargaining units as a result of the federal subsidy and
that we would use the federal subsidy to offset plan costs in order to establish
retiree contributions, and there would be no change in participation rates. In
measuring the impact of the Act, we projected that all current and future
retirees of one of our collective-bargaining units would receive prescription
drug benefits that are at least actuarially equivalent (as defined in the Act)
to Medicare Part D. We based this on a comparison of the value of the
prescription drug plan (net of retiree contribution) compared to Medicare Part D
(net of retiree premium), using an actuarial model of prescription drug expenses
for employer-sponsored medical plans. The effect of applying FSP No. FAS 106-2
had no cumulative effect on our retained earnings as of January 31, 2004.
Accordingly, in applying the guidance in SFAS No. 3, we reported net periodic
benefit costs of $350,000 for the first six months of fiscal 2004 representing
half of the $0.7 million annual reduction under the Act. Had the effect of FSP
No. FAS 106-2 been applied retroactively to the beginning of fiscal 2004, net
periodic benefit cost for each of the fiscal quarters ended July 31, 2004 and
May 1, 2004 would have been reduced by $0.2 million.

##### Forward-Looking Information

This report and the
documents incorporated by reference into this report contain both historical and
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements appear in a
number of places in this report and include statements regarding our intent,
belief and current expectations with respect to, among other things, capital
expenditures and technology initiatives, the ability to borrow funds under our
credit facilities, the ability to successfully implement our operating
strategies, including trends affecting our business, financial condition and
results of operations. The words anticipate, believe,
expect, forecast, guidance,
intend, may, plan, project,
will and other similar expressions generally identify
forward-looking statements. While these forward-looking statements and the
related assumptions are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein. These statements are based upon a
number of assumptions and estimates which are inherently subject to significant
uncertainties and contingencies, many of which are beyond our control and
reflect future business decisions which are subject to change. Some of these
assumptions inevitably will not materialize, and unanticipated events will occur
which will affect our results.

18

### Pathmark Stores, Inc.

Some important factors (but
not necessarily all factors) that could negatively affect our revenues, growth strategies,
future profitability and operating results, or that otherwise could cause actual results
to differ materially from those expressed in or implied by any forward-looking statement,
include the following:

- changes in business and economic conditions and other adverse conditions in our
markets;
- unanticipated environmental damages;
- increased competition;
- increased labor and labor related (e.g., health and welfare  and pension) costs
and/or labor disruptions;
- reliance on third-party suppliers;
- our ability to successfully implement our operating,  marketing, renovation and
expansion strategies; and
- natural disasters.

For a discussion of these
factors, see Item 1  Business  Factors Affecting Our Business and Prospects in
our Annual Report on Form 10-K for the year ended January 31, 2004.

#### Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our financial results are
subject to risk from interest rate fluctuations on debt which carries variable interest
rates. Variable rate debt outstanding under our Term Loan was $45.7 million on July 31,
2004. The interest rate in effect on all borrowings under our Term Loan was 5.7% during
the first six months of fiscal 2004. A 1% change in interest rates applied to the $45.7
million balance of floating-rate Term Loan debt would affect pre-tax annual results of
operations by approximately $0.5 million. Our Senior Subordinated Notes bear interest at a
fixed rate of 8.75%, and are, therefore, not subject to risk from interest rate
fluctuations. The principal objective of our investment management activities is to
maintain acceptable levels of interest rate and liquidity risk to facilitate our funding
needs. As part of our risk management, we may use derivative financial products such as
interest rate hedges and interest rate swaps in the future.

#### Item 4. Controls and Procedures.

The Companys management, with the participation of
the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Companys disclosure controls and procedures pursuant to Rule
13a-15(b) of the Exchange Act as of July 31, 2004. Based on that evaluation, the
Companys Chief Executive Officer and Chief Financial Officer have concluded that, as
of July 31, 2004, the Companys disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company required to be
included in the Companys Exchange Act reports.

There has been no change during the Companys fiscal
quarter ended July 31, 2004 in the Companys internal controls over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, the
Companys internal controls over financing reporting.

19

### Pathmark Stores, Inc.

### Part II. Other Information

#### Item 4. Submission of Matters to a Vote of Security Holders.



|(a) | The
Company held its Annual Meeting of Shareholders on June 11, 2004.
|--- | ---------------------------------------------------------------------



|(b) | Results
of votes of security holders.
|--- | -------------------------------------



| | (1) | Election of Directors | For        | Withheld
| | --- | --------------------- | ---------- | --------
|
| |     | William J. Begley     | 26,805,112 | 354,352 
|
| |     | Daniel H. Fitzgerald  | 26,542,089 | 617,375 
|
| |     | Eugene M. Freedman    | 26,534,871 | 624,593 
|
| |     | Bruce Hartman         | 26,809,370 | 350,094 
|
| |     | James L. Moody, Jr.   | 26,810,131 | 349,333 
|
| |     | Eileen R. Scott       | 26,698,168 | 461,296 
|
| |     | Frank G. Vitrano      | 26,664,322 | 495,142 



| | (2) | Ratification of Deloitte & Touche LLP as independent auditors for fiscal 2004:
| | --- | ------------------------------------------------------------------------------



| |  | For        | Against | Abstained
| |  | ---------- | ------- | ---------
|
| |  | 26,500,359 | 644,716 | 14,389   

#### Item 6.   Exhibits and Reports on Form 8-K.



|1) | Exhibits:
|-- | ---------



| | 31.1: | Certification
of Eileen R. Scott, under Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
| | ----- | ------------------------------------------------------------------------------------------------------



| | 31.2: | Certification
of Frank G. Vitrano, under Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
| | ----- | -------------------------------------------------------------------------------------------------------



| | 32.1: | Certification
of Eileen R. Scott, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed herewith.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | 32.2: | Certification
of Frank G. Vitrano, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed herewith.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



|2) | Reports on Form 8-K:
|-- | --------------------



| | On
May 12, 2004, we furnished a Current Report on Form 8-K to the SEC under Item 12
containing our press  release dated May 12, 2004, attached thereto as Exhibit 99.1
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | On
June 3, 2004, we furnished a Current Report on Form 8-K to the SEC under Item 12
containing our press  release dated June 3, 2004, attached thereto as Exhibit 99.1.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

### Pathmark Stores, Inc.

### Signatures

Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

| |  | Pathmark Stores, Inc.
| |  | ---------------------
|
| |  | By:                  
|
| |  | By:                  

Date: September 9, 2004

21