**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

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

 

**For thequarterly period ended April 29, 2006**

 

**OR**

 

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

 

**For the Transition Periodfrom                        to                        **

 

**Commission file number: 0-8858**

 

**THE PENN TRAFFIC COMPANY**

(Exact name of registrant as specified in its charter)

 

| **Delaware**              | ** ** | **25-0716800**                     |
|---------------------------|------------|------------------------------------|
| (State of  incorporation) |       | (IRS Employer  Identification No.) |

 

| **1200  State Fair Blvd., Syracuse, New York 13221-4737** | ** ** | **(315)  453-7284** |
|-----------------------------------------------------------|------------|---------------------|
| (Address of  principal executive offices)                 |       | (Telephone  Number) |

 

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

YES   o               NO   x

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o                       |   | Accelerated filer x         |
|-------------------------------------------------|--------|-----------------------------|
|                                            |   |                        |
| Non-accelerated filer o                         |   | Smaller reporting company o |
| (Do not check if a smaller reporting   company) |   |                        |

 

Indicated by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

YES   o               NO   x

 

Indicate by check markwhether the registrant has filed all documents and reports required to be filedby Section 12, 13 or 15(d) of the Securities Exchange Act of 1934subsequent to the distribution of securities under a plan confirmed by a court.    YES   o               NO   x

 

Common Stock, par value$.01 per share:  8,336,192 sharesoutstanding as of May 14, 2008

 

 

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**FORM 10-QINDEX**

 
| ** **        | ** ** | ** **                                                                                  | **PAGE** |
|-------------------|------------|---------------------------------------------------------------------------------------------|----------|
|              |       |                                                                                        |     |
| **PART I.**  |       |
|              |       |                                                                                        |     |
| Item              | 1.         | Financial  Statements                                                                       | 4        |
|              |       |                                                                                        |     |
| Item              | 2.         | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 15       |
|              |       |                                                                                        |     |
| Item              | 3.         | Quantitative  and Qualitative Disclosures About Market Risk                                 | 18       |
|              |       |                                                                                        |     |
| Item              | 4.         | Controls and Procedures                                                                     | 18       |
|              |       |                                                                                        |     |
| **PART II.** |       |
|              |       |                                                                                        |     |
| Item              | 1.         | Legal Proceedings                                                                           | 19       |
|              |       |                                                                                        |     |
| Item              | 1A.        | Risk Factors                                                                                | 19       |
|              |       |                                                                                        |     |
| Item              | 4.         | Submission  of Matters to a Vote of Security Holders                                        | 19       |
|              |       |                                                                                        |     |
| Item              | 6.         | Exhibits                                                                                    | 19       |

 

2

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

 

Certainstatements included in this Form 10-Q, including without limitation,statements included in Item 2 - “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations,” which are not statements ofhistorical fact, are intended to be, and are hereby identified as, “forward-lookingstatements” within the meaning of the Private Securities Litigation Reform Actof 1995, as amended, reflecting management’s current analysis and expectations,based on what management believes to be reasonable assumptions.  These forward-looking statements includestatements relating to our anticipated financial performance and businessprospects.  Statements preceded by,followed by or that include words such as “believe,” “anticipate,” “estimate,” “expect,”“could,” and other similar expressions are to be considered suchforward-looking statements. Forward-looking statements may involve known and unknown risks,uncertainties and other factors, which may cause the actual results to differmaterially from those projected, stated or implied, depending on such factorsas: our ability to improve operating performance and effectuate business plans;our ability to operate pursuant to the terms of our credit facilities and tocomply with the terms of our lending agreements or to amend or modify the termsof such agreements as may be needed from time to time; our ability to generatecash; our ability to attract and maintain adequate capital; our ability to refinanceour indebtedness; increases in prevailing interest rates; our ability to obtaintrade credit, and shipments and terms with vendors and service providers forcurrent orders; our ability to maintain contracts that are critical to ouroperations; potential adverse developments with respect to our liquidity orresults of operations; general economic and business conditions; competition,including increased capital investment and promotional activity by ourcompetitors; availability, location and terms of sites for store development;the successful implementation of our capital expenditure program; laborrelations; labor and employee benefit costs including increases in health careand pension costs and the level of contributions to our sponsored pension plans;the result of our pursuit of strategic alternatives; economic and competitiveuncertainties; our ability to pursue strategic alternatives; economic andcompetitive uncertainties; changes in strategies; changes in generally acceptedaccounting principles; adverse changes in economic and political climatesaround the world, including terrorist activities and international hostilities;and the outcome of pending, or the commencement of any new, legal proceedingsagainst, or governmental investigations of us, including the previouslyannounced SEC and U.S. Attorney’s Office investigations.  We caution that the foregoing list ofimportant factors is not exhaustive. Accordingly, there can be no assurance that we will meet future results,performance or achievements expressed or implied by such forward-lookingstatements, which are generally required to be publicly revised ascircumstances change, and which we do not intend to update.

 

**EXPLANATORY NOTE**

 

This Quarterly Report on Form 10-Qis for the period beginning January 29, 2006 and ending April 29, 2006and, except as expressly indicated otherwise, information in this report speaksas of such date.  As discussed further inthis report, we emerged from Chapter 11 bankruptcy reorganization effective April 13,2005.

 

3

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**PART I**

 

**ITEM 1.        Financial Statements**

 

The Penn Traffic Company

CondensedConsolidated Balance Sheets

(Inthousands, except share and per share data)

 
| ** **                                                                                               | ** ** | **April 29,** | ** ** | **January 28,**                        | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|--------------------|------------|---------------------------------------------|------------|
| ** **                                                                                               | ** ** | **2006**           | ** ** | **2006**                                    | ** ** |
| ** **                                                                                               | ** ** | **unaudited**      | ** ** | **audited**                                 | ** ** |
| ** **                                                                                               | ** ** | ** **         | ** ** | **(Restated – Note 3)** | ** ** |
| **ASSETS**                                                                                               |       |               |       |                                        |       |
|                                                                                                     |       |               |       |                                        |       |
| **Current Assets:**                                                                                      |       |               |       |                                        |       |
| Cash and cash equivalents                                                                                |       | $                  | 7,804      |                                        | $          | 12,432 |   |
| Accounts and notes receivable (less  allowance for doubtful accounts of $2,802 and $3,174, respectively) |       | 37,143             |       | 36,970                                      |       |
| Inventories                                                                                              |       | 114,704            |       | 113,467                                     |       |
| Prepaid expenses and other current assets                                                                |       | 7,152              |       | 6,157                                       |       |
|                                                                                                     |       | 166,803            |       | 169,026                                     |       |
|                                                                                                     |       |               |       |                                        |       |
| **Capital Leases, net**                                                                                  |       | 10,676             |       | 10,997                                      |       |
|                                                                                                     |       |               |       |                                        |       |
| **Fixed Assets, net**                                                                                    |       | 109,468            |       | 104,399                                     |       |
|                                                                                                     |       |               |       |                                        |       |
| **Other Assets:**                                                                                        |       |               |       |                                        |       |
| Intangible assets                                                                                        |       | 31,987             |       | 33,025                                      |       |
| Deferred tax asset                                                                                       |       | 2,609              |       | 2,609                                       |       |
| Other assets                                                                                             |       | 4,964              |       | 5,335                                       |       |
|                                                                                                     |       | 39,560             |       | 40,969                                      |       |
|                                                                                                     |       |               |       |                                        |       |
| Total Assets                                                                                             |       | $                  | 326,507    |                                        | $          | 325,391 |   |

 

The accompanying notes are an integral partof these statements.

 

4

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| ** **                                                                                                                  | ** ** | **April 29,** | ** ** | **January 28,**                        | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|---------------------------------------------|------------|
| ** **                                                                                                                  | ** ** | **2006**           | ** ** | **2006**                                    | ** ** |
| ** **                                                                                                                  | ** ** | **unaudited**      | ** ** | **audited**                                 | ** ** |
| ** **                                                                                                                  | ** ** | ** **         | ** ** | **(Restated – Note 3)** | ** ** |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                              |       |               |       |                                        |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Current Liabilities:**                                                                                                    |       |               |       |                                        |       |
| Current portion of obligations under  capital leases                                                                        |       | $                  | 1,349      |                                        | $          | 1,310 |   |
| Current maturities of long-term debt                                                                                        |       | 284                |       | 278                                         |       |
| Accounts payable                                                                                                            |       | 37,843             |       | 36,695                                      |       |
| Other current liabilities                                                                                                   |       | 52,353             |       | 46,294                                      |       |
| Accrued interest expense                                                                                                    |       | 356                |       | 557                                         |       |
| Deferred income taxes                                                                                                       |       | 13,302             |       | 13,302                                      |       |
| Liabilities subject to compromise (Note 5)                                                                                  |       | 2,869              |       | 2,871                                       |       |
|                                                                                                                        |       | 108,356            |       | 101,307                                     |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Non-current Liabilities:**                                                                                                |       |               |       |                                        |       |
| Obligations under capital leases                                                                                            |       | 12,077             |       | 12,429                                      |       |
| Long-term debt                                                                                                              |       | 41,265             |       | 37,235                                      |       |
| Defined benefit  pension plan liability (Note 7)                                                                            |       | 26,626             |       | 27,600                                      |       |
| Other non-current  liabilities                                                                                              |       | 26,841             |       | 28,021                                      |       |
|                                                                                                                        |       | 106,809            |       | 105,285                                     |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Total Liabilities**                                                                                                       |       | 215,165            |       | 206,592                                     |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Commitments and Contingencies (Notes 5 and  8)**                                                                          |       |               |       |                                        |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Stockholders’ Equity:**                                                                                              |       |               |       |                                        |       |
| Preferred stock - authorized 1,000,000  shares, $.01 par value; none issued                                                 |       | —             |       | —                                      |       |
| Common stock - authorized 15,000,000  shares, $.01 par value;  issued and to be issued 8,498,752  shares at both dates |       | 85                 |       | 85                                          |       |
| Capital in excess of par value                                                                                              |       | 118,493            |       | 118,493                                     |       |
| Deficit                                                                                                                     |       | (12,155            | )          | (4,698                                      | )          |
| Accumulated other comprehensive income                                                                                      |       | 4,919              |       | 4,919                                       |       |
| **Total stockholders’ equity**                                                                                         |       | 111,342            |       | 118,799                                     |       |
|                                                                                                                        |       |               |       |                                        |       |
| **Total Liabilities and Stockholders’ Equity**                                                                         |       | $                  | 326,507    |                                        | $          | 325,391 |   |

 

The accompanying notes are an integral partof these statements.

 

5

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The Penn Traffic Company

CondensedConsolidated Statements of Operations

(Inthousands, except share and per share data)

(unaudited)

 
| ** **                                      | ** ** | **Quarter Ended   April 29, 2006** | ** ** | **Period from   April 17, 2005 to   April 30, 2005** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| ** **                                      | ** ** | ** **                                             | ** ** | **(Restated – Note 3)**                                                  | ** ** |
|                                            |       |                                                   |       |                                                                                         |       |
| **Revenues**                                    |       | $                                                      | 310,414    |                                                                                         | $          | 46,065 |   |
|                                            |       |                                                   |       |                                                                                         |       |
| **Cost and Operating Expenses:**                |       |                                                   |       |                                                                                         |       |
| Cost of sales                                   |       | 232,346                                                |       | 35,954                                                                                       |       |
| Selling and administrative expenses             |       | 83,227                                                 |       | 10,910                                                                                       |       |
|                                            |       |                                                   |       |                                                                                         |       |
| **Operating Loss**                              |       | (5,159                                                 | )          | (799                                                                                         | )          |
|                                            |       |                                                   |       |                                                                                         |       |
| Interest expense                                |       | 2,035                                                  |       | 255                                                                                          |       |
| Reorganization expense                          |       | 206                                                    |       | —                                                                                       |       |
|                                            |       |                                                   |       |                                                                                         |       |
| **Loss Before Income Taxes**                    |       | (7,400                                                 | )          | (1,054                                                                                       | )          |
|                                            |       |                                                   |       |                                                                                         |       |
| Income tax provision                            |       | 57                                                     |       | 65                                                                                           |       |
|                                            |       |                                                   |       |                                                                                         |       |
| **Net Loss**                                    |       | $                                                      | (7,457     | )                                                                                            | $          | (1,119 | ) |
|                                            |       |                                                   |       |                                                                                         |       |
| Shares outstanding  and to be issued            |       | 8,498,752                                              |       | 8,498,752                                                                                    |       |
|                                            |       |                                                   |       |                                                                                         |       |
| **Loss Per Share (Basic and Diluted) (Note 4)** |       | $                                                      | (0.88      | )                                                                                            | $          | (0.13 | ) |

 

The accompanying notes are an integral partof these statements.

 

6

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ThePenn Traffic Company

CondensedConsolidated Statements of Cash Flows

(Inthousands)

(unaudited)

 
| ** **                                                                       | ** ** | **Quarter Ended**       | ** ** | **Period from   April 17, 2005 to** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **April 29, 2006** | ** ** | **April 30, 2005**                                 | ** ** |
| ** **                                                                       | ** ** | ** **                   | ** ** | **(Restated – Note 3)**                  | ** ** |
|                                                                             |       |                         |       |                                                         |       |
| **Operating Activities:**                                                        |       |                         |       |                                                         |       |
| Net loss                                                                         |       | $                            | (7,457     | )                                                            | $          | (1,119 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities: |       |                         |       |                                                         |       |
| Depreciation and amortization                                                    |       | 6,338                        |       | 1,178                                                        |       |
| Amortization of deferred financing cost                                          |       | 323                          |       | —                                                       |       |
| Gain on sale of fixed assets                                                     |       | (13                          | )          | —                                                       |       |
|                                                                             |       |                         |       |                                                         |       |
| **Net change in operating assets and  liabilities:**                             |       |                         |       |                                                         |       |
| Accounts and notes receivable, net                                               |       | (173                         | )          | 5,665                                                        |       |
| Prepaid expenses and other current assets                                        |       | (995                         | )          | 3,545                                                        |       |
| Inventories                                                                      |       | (1,237                       | )          | 273                                                          |       |
| Accounts payable and other current  liabilities                                  |       | 7,004                        |       | (908                                                         | )          |
| Other assets                                                                     |       | (451                         | )          | 5                                                            |       |
| Defined benefit pension plan                                                     |       | (974                         | )          | (16                                                          | )          |
| Other non-current liabilities                                                    |       | (672                         | )          | (16                                                          | )          |
|                                                                             |       |                         |       |                                                         |       |
| **Net Cash Provided by Operating Activities**                                    |       | 1,693                        |       | 8,607                                                        |       |
|                                                                             |       |                         |       |                                                         |       |
| **Investing Activities:**                                                        |       |                         |       |                                                         |       |
| Capital expenditures                                                             |       | (10,057                      | )          | (351                                                         | )          |
| Proceeds from sale of fixed assets                                               |       | 13                           |       | —                                                       |       |
|                                                                             |       |                         |       |                                                         |       |
| **Net Cash Used in Investing Activities**                                        |       | (10,044                      | )          | (351                                                         | )          |
|                                                                             |       |                         |       |                                                         |       |
| **Financing Activities:**                                                        |       |                         |       |                                                         |       |
| Payments of mortgages                                                            |       | (67                          | )          | (15                                                          | )          |
| Net borrowings  under revolving credit facility                                  |       | 4,103                        |       | 2,636                                                        |       |
| Reduction in  capital lease obligations                                          |       | (313                         | )          | —                                                       |       |
|                                                                             |       |                         |       |                                                         |       |
| **Net Cash Provided by****Financing Activities**                                 |       | 3,723                        |       | 2,621                                                        |       |
|                                                                             |       |                         |       |                                                         |       |
| **Net (decrease) increase in cash**                                              |       | (4,628                       | )          | 10,877                                                       |       |
|                                                                             |       |                         |       |                                                         |       |
| **Cash and cash equivalents at the beginning of period**                         |       | 12,432                       |       | 29,304                                                       |       |
|                                                                             |       |                         |       |                                                         |       |
| **Cash and cash equivalents at end of period**                                   |       | $                            | 7,804      |                                                         | $          | 40,181 |   |

 

The accompanying notes are an integral partof these statements.

 

7

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ThePenn Traffic Company

CondensedConsolidated Statements of Stockholders’ Equity

Forthe unaudited period January 29, 2006 to April 29, 2006

(Inthousands)

 
| ** **                       | ** ** | **Common   Stock** | ** ** | **Capital in   Excess of   Par Value** | ** ** | **Retained   Earnings** | ** ** | **Accumulated   Other   Comprehensive   Loss** | ** ** | **Total   Stockholders’   Equity** | ** ** |
|----------------------------------|------------|-------------------------|------------|-----------------------------------------------------------------|------------|------------------------------|------------|---------------------------------------------------------------|------------|---------------------------------------------------|------------|
|                             |       |                    |       |                                                            |       |                         |       |                                                          |       |                                              |       |
| Balance at January 28, 2006 |       | $                       | 85         |                                                            | $          | 118,493                      |       | $                                                             | (4,698     | )                                                 | $          | 4,919 |   | $ | 118,799 |   |
|                             |       |                    |       |                                                            |       |                         |       |                                                          |       |                                              |       |
| Net loss for the 13-week         |       |                    |       |                                                            |       |                         |       |                                                          |       |                                              |       |
| period ended                     |       |                    |       |                                                            |       |                         |       |                                                          |       |                                              |       |
| April 29, 2006              |       |                    |       |                                                            |       | (7,457                       | )          |                                                          |       | (7,457                                            | )          |
|                             |       |                    |       |                                                            |       |                         |       |                                                          |       |                                              |       |
| Balance at April 29, 2006   |       | $                       | 85         |                                                            | $          | 118,493                      |       | $                                                             | (12,155    | )                                                 | $          | 4,919 |   | $ | 111,342 |   |

 

The accompanying notes are an integral part of these statements.

 

8

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The Penn Traffic Company

Notes to ConsolidatedFinancial Statements

 

**Note 1 –Basis of Presentation**

 

The accompanying unaudited interim condensedconsolidated financial statements of The Penn Traffic Company and subsidiaries(the “Company”) have been prepared in accordance with generally acceptedaccounting principles for interim financial information and the instructions toForm 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of theinformation and footnotes required by accounting principles generally acceptedin the United States of America for complete financial statements.

 

In the opinion of management, all adjustments(consisting of normal recurring accruals) considered necessary for a fairpresentation have been included.  Operating results for the interim period endedApril 29, 2006 are not necessarily an indication of results to be expectedfor the fiscal year ended February 3, 2007.  For further information, refer to the auditedconsolidated financial statements and footnotes thereto included in the Company’sannual report on Form 10-K/A for the fiscal year ended February 3,2007.

 

The balance sheet as ofJanuary 28, 2006 has been derived from the audited consolidated financialstatements as of such date, but does not include all of the information andfootnotes required by accounting principles generally accepted in the UnitedStates of America for complete financial statements.

 

The Company’s fiscal year ends on the Saturday closestto January 31.  Fiscal year 2007 isthe 53-week period ended February 3, 2007.  Fiscal year 2006 is the 41-week period from April 17, 2005,the commencement of fresh-start reporting (see Note 3 to the Company’s AnnualReport on Form 10-K/A for the fiscal year ended February 3, 2007),to January 28, 2006.  Theinformation presented in this Quarterly Report on Form 10-Q is for thequarter beginning January 29, 2006 and ending April 29, 2006.

 

All significant intercompany transactions and accountshave been eliminated in consolidation.

 

**Note 2 –Voluntary Bankruptcy Filing and Reorganization**

 

On May 30, 2003, ThePenn Traffic Company and all of its subsidiaries filed voluntary petitionsunder Chapter 11 of the United States Bankruptcy Code in the United StatesBankruptcy Court for the Southern District of New York.  The filing was made in response to pendingdefaults under the Company’s then-existing loan agreements and a lack ofliquidity to continue operations.  UnderChapter 11, the Company continued to operate its businesses asdebtor-in-possession under court protection from its creditors and claimants,while using the Chapter 11 process to substantially reduce its debt obligationsand implement a plan of reorganization.

 

On February 2, 2005,the Company filed the First Amended Joint Plan of Reorganization (the “Plan”)with the bankruptcy court.  The Plan wasconfirmed on March 17, 2005 and became effective on April 13, 2005(the “Effective Date”).

 

Pursuant to the terms ofthe Plan, the following transactions occurred on or around the Effective Date:

 

1.         The Company entered into new creditagreements providing for borrowings of up to $164 million.  Proceeds from these new credit agreementsprovided funds sufficient to repay a debtor-in-possession credit facility andall administrative and priority claims to the extent provided for in the Plan.

 

2.         The Company sold and leased back its fiveowned distribution facilities for a sales price of approximately$37 million.

 

3.         All shares of common stock and all stockoptions and warrants outstanding prior to the confirmation of the Plan werecancelled and the holders of such equity securities received no distributionsunder the Plan.

 

4.         The reorganized Company was authorized toissue new shares of common stock to unsecured creditors, which included holdersof $100 million of senior notes, a claim by the Pension Benefit GuarantyCorporation or the (“PBGC”) of $60 million and trade claims, all of whomwere eligible to receive pro rata distributions of new shares of common stockand the right to share in potential proceeds from certain causes of action.

 

9

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Pursuant to theprovisions of Statement of Position 90-7 “Financial Reporting by Entities inReorganization Under the Bankruptcy Code” (“SOP 90-7”) issued by the AmericanInstitute of Certified Public Accountants upon emergence from Chapter 11proceedings, the Company adopted fresh-start reporting which resulted in a newreporting entity and a new basis of accounting.

 

Although April 13,2005 was the effective date of the Plan, the Company chose April 16, 2005as the effective date for accounting purposes to adopt fresh-start reportingbecause of the proximity of that date to the end of an accounting period.  Applying fresh-start reporting as of April 16,2005 rather than the actual effective date of April 13, 2005 did not havea material effect on the financial condition or results of operations of theCompany.

 

**Note 3 – Restatement**

 

As a result ofcancellation of debt in the Chapter 11 proceedings (see Note 2), the Companypreviously entirely eliminated all net operating loss carryforwards and reducedthe tax basis of its long-lived assets effective January 28, 2006.  During the year ended February 2, 2008,the Company corrected the amount of debt forgiveness in the Chapter 11proceedings that reduced tax attributes which results in an increaseaggregating $66 million in the tax basis of its long-lived assets and netoperating loss carryforwards.

 

The correction resultedin an increase in deferred tax assets attributable to the net operating losscarryforwards and the recording of a related valuation allowance and areduction in the deferred tax liability attributable to the increase in the taxbasis of long-lived assets.  The neteffect of the above was a $3.5 million reduction in the net deferred taxliability and a corresponding reduction in the carrying value of certainlong-lived assets upon adoption of fresh-start reporting on April 16,2005.  As a result, net loss for theperiod from April 17, 2005 to April 30, 2005 was restated as follows:

 
| ** **                                     | ** ** | **2 Week**       | ** ** |
|------------------------------------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | **Period Ended** | ** ** |
| ** **                                     | ** ** | **April 30,**    | ** ** |
| ** **                                     | ** ** | **2005**              | ** ** |
| ** **                                     | ** ** | ** **            | ** ** |
| Net loss as previously reported                |       | $                     | (878       | ) |
|                                           |       |                  |       |
| Reduction in depreciation of long-lived assets |       | 14                    |       |
| Reduction in income tax benefit                |       | (255                  | )          |
|                                           |       |                  |       |
| Net loss as restated                           |       | $                     | (1,119     | ) |
|                                           |       |                  |       |
| Net loss per share (basic and diluted):        |       |                  |       |
| As previously reported                         |       | $                     | (0.10      | ) |
| Restated                                       |       | (0.03                 | )          |
| As restated                                    |       | $                     | (0.13      | ) |

 

10

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**Note 4 –Per Share Data**

 

Basic and dilutednet loss per share is based on the number of common shares issued and estimatedto be issued pursuant to the Plan. Common shares issued and estimated to be issued in settlement of claimsfiled in the Company’s Chapter 11 proceeding are treated as outstanding as ofthe effective date of the Plan.  At both April 29, 2006and January 28, 2006, 201,055 common shares are estimated to be issued inconnection with the settlement of remaining claims.

 

**Note 5 – Liabilities Subject toCompromise**

 

In connection with theChapter 11 proceeding, there are two pending matters involving claims for thepayment of money or the transfer of property. In one matter, the Ohio Bureau of Workers’ Compensation (“OBWC”) hasfiled priority and administrative claims aggregating $13.4 million forpre-petition unpaid workers’ compensation premiums and for reserves to payfuture claims arising from existing injuries. The OBWC has also filed claims aggregating $1.8 million for allegednon-payment of post-petition premiums and for reserves to pay future claimsarising from existing injuries.  TheCompany disputes the amounts of the claims, and is attempting to negotiate asettlement.

 

In another matter,a claimant has filed a priority claim allegedly arising under an agreement fora sale-leaseback transaction seeking either damages of $2.2 million orspecific performance of the agreement. The Company disputes the merits of the claim and is defending againstit.

 

During the quarter ended April 29,2006, the Company made no payments in settlement of disputed claims.  The Company has established liabilities forthe estimated cash payments required to settle the remaining claims outstandingin the Chapter 11 proceedings.  Estimatedshares of common stock to be issued in settlement of claims have been accountedfor as stockholders’ equity.

 

**Note 6 – Acquisitions andDispositions**

 

In March and April 2006,the Company acquired two retail stores for an aggregate purchase price of$1.5 million.  The cost of theacquisitions was allocated $0.5 million to inventories and $1.0 million toequipment.

 

During the quarter ended April 29,2006, no stores were closed.  During thequarter ended April 29, 2006, the Company incurred approximately $0.1million of additional store closing costs relating to leases and terminatedemployees related to stores closed during fiscal year 2006.

 

**Note 7 – Pension Plans**

 

The Company has fournoncontributory defined benefit pension plans covering certain unionpersonnel.  The Company’s policy is tofund pension benefits to the extent contributions are deductible for taxpurposes and in compliance with federal laws and regulations.

 

The components of netperiodic benefit cost for the periods ended April 29, 2006 and April 30, 2005is as follows (in thousands):

 
| ** **                     | ** ** | **13-Week**           | ** ** | **2-Week**            | ** ** |
|--------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                     | ** ** | **Period Ended** | ** ** | **Period Ended** | ** ** |
| ** **                     | ** ** | **April 29,**    | ** ** | **April 30,**    | ** ** |
| ** **                     | ** ** | **2006**              | ** ** | **2005**              | ** ** |
|                           |       |                  |       |                  |       |
| Service cost                   |       | $                     | 496        |                  | $          | 72 |   |
| Interest cost                  |       | 1,494                 |       | 212                   |       |
| Expected return on plan assets |       | (1,494                | )          | (194                  | )          |
|                           |       |                  |       |                  |       |
|                           |       | $                     | 496        |                  | $          | 90 |   |

 

For the 13-week periodended April 29, 2006, the Company contributed $1.1 million to the fourdefined benefit pension plans.  For the2-week period ended April 30, 2005, the Company did not make anycontributions to the four defined benefit plans.

 

11

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**Note 8 – Commitments andContingencies**

 

The United StatesAttorney for the Northern District of New York and the Securities and ExchangeCommission (“SEC”) have been conducting investigations relating to the Company’spromotional allowance practices and policies. Such investigations began prior to the Company’s emergence frombankruptcy in April 2005.  TheCompany has been cooperating with these investigations and has produceddocuments and made Company employees available for interviews as requested.

 

On June 1, 2006, theCompany announced that the Audit Committee of the Board of Directors hadcompleted its internal investigation of the Company’s promotional allowancepractices.  The Audit Committee hiredindependent counsel to perform the investigation.  The Audit Committee found that the Companyhad engaged in certain improper practices principally relating to the prematurerecognition of promotional allowances and that these practices had largelyceased by the time of the Company’s Chapter 11 filing in May 2003.  On February 3, 2006, the Companyannounced that the employment of the Company’s Chief Marketing Officer and theCompany’s Vice President, Non-Perishables Marketing had been terminatedfollowing an interim report to the Audit Committee on the findings of theinvestigation.

 

On September 17,2007, the SEC filed civil fraud charges against the Company’s former ChiefMarketing Officer and former Vice President, Non-Perishables Marketing allegingthat such individuals orchestrated a scheme to inflate the Company’s income andother financial results by prematurely recognizing promotional allowancesreceived from vendors from approximately the second quarter of fiscal year 2001through at least the fourth quarter of fiscal year 2003. The complaint furtheralleges that the individuals deceived the Company’s accounting personnel tocarry out their fraudulent scheme and aided and abetted the Company’sviolations of the Securities Exchange Act of 1934 and rules thereunder. Inaddition, on the same date, the United States Attorney for the NorthernDistrict of New York announced that a federal grand jury has returned anindictment against the abovementioned individuals on related criminal charges.Both the SEC and the United States Attorney indicated that their investigationsare continuing.

 

In connection with thesematters, the Company could be subject to damage claims, fines orpenalties.  At present, the Company isunable to estimate the likelihood of an unfavorable outcome or the amount ofany damage claims, fines or penalties in the event of an unfavorable outcomeand, accordingly, no liability has been recorded for this contingency.

 

12

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**Note 9 – Segment Information**

 

The Company operates intwo segments – the retail food business and the wholesale food distributionbusiness.  The retail food businessconsists of supermarkets which the Company operates.  The wholesale food distribution businesssupplies independent supermarkets and other independent wholesale accounts withfood, related products and other services. In fiscal period 2006, the Company had allocated warehouse andtransportation costs based on each segment’s percentage of totalshipments.  In fiscal year 2007, theallocation method was changed to include order size and distance from thewarehouse.  The effect of this change wasto increase the operating income of the retail food segment and decrease theoperating income of the wholesale food distribution segment by $1.2 million forthe period ended April 29, 2006.

 

The tables below presents(in thousands) information with respect to operating segments as well asreconciliations to consolidated information.

 
| ** **                                                     | ** ** | **Quarter Ended April 29, 2006** | ** ** |
|----------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                     | ** ** | ** **                                           | ** ** | **Wholesale   Food** | ** ** | **Reconciling** | ** ** | ** ** | ** ** |
| ** **                                                     | ** ** | **Retail Food**                                 | ** ** | **Distribution** | ** ** | **Items** | ** ** | **Total** | ** ** |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Revenues                                                       |       | $                                                    | 253,116    |   | $ | 51,935 |   | $ | 5,363 | (1) | $ | 310,414 |   |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Cost of sales                                                  |       | (178,394                                             | )          | (49,065 | ) | (3,512 | )(2) | (230,971 | )(4) |
| Selling and administrative expense                             |       | (62,389                                              | )          | (1,485 | ) | (14,390 | )(3) | (78,264 | )(4) |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Operating income (loss) before depreciation and amortization   |       | 12,333                                               |       | 1,385 |   | (12,539 | ) | 1,179 |   |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Depreciation and amortization                                  |       | (5,737                                               | )          | (156 | ) | (445 | ) | (6,338 | ) |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Operating income (loss)                                        |       | $                                                    | 6,596      |   | $ | 1,229 |   | $ | (12,984 | ) | (5,159 | ) |
| Interest expense                                               |       | —                                               |       | — |   | — |   | (2,035 | ) |
| Reorganization costs                                           |       | —                                               |       | — |   | — |   | (206 | ) |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Consolidated loss before income taxes                          |       |                                                 |       |   |   |   |   | $ | (7,400 | ) |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Total assets as of April 29, 2006                         |       | $                                                    | 264,393    | (5) | $ | 30,233 | (5) | $ | 31,881 | (6) | $ | 326,507 |   |
|                                                           |       |                                                 |       |   |   |   |   |   |   |
| Capital expenditures for the quarter ended April 29, 2006 |       | $                                                    | 9,106      |   | $ | — |   | $ | 951 |   | $ | 10,057 |   |

 

----

(1)          Consists principally of approximately$3.8 million for bakery sales principally to customers other than those ofthe retail and wholesale segments and approximately $1.5 million fortrucking revenues.

 

(2)          Consists principally of approximately$2.4 million for bakery sales and approximately $0.3 million increasein cost of sales to reconcile segment inventories on FIFO to consolidated inventorieson LIFO.

 

(3)          Consists principally of approximately$6.8 million of payroll, benefits, and payroll taxes associated with theadministrative staff, approximately $1.5 million associated with sellingand administrative costs of the bakery, approximately $1.4 million of contracthauling costs associated with trucking revenue, approximately $3.1 million ofprofessional fees (including approximately $1.9 million of legal costsassociated with the internal and SEC investigation relating to the Company’spractices regarding promotional discounts and allowances),  approximately $0.5 million for dataprocessing maintenance and $0.3 million for corporate insurance costs.

 

(4)          Excludes depreciation and amortization of$1.3 million for cost of sales and $5.0 million for selling andadministrative expenses.

 

(5)          The warehouse and transportation assetshave been allocated using the same methodology as that which was used for thewarehouse and transportation costs described above.  The effect of the change in allocation methodin fiscal year 2007 was to increase the assets of the wholesale fooddistribution segment and decrease assets of the retail food segment by $4.3million.

 

(6)          Consists principally of fixed assets andinventory of the bakery operation and general corporate assets (including cashand cash equivalents).

 

13

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| ** **                                                    | ** ** | **From April 17, 2005 to April 30, 2005** | ** ** |
|---------------------------------------------------------------|------------|------------------------------------------------------------------------------|------------|
| ** **                                                    | ** ** | ** **                                                                   | ** ** | **Wholesale   Food** | ** ** | **Reconciling** | ** ** | ** ** | ** ** |
| ** **                                                    | ** ** | **Retail Food**                                                         | ** ** | **Distribution** | ** ** | **Items** | ** ** | **Total** | ** ** |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Revenues                                                      |       | $                                                                            | 37,457     |   | $ | 7,753 |   | $ | 855 | (1) | $ | 46,065 |   |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Cost of sales                                                 |       | (27,638                                                                      | )          | (7,584 | ) | (591 | )(2) | (35,813 | )(4) |
| Selling and administrative expense                            |       | (8,348                                                                       | )          | (248 | ) | (1,277 | )(3) | (9,873 | )(4) |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Operating income (loss) before depreciation and amortization  |       | 1,471                                                                        |       | (79 | ) | (1,013 | ) | 379 |   |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Depreciation and amortization                                 |       | (1,115                                                                       | )          | (61 | ) | (2 | ) | (1,178 | ) |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Operating income (loss)                                       |       | $                                                                            | 356        |   | $ | (140 | ) | $ | (1,015 | ) | (799 | ) |
| Interest expense                                              |       |                                                                         |       |   |   |   |   | (255 | ) |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Consolidated loss before income taxes                         |       |                                                                         |       |   |   |   |   | $ | (1,054 | ) |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Total assets as of April 30, 2005                        |       | $                                                                            | 313,887    | (5) | $ | 25,965 | (5) | $ | 16,658 | (6) | $ | 356,510 |   |
|                                                          |       |                                                                         |       |   |   |   |   |   |   |
| Capital expenditures for the period ended April 30, 2005 |       | $                                                                            | 285        |   | $ | — |   | $ | 66 |   | $ | 351 |   |

 

----

(1)          Consists principally of approximately$0.5 million for bakery sales to customers other than those of the retailand wholesale segments and approximately $0.3 million for truckingrevenues.

 

(2)          Consists principally of approximately$0.5 million for bakery sales and approximately $0.1 million increasein cost of sales to reconcile segment inventories on FIFO to consolidatedinventories on LIFO.

 

(3)          Consists principally of approximately$1.0 million of payroll, benefits, and payroll taxes associated with theadministrative staff and approximately $0.1 million of contract haulingcosts associated with trucking revenue.

 

(4)          Excludes depreciation and amortization of$0.1 million for cost of sales and $1.1 million for selling andadministrative expenses.

 

(5)          The warehouse and transportation assetshave been allocated using the same methodology that was used for the warehouseand transportation costs.

 

(6)          Consists principally of fixed assets andinventory of the bakery operation and general corporate assets (including cashand cash equivalents).

 

14

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**ITEM 2.        Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

 

**Overview**

 

As discussed in Note 2 to the accompanyingConsolidated Financial Statements, we emerged from Chapter 11 proceedings on April 13,2005.  For financial reporting purposes,we accounted for the consummation of our plan of reorganization as of the closeof business on April 16, 2005. In accordance with SOP 90-7 we have applied fresh-start reporting as ofthe close of business on April 16, 2005, which has resulted insignificant changes to the valuation of certain of our assets and liabilities,and to our stockholders’ equity.  Inconnection with the adoption of fresh-start reporting, a new entity has beendeemed to be created for financial reporting purposes.  The periods ended on or prior to April 16, 2005have been designated “Predecessor Company” and the periods subsequent to April 16, 2005have been designated “Successor Company”. For purposes of the discussion of the unaudited Results of Operations, theactivities of the Successor Company have been deemed noncomparable to those ofthe Predecessor Company and, accordingly, no comparison was done with thePredecessor Company.

 

**Results of Operations**

 

The following table setsforth certain Consolidated Statement of Operations components expressed aspercentages of revenues for the 13-week period ended April 29, 2006 andthe period from April 17, 2005 to April 30, 2005.

 
| ** **                          | ** ** | **Quarter**                  | ** ** | **2 -Weeks**                 | ** ** |
|-------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                          | ** ** | **Ended**                    | ** ** | **Ended**                    | ** ** |
| ** **                          | ** ** | **April 29, 2006** | ** ** | **April 30, 2005** | ** ** |
|                                |       |                         |       |                         |       |
| Revenues                            |       | 100.0                        | %          | 100.0                        | %          |
|                                |       |                         |       |                         |       |
| Gross profit (1)                    |       | 25.1                         |       | 22.0                         |       |
|                                |       |                         |       |                         |       |
| Selling and administrative expenses |       | 26.8                         |       | 23.7                         |       |
|                                |       |                         |       |                         |       |
| Operating loss                      |       | (1.7                         | )          | (1.7                         | )          |
|                                |       |                         |       |                         |       |
| Interest expense                    |       | 0.7                          |       | 0.6                          |       |
|                                |       |                         |       |                         |       |
| Reorganization expenses             |       | 0.1                          |       | 0.0                          |       |
|                                |       |                         |       |                         |       |
| Income tax provision                |       | 0.0                          |       | 0.1                          |       |
|                                |       |                         |       |                         |       |
| Net loss                            |       | (2.5                         | )          | (2.4                         | )          |
|                                |       |                         |       |                         |       |

 

----

(1)                                 Revenues less cost of sales.

 

15

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**Fiscal Year 2007 (the Quarter Ended April 29, 2006) andFiscal Year 2006 (the 2-Week Period Ended April 30, 2005)**

 

**Revenues**

 

Revenues for the quarterended April 29, 2006 were $310.4 million and $46.1 million for the2-week period ended April 30, 2005.

 

Retail food revenues were$253.1 million for the quarter ended April 29, 2006 and $37.5 million forthe 2-week period ended April 30, 2005.

 

Wholesale fooddistribution revenues for the quarter ended April 29, 2006 were $51.9million and $7.8 million for the 2-week period ended April 30, 2005.

 

**GrossProfit**

 

Gross profit was $78.1million, or 25.1% of revenues for the quarter ended April 29, 2006and for the 2-week period ended April 30, 2005, $10.1 million, or 22.0% ofrevenues.

 

**Sellingand Administrative Expenses**

 

Sellingand administrative expenses were $83.2 million, or 26.8% of revenues forthe quarter ended April 29, 2006. For the 2-week period ended April 30, 2005, selling andadministrative expenses were $10.9 million or 23.7% of revenues.

 

**Depreciationand Amortization**

 

Depreciation andamortization expense was $6.3 million, or 2.0% of revenues, for the quarterended April 29, 2006 and $1.2 million or 2.6% of revenues, for the 2-weekperiod ended April 30, 2005.

 

**OperatingLoss**

 

Operating loss for thequarter ended April 29, 2006 was $5.2 million, or 1.7% of revenuesand $0.8 million, or 1.7% of revenues, for the 2-week period ended April 30,2005.

 

**Interest Expense**

 

Interest expense for thequarter ended April 29, 2006 was $2.0 million or 0.7% of revenues and$0.3 million or 0.6% of revenue, for the 2-week period ended April 30,2005.

 

**ReorganizationExpense**

 

Duringthe quarter ended April 29, 2006, the Company recorded reorganizationexpense of $0.2 million.  These expenseswere primarily professional fees and are considered non-recurringexpenses.  There were no reorganization expensesfor the 2-week period ended April 30, 2005.

 

**IncomeTax Provision**

 

Incometax provision for the quarter ended April 29, 2006  and for the 2-week period ended April 30,2005 was less than $0.1 million. The taxes consist of minimal state taxes and capital/franchise tax.

 

**NetLoss**

 

Net loss for the quarterended April 29, 2006 was $7.5 million, or 2.5% of revenues, comparedto a net loss of $1.1 million or 2.4% of revenue during the 2-week periodended April 30, 2005.

 

16

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**Liquidity and Capital Resources**

 

OnApril 16, 2005, upon emergence from Chapter 11 proceedings, we enteredinto a revolving credit and term loan facility with a group of financialinstitutions providing for a $130.0 million revolving credit facility anda $6.0 million term loan.  Also on April 16,2005, we entered into a supplemental real estate credit facility with anothergroup of lenders, providing for term loan borrowings of up to $28.0million.  Availability under both creditfacilities is dependent on levels of accounts receivable, inventory and certainother assets.  Interest rates onborrowings under the revolving credit facility vary depending upon the amountof availability.  At April 29, 2006,outstanding borrowings under both facilities aggregated $33.6 million andoutstanding letters of credit under the revolving credit facility amounted toapproximately $50.3 million.  Atsuch date, availability in excess of outstanding borrowings and letters ofcredit was approximately $44.4 million. Borrowings under the revolving credit and term loan facility are securedby substantially all of our assets, subject to first liens on certainproperties by other lenders.  Borrowingsunder the real estate facility are secured by a first lien on substantially allof our leasehold interests and a second lien on substantially all of ourremaining assets.  During the fiscalquarter ended April 29, 2006, we had stand-by letters of credit ofapproximately $53.5 million.  Manyof these stand-by letters of credit were required upon emergence frombankruptcy and as a result of our inability to file financial statements.

 

Provisionsof both credit facilities, among other things, require the maintenance ofcertain financial covenants (when availability under the credit facilities isless than $35.0 million for four consecutive days or less than$30.0 million for any one day), and limit the amount of capitalexpenditures, our assumption of additional debt and our payment of dividends.  At no time through April 29, 2006had we been subject to compliance with these financial covenants because theannual available for borrowing had not dropped to these levels.  However, had such an event occurred, we wouldnot have been in compliance with the financial covenants and would have been indefault under the terms of the loan agreement at April 29, 2006.

 

Pursuantto our plan of reorganization, we entered into a collateral trust agreementwith the collateral trustee in connection with the secured trade lienprogram.  The secured trade lien programis with certain of our vendors and allows us to maintain trade terms.

 

OnDecember 26, 2006, August 1, 2007, and January 30, 2008, both therevolving credit and term loan facility and the supplemental real estate creditfacility were amended to permit the disposal of assets in connection with theclosing of certain stores.  In March2008, the maturity date of both facilities were extended to April 13, 2009.(See Note 7 to the financial statements included in the annual report on Form10-K for year ended February 2, 2008 for additional information).

 

Wealso have $4.4 million of borrowings under mortgages secured by the relatedproperties as of April 29, 2006.

 

17

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**ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSUREABOUT MARKET RISK**

 

Ourfinancial results are subject to risk from interest rate changes on debt thathas variable interest rates. Total variable rate debt outstanding under ourloan agreements at April 29, 2006 was $37.1 million with a weightedaverage interest rate of 10.33%.  A1% change in interest rates would impact pre-tax income by $0.4million million based on the debt outstanding at April 29, 2006.  In addition to the variable rate debt we had$4.4 million of fixed rate debt outstanding at April 29, 2006 with aweighted average interest rate of 6.6%. We view the fixed rate debt as a partial hedge against interest ratefluctuations which should minimize the potential impact on earnings frominterest rate changes.

 

**ITEM 4.            CONTROLS AND PROCEDURES**

 

Disclosure controls and procedures under Rule 13a-15(e) ofthe Securities Exchange Act of 1934 (the “Exchange Act”) are those controls andother procedures of a company that are designed to ensure that informationrequired to be disclosed by the company in the reports that it files or submitsunder the Exchange Act is recorded, processed, summarized and reported, withinthe time periods specified in the SEC’s rule and forms.  Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by an issuer in the reports it files or submits underthe Exchange Act is accumulated and communicated to the issuer’s management,including its principal executive and principal financial officers, or personsperforming similar functions, as appropriate to allow timely decisionsregarding required disclosure.

 

Pursuant to Rule 13a-15(e) under theExchange Act, our management evaluated the effectiveness of the design andoperation of our disclosure controls and procedures with the participation ofour principal executive and principal financial officers.  Our President and Chief Executive Officer andour Senior Vice President and Chief Financial Officer were not with us duringfiscal year 2007.  Based on their currentobservations combined with observations by the disclosure committee, which iscomprised of members of management, members of the audit committee and externalcounsel, management concluded that our disclosure controls and procedures wereineffective as of April 29, 2006 in providing reasonable assurancethat material information requiring disclosure was brought to management’sattention on a timely basis and that our financial reporting was reliable.

 

**Change in our Internal Control Over Financial Reporting**

 

Management did notconduct an evaluation of the effectiveness of our internal control overfinancial reporting as of April 29, 2006.  In May 2007, we hired an outsideconsulting firm to assist management in its evaluation of the effectiveness ofour internal controls over financial reporting, including disclosure controlsand procedures.  They have sincedetermined they will use the framework established in “InternalControl-Integrated Framework”, issued by the Committee of SponsoringOrganizations of the Treadway Commission.

 

18

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**PART II – OTHER INFORMATION**

 

**ITEM 1.        LEGAL PROCEEDINGS**

 

Therehave been no changes to the legal proceedings disclosed in the Company’s AnnualReport on Form 10-K for the year-ended February 2, 2008.

 

**ITEM 1A.         RISK FACTORS**

 

Therehave been no changes to the risk factors disclosed in the Company’s AnnualReport on Form 10-K for the year-ended February 2, 2008.

 

**ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

 

No matter was submitted to avote of security holders during the quarter ended January 29, 2006 to April 29,2006.

 

**ITEM 6.        EXHIBITS**

 

Thefollowing are filed as Exhibits to this Report:

 
| **Exhibit No.** |   | **Description**                                                                                                                                                                                |
|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |   |                                                                                                                                                                                           |
| 31.1                 |   | Certification of CEO pursuant to  Rule 13a-14(a) under the Securities Exchange Act of 1934, as  amended.                                                                             |
|                 |   |                                                                                                                                                                                           |
| 31.2                 |   | Certification of CFO  pursuant to Rule 13a-14(a) under the Securities Exchange Act of  1934, as amended.                                                                             |
|                 |   |                                                                                                                                                                                           |
| 32.1                 |   | Certification of CEO pursuant  to Rule 13a-14(b) under the Securities Exchange Act of 1934, as  amended, and Section 1350 of Chapter 63 of Title 18 of the United States  Code. |
|                 |   |                                                                                                                                                                                           |
| 32.2                 |   | Certification of CFO  pursuant to Rule 13a-14(b) under the Securities Exchange Act of  1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the  United States Code. |

 

19

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**Signatures**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

**THE PENN TRAFFIC COMPANY**

 
| Date:  May 14, 2008 | By:                                           | /s/  Gregory J. Young |
|--------------------------|-----------------------------------------------|-----------------------|
|                     | Name:  Gregory J. Young                       |
|                     | Title:  Chief Executive Officer and President |

 

 
| Date:  May 14, 2008 | By:                                                       | /s/  Tod A. Nestor |
|--------------------------|-----------------------------------------------------------|--------------------|
|                     | Name:  Tod A. Nestor                                      |
|                     | Title:  Senior Vice President and Chief Financial Officer |

 

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