10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended June 18, 2011

OR

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

For the transition period from ____________ to _______________                                                                                                

Commission file number 1-4141

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

(Exact name of registrant as specified in its charter)

Maryland	13-1890974
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2 Paragon Drive

Montvale, New Jersey 07645

(Address of principal executive offices)

Registrant’s telephone number, including area code:  201-573-9700

_________________________________

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock - $1 par value	OTC Markets, Inc.
9.375% Notes, due August 1, 2039	OTC Markets, Inc.

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

_________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [ x ] No [   ]

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

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

Large accelerated filer ________     Accelerated filer ­­­­­­­­________ Non-accelerated filer       x          ­­­­­­­­Smaller reporting company__________

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

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 [  ] No [  ]

The number of shares of common stock outstanding as of the close of business on July 27, 2011 was 53,852,470.

Explanatory Note

The purpose of this Amendment No. 1 to The Great Atlantic & Pacific Tea Company Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 18, 2011, filed with the Securities and Exchange Commission on August 1, 2011 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q in formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

ITEM 6 – Exhibits

(a)      Exhibits required by Item 601 of Regulation S-K

EXHIBIT NO.                                       DESCRIPTION

10.1* Supply, Distribution and Related Services Agreement dated May 29, 2011 by and between the Company and C&S Wholesale Grocers, Inc.

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

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

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

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

101.INS** XBRL Instance Document

101.SCH** XBRL Schema Document

101.CAL** XBRL Calculation Linkbase Document

101.LAB** XBRL Label Linkbase Document

101.PRE** XBRL Presentation Linkbase Document

101.DEF** XBRL Definition Linkbase Document

* These exhibits were previously included or incorporated by reference in The Great Atlantic & Pacific Tea Company, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 18, 2011, filed with the Securities and Exchange Commission on August 1, 2011.

** Filed with this Form 10-Q/A

The Great Atlantic & Pacific Tea Company, 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.

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.

Date:  August 4, 2011	By: /s/ Melissa E. Sungela
	Melissa E. Sungela, Senior Vice President,
	Corporate Controller (Chief Accounting Officer
	and Duly Authorized Officer)

XML



Consolidated Statements Of Operations (Parenthetical) (USD $) In Thousands	3 Months Ended
	Jun. 18, 2011	Jun. 19, 2010
Consolidated Statements Of Operations
Tax benefit from discontinued operations	$ 1,142	$ 0
Gain on disposal of discontinued operations, tax		0
Reorganization items, income tax provision	$ 14,361

XML



Consolidated Statements Of Stockholders' Deficit And Comprehensive Loss (USD $) In Thousands, except Share data	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Total
Balance at Feb. 27, 2010	$ 55,868	$ 526,421	$ (79,403)	$ (1,032,089)	$ (529,203)
Balance, shares at Feb. 27, 2010	55,868,129
Net loss				(122,643)	(122,643)
Beneficial conversion feature related to preferred stock, net of accretion		(1,481)			(1,481)
Dividends on preferred stock		(4,308)			(4,308)
Preferred stock financing fees amortization		(534)			(534)
Stock options exercised, value	5	23			28
Stock options exercised, shares	4,834
Other share based awards, value	250	(1,111)			(861)
Other share based awards, shares	250,245
Other comprehensive income (loss)			252		252
Pension and other postretirement benefits, net of tax of $1,719 and $0					252
Total comprehensive loss					(122,391)
Balance at Jun. 19, 2010	56,123	519,010	(79,151)	(1,154,732)	(658,750)
Balance, shares at Jun. 19, 2010	56,123,208
Balance at Feb. 26, 2011	53,852	511,157	(75,309)	(1,630,664)	(1,140,964)
Balance, shares at Feb. 26, 2011	53,852,470
Net loss				(157,161)	(157,161)
Beneficial conversion feature related to preferred stock, net of accretion		(1,482)			(1,482)
Preferred stock financing fees amortization		(535)			(535)
Other share based awards, value		491			491
Other comprehensive income (loss)			(1,236)		(1,236)
Pension and other postretirement benefits, net of tax of $1,719 and $0					(1,236)
Total comprehensive loss					(158,397)
Balance at Jun. 18, 2011	$ 53,852	$ 509,631	$ (76,545)	$ (1,787,825)	$ (1,300,887)
Balance, shares at Jun. 18, 2011	53,852,470

XML



Income Taxes

3 Months Ended

Jun. 18, 2011

Income Taxes

Income Taxes

15.  Income Taxes

During the 16 weeks ended June 18, 2011 and June 19, 2010, our valuation allowance increased by $61.2 million and $48.6 million, respectively, to reflect generation of additional operating losses. In future periods, we will continue to record a valuation allowance against net deferred tax assets that are created by losses until such time as the certainty of future tax benefits can be reasonably assured.

Our Company is subject to U.S. federal income tax, as well as income tax in multiple state and foreign jurisdictions.  As of June 18, 2011, with a few exceptions, we remain subject to examination by federal, state and local tax authorities for tax years 2005 through 2009.  With a few exceptions, we are no longer subject to federal, state or local examinations by tax authorities for tax years 2004 and prior.  At June 18, 2011 and February 26, 2011, we had unrecognized tax benefits of $0.6 million and $1.4 million, which were recorded within deferred tax liabilities in "Other accruals" in our Consolidated Balance Sheets.  We do not expect that the amount of our gross unrecognized tax positions will change significantly in the next 12 months.  Any future decrease in our Company's gross unrecognized tax positions would require a reevaluation of our Company's valuation allowance maintained on our net deferred tax asset and, therefore, is not expected to affect our effective tax rate.  Our Company classifies interest and penalty expense related to unrecognized tax benefits within "Benefit from (provision for) income taxes" in our Consolidated Statements of Operations.  For the 16 weeks ended June 18, 2011 and June 19, 2010, no amounts were recorded for interest and penalties within "Benefit from (provision for) income taxes" in our Consolidated Statements of Operations.

The effective tax rate on continuing operations of 7.6% and 0.1% for the 16 weeks ended June 18, 2011 and June 19, 2010, respectively, varied from the statutory rate of 35%, primarily due to state and local income taxes, and the increase in our valuation allowance. The rate for the 16 weeks ended June 19, 2010 was also impacted by the mark to market of the Series B warrants issued in the acquisition of Pathmark.

At June 18, 2011, we had federal Net Operating Loss ("NOL") carry forwards of $981 million, which will expire between fiscal 2024 and 2031, some of which are subject to an annual limitation.  The federal NOL carry forwards include $7.4 million related to the excess tax deductions for stock option plans that have yet to reduce income taxes payable.  Upon utilization of these carry forwards, the associated tax benefits of approximately $2.6 million will be recorded in "Additional paid-in capital" in our Consolidated Balance Sheets.  In addition, we had state loss carry forwards of $1.0 billion that will expire between fiscal 2011 and fiscal 2031. Our Company's general business credits consist of federal and state work incentive credits, which will expire between fiscal 2011 and fiscal 2030, some of which are subject to an annual limitation.

At June 18, 2011 and February 26, 2011, we had net current deferred tax liabilities of $27.1 million and $28.3 million, respectively, which were included in "Other accruals" in our Consolidated Balance Sheets and non-current deferred tax assets of $15.5 million and $16.7 million, respectively, which were recorded in "Other non-current liabilities" in our Consolidated Balance Sheets.

Revision of Prior Period Financial Statements

During the 16 weeks ended June 18, 2011, our Company identified the amount of income tax benefit and income tax expense allocated to continuing operations and discontinued operations, respectively, for the fiscal year ended February 26, 2011 was improperly presented in our Consolidated Statements of Operations.  The impact of this improper presentation, which results from the improper intraperiod allocation of income taxes, was an understatement of the "Benefit from income taxes" related to "Loss from continuing operations" and an understatement of the "Provision for income taxes" related to "Income from discontinued operations" of $33.1 million in our Consolidated Statements of Operations during the fiscal year ended February 26, 2011.  The effect of this revision had no impact on our "Net loss" in our Consolidated Statements of Operations or "Net cash used in operating activities" in our Consolidated Statements of Cash Flows for the fiscal year ended February 26, 2011.

The following table presents the impact of this revision in our Company's Consolidated Statements of Operations for the fiscal year ended February 26, 2011 (in thousands):

	As Reported			Adjustment			As Revised
Benefit from (provision for) income taxes	$	3,798		$	33,146		$	36,944
Loss from continuing operations		(673,400	)		33,146			(640,254	)
Income (loss) from discontinued operations		74,825			(33,146	)		41,679
Net (loss) income per share - basic		(11.45	)		0.01			(11.44	)

The revisions described above will be reflected in our Company's consolidated financial statements for the fiscal year ended February 25, 2012, which will be included in our Company's Annual Report on Form 10-K for the fiscal year ended February 25, 2012.

XML



Document And Entity Information	3 Months Ended
	Jun. 18, 2011	Jul. 27, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 18, 2011
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Entity Registrant Name	GREAT ATLANTIC & PACIFIC TEA CO INC
Entity Central Index Key	0000043300
Current Fiscal Year End Date	--02-25
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		53,852,470

XML



Assets Held For Sale

3 Months Ended

Jun. 18, 2011

Assets Held For Sale

Assets Held For Sale

18.  Assets Held For Sale

During the first quarter of fiscal 2011, our Company held an auction whereby we agreed to sell our interests in 12 of our existing stores based in Maryland and the District of Columbia, all of which are a part of our Fresh reportable segment, for approximately $37.8 million.  The transactions closed during June and July 2011.

XML



Fair Value Measurements

3 Months Ended

Jun. 18, 2011

Fair Value Measurements

Fair Value Measurements

4.  Fair Value Measurements

The accounting guidance for fair value measurement defines and establishes a framework for measuring fair value.  Inputs used to measure fair value are classified based on the following three-tier fair value hierarchy:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Directly or indirectly observable inputs other than Level 1 quoted prices in active markets. Our Level 2 liabilities include warrants, which are valued using the Black-Scholes pricing model with inputs that are observable or can be derived from or corroborated by observable market data.  In addition, our investments in money market funds, which are considered cash equivalents, are classified as Level 2, as they are valued based on their reported Net Asset Value (NAV).

Level 3 – Unobservable inputs that are supported by little or no market activity whose value is determined using pricing models, discounted cash flows, or similar methodologies, as well as instruments for which the determination of fair value requires significant judgment or estimation.

A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 18, 2011 and February 26, 2011 (in thousands):

			Fair Value Measurements at June 18, 2011 Using
			Quoted Prices		Significant Other		Significant
	Total Carrying		in Active		Observable		Unobservable
	Value at		Markets		Inputs		Inputs
	June 18, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	1,552	$	-	$	1,552	$	-
Liabilities:
Series B warrant	$	87	$	-	$	87	$	-

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

There were no transfers in and out of Level 1 and Level 2 fair value measurements during the 16 weeks ended June 18, 2011.

Level 3 Valuations

We did not have any financial assets or liabilities classified as Level 3 within the fair value hierarchy as of June 18, 2011 and February 26, 2011.

Nonfinancial Assets and Liabilities Measured on a Nonrecurring Basis.  Fair value measurements of our nonfinancial assets and nonfinancial liabilities on a nonrecurring basis using Level 3 inputs are primarily used in the impairment analyses of our goodwill and other indefinite-lived intangible assets, our long-lived assets and closed locations occupancy costs.  Long-lived assets and closed locations occupancy costs were measured at fair value on a nonrecurring basis using Level 3 inputs, as unobservable inputs were used to measure their fair value.  Refer to Note 5 – Valuation of Long-Lived Assets, Note 16 – Discontinued Operations and Note 17 – Asset Disposition Initiatives for more information relating to the valuation of these assets and liabilities.

Long-Term Debt

The following table provides the carrying values recorded on our balance sheet and the estimated fair values of financial instruments as of June 18, 2011 and February 26, 2011 (in thousands):

	At June 18, 2011				At February 26, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Current portion of long-term debt	$	350,000	$	350,000	$	159	$	159
Long-term debt-subject to compromise, net of related discount		905,278		470,674		1,255,225		765,577

Our long-term debt includes borrowings under our line of credit, credit agreement, related party promissory note and our debt securities.  The fair value of our debt securities are determined based on quoted market prices for such notes in non-active markets. 

XML



Loss Per Share

3 Months Ended

Jun. 18, 2011

Loss Per Share

Loss Per Share

19.  Loss Per Share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average shares outstanding for the reporting period.  Diluted loss per share reflects all potential dilution, using either the treasury stock method or the "if-converted" method, and assumes that the convertible debt, stock options, restricted stock, performance restricted stock, warrants, preferred stock, and other potentially dilutive financial instruments were converted into common stock on the first day of the period.  If the conversion of a potentially dilutive security yields an antidilutive result, such potential dilutive security is excluded from the diluted earnings per share calculation.

The following table contains common share equivalents, which were not included in the historical loss per share calculations as their effect would be antidilutive:

	16 Weeks Ended	16 Weeks Ended
	June 18, 2011	June 19, 2010
Stock options	5,096,413	1,988,469
Warrants	6,965,858	686,277
Performance restricted stock units	-	218,294
Restricted stock units	719,533	1,080,710
Convertible debt	11,157,569	8,086,769
Financing warrant	11,157,569	11,278,988
Preferred stock	35,804,000	35,000,000

The following table sets forth the calculation of basic and diluted loss per share (in thousands):

	16 Weeks Ended			16 Weeks Ended
	June 18, 2011			June 19, 2010
Loss from continuing operations	$	(177,791	)	$	(115,607	)
Preferred stock dividends		-			(4,308	)
Beneficial conversion feature amortization		(1,482	)		(1,481	)
Loss from continuing operations - basic		(179,273	)		(121,396	)
Adjustments for convertible debt (1)		-			(10,655	)
Adjustments on Other financial liabilities (2)		-			(8,277	)
Loss from continuing operations–diluted	$	(179,273	)	$	(140,328	)
Weighted average common shares outstanding		53,852,470			55,926,065
Share lending agreement (3)		-			(2,427,944	)
Common shares outstanding–basic		53,852,470			53,498,121
Effect of dilutive securities:
Convertible debt (1)		-			3,192,219
Convertible financial liabilities (2)		-			(26,165,689	)
Common shares outstanding–diluted		53,852,470			30,524,651

   (1) We have debt instruments with a bifurcated conversion feature that were recorded at a significant discount.  (Refer to Note 8 – Indebtedness and Other Financial Liabilities).  For purposes of determining if an application of the "if-converted method" to these convertible instruments produces a dilutive result, we consider the combined impact of the numerator and denominator adjustments, including a numerator adjustment for gains and losses, which would have been incurred had the instruments been converted on the first day of the period presented.  

   (2) Our Series B Warrants are classified as a liability because a third party has the right to determine their cash or share settlement.    (Refer to Note 8 – Indebtedness and Other Financial Liabilities).  These warrants are marked-to-market in our Consolidated Statements of Operations.  For example, in periods when the market price of our common stock decreases, our income from continuing operations is increased.   For purposes of determining if an application of the treasury stock method produces a dilutive result, we assume proceeds are used to repurchase common stock and we adjust the numerator similar to the adjustments required under the "if-converted" method.  We consider the combined impact of the numerator and denominator adjustments, including a denominator adjustment to reduce shares, even when the average market price of our common stock for the period is below the warrant's strike price.  

(3) As of June 19, 2010, we had 5,634,002 of loaned shares under our share lending agreements, which were considered issued and outstanding.  The obligation of the financial institutions to return the borrowed shares has been accounted for as prepaid forward contract and, accordingly, shares underlying this contract are removed from the computation of basic and diluted earnings per share, unless the borrower defaults on returning the related shares.  On September 15, 2008, Lehman Europe, who is a party to a 3,206,058 share lending agreement with our Company filed under chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court and/or commenced equivalent proceedings in jurisdictions outside of the United States (collectively, the "Lehman Bankruptcy").  As such, we have included these loaned shares as issued and outstanding effective September 15, 2008 for purposes of computing our basic and diluted weighted average shares and (loss) income per share.  During fiscal 2009, Bank of America, N.A., who is a party to our share lending agreement, returned 2,500,000 shares, eliminating our obligation to lend additional shares to them in the future.  The returned shares were immediately retired, reducing our issued and outstanding shares. For the 16 weeks ended June 19, 2010, weighted average common shares relating to share lending agreements of 2,427,944 were excluded from the computation of earnings per share. As of February 26, 2011, there were no shares outstanding with Bank of America, N.A.

XML



Asset Disposition Initiatives

3 Months Ended

Jun. 18, 2011

Asset Disposition Initiatives

Asset Disposition Initiatives

17.  Asset Disposition Initiatives

In addition to the events describe in Note 16 – Discontinued Operations, there were restructuring transactions which were not primarily related to our discontinued operations businesses. These events are referred to based on the year the transaction was initiated, as described below.

Summarized below is a reconciliation of the liabilities related to restructuring obligations resulting from these activities (in thousands):

	For the 16 Weeks Ended June 18, 2011
	Balance at		Interest							Balance at
	2/26/2011		Accretion(1)		Adjustments(2)		Utilization(3)			6/18/2011
2011 Event
Continuing Operations
Occupancy	$	-	$	-	$	33,960	$	(1,264	)	$	32,696
Severance		2,738		-		2,948		(945	)		4,741
2011 event total		2,738		-		36,908		(2,209	)		37,437
2010 Event
Continuing Operations
Occupancy		29,353		-		-		(168	)		29,185
Health benefits		239		-		-		-			239
2010 event total		29,592		-		-		(168	)		29,424
2005 Event
Continuing Operations
Health benefits		445		-		-		(60	)		385
2005 event total		445		-		-		(60	)		385
2001 Event
Continuing Operations
Occupancy		2,127		-		166		-			2,293
Discontinued Operations
Occupancy		1,774		-		-		-			1,774
2001 event total		3,901		-		166		-			4,067
1998 Event
Continuing Operations
Occupancy		3,400		8		-		(118	)		3,290
Pension withdrawals and health benefits		524		-		-		-			524
1998 event total		3,924		8		-		(118	)		3,814
Total	$	40,600	$	8	$	37,074	$	(2,555	)	$	75,127

(1)   The additions to occupancy represent the interest accretion on future occupancy costs which were recorded at present value at the time of the original charge.   These adjustments are recorded to "Store operating, general and administrative expense" and "Reorganization items, net" for continuing operations and "Loss from operations of discontinued businesses" for discontinued operations in our Consolidated Statements of Operations.  

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

For the 16 Weeks Ended June 18, 2011

For the 16 weeks ended June 18, 2011, we recorded an initial occupancy charge for the 2011 event related to the April store closings of $63.3 million partially offset by an adjustment of $29.3 million to reduce the occupancy liabilities to an estimated allowable claim amount due to property leases that were rejected in bankruptcy court during the first quarter of fiscal 2011.  In addition, we recorded an initial severance charge for the 2011 Event related to the southern store closings of $2.8 million and an adjustment of $0.1 million for the 2011 Event related to the April store closings.  These store closures were completed by July 9, 2011.  An occupancy charge for these stores will be recorded in the second quarter of fiscal 2011.

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

Summarized below are the payments made to date from the time of the original charge and expected future payments related to these events (in thousands):

	2011		2010		2005		2001		1998
	Event		Event		Event		Event		Event		Total
Total severance payments made to date	$	945	$	533	$	49,297	$	28,205	$	30,940	$	109,920
Expected future severance payments		4,741		239		385		-		524		5,889
Total severance payments expected
to be incurred	$	5,686	$	772	$	49,682	$	28,205	$	31,464	$	115,809
Total occupancy payments made to date	$	1,264	$	957	$	13,856	$	67,283	$	120,090	$	203,450
Expected future occupancy payments,
excluding interest accretion		32,696		29,185		-		4,067		3,290		69,238
Total occupancy payments expected
to be incurred, excluding interest
accretion	$	33,960	$	30,142	$	13,856	$	71,350	$	123,380	$	272,688
Total severance and occupancy
payments made to date	$	2,209	$	1,490	$	63,153	$	95,488	$	151,030	$	313,370
Expected future severance and
occupancy payments, excluding
interest accretion		37,437		29,424		385		4,067		3,814		75,127
Total severance and occupancy payments
expected to be incurred, excluding
interest accretion	$	39,646	$	30,914	$	63,538	$	99,555	$	154,844	$	388,497

Payments to date were primarily for occupancy related costs such as rent, common area maintenance, real estate taxes, lease termination costs, severance, and benefits.  The remaining obligation relates to expected future payments under long-term leases and expected future payments for early withdrawal from multi-employer union pension plans.  The expected completion dates for the 2011, 2010, 2005, 2001 and 1998 events are 2015, 2012, 2015, 2012 and 2013, respectively.

Summarized below are the amounts included in our balance sheet captions in our Company's Consolidated Balance Sheets related to these events (in thousands):

					June 18, 2011
	2011		2010		2005		2001		1998
	Event		Event		Event		Event		Event		Total
Other accruals	$	4,741	$	-	$	-	$	-	$	-	$	4,741
Other non-current liabilities	$	-	$	-	$	-	$	-	$	-	$	-
Liabilities subject to compromise	$	32,696	$	29,424	$	385	$	4,067	$	3,814	$	70,386
					February 26, 2011
			2010		2005		2001		1998
			Event		Event		Event		Event		Total
Other accruals			$	-	$	-	$	-	$	-	$	-
Other non-current liabilities			$	-	$	-	$	-	$	-	$	-
Liabilities subject to compromise			$	29,592	$	445	$	3,901	$	3,924	$	37,862

We evaluated the closed locations reserves balances as of June 18, 2011 based on current information and have concluded that they are adequate to cover future costs.  We will continue to monitor the status of the vacant and subsidized properties, severance and benefits, and pension withdrawal liabilities, and adjustments to the closed locations reserves balances may be recorded in the future, if necessary.

XML



Liabilities Subject To Compromise

3 Months Ended

Jun. 18, 2011

Liabilities Subject To Compromise

Liabilities Subject To Compromise

9.   Liabilities Subject to Compromise

As a result of the Bankruptcy Filing, the payment of pre-petition indebtedness is subject to compromise or other treatment under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-Bankruptcy Filing liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted the Debtor authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of our Company's businesses and assets. Among other things, the Bankruptcy Court authorized us to pay certain pre-petition claims relating to employee wages and benefits, customers, vendors, and suppliers.

We have been paying and intend to continue to pay undisputed post-petition claims in the ordinary course of business. In addition, we may reject pre-petition executory contracts and unexpired leases with respect to our operations, with the approval of the Bankruptcy Court. Any damages resulting from rejection of executory contracts and unexpired leases are treated as general unsecured claims and will be classified as "Liabilities subject to compromise" in our Consolidated Balance Sheets. We previously notified all known claimants subject to the bar date of their need to file a proof of claim with the Bankruptcy Court. A bar date is the date by which claims against our Company must be filed if the claimants disagree with the amounts included in our schedule of assets and liabilities filed with the Bankruptcy Court and wish to receive any distribution in the Bankruptcy Filing.  The bar date of June 17, 2011 set by the Bankruptcy Court has passed. Thus far, claimants filed over nine thousand claims against our Company, asserting approximately $27.8 billion worth of liabilities.  Our Company and our retained professionals are continuing to review and analyze the proofs of claim submitted by claimants and will investigate any material differences between these claims and liability amounts estimated by our Company. If necessary, in the event of a claims dispute, the Bankruptcy Court will make a final determination whether such claims should be allowed and, if so, the appropriate amount of such allowed claims. The ultimate amount of such liabilities is not determinable at this time.

Pre-petition liabilities that are subject to compromise are required to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts.  The amounts currently classified as "Liabilities subject to compromise" may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, or other events.  We expect that certain amounts currently classified as "Liabilities subject to compromise" may in fact be paid in the ordinary course as they come due.  Any resulting changes in classification will be reflected in subsequent financial statements.

Liabilities subject to compromise consist of the following (in thousands):

	At		At
	June 18, 2011		February 26, 2011
Accounts payable	$	204,044	$	212,135
Accrued salaries, wages, and benefits		10,941		10,939
Self-insurance reserves		396,260		400,170
Closed locations reserves		11,354		50,550
Damages claim for rejected leases		168,796		106,642
Pension withdrawal liabilities		112,613		97,196
GHI liability for employee benefits		96,701		94,281
Accrued occupancy related costs for open stores		22,200		24,523
Deferred income		34,043		74,394
Deferred real estate income		34,995		89,309
Accrued audit, legal and other		6,886		8,118
Accrued interest		43,021		33,921
Other postretirement and postemployment benefits		41,831		41,655
Other accruals		9,310		8,005
Pension plan benefits		127,659		125,000
Deferred rent liabilities		51,524		56,287
Unfavorable lease liabilities		825		4,201
Other noncurrent liabilities		10,678		11,316
5.125% Convertible Senior Notes, due June 15, 2011		165,000		165,000
Related Party Promissory Note, due August 18, 2011		10,000		10,000
9.125% Senior Notes, due December 15, 2011		12,840		12,840
6.750% Convertible Senior Notes, due December 15, 2012		255,000		255,000
11.375% Senior Secured Notes, due August 1, 2015		260,000		260,000
9.375% Notes, due August 1, 2039		200,000		200,000
Other debt		2,525		2,714
Obligations under capital leases		110,337		121,058
Real estate liabilities		390,029		399,480
Total liabilities subject to compromise	$	2,789,412	$	2,874,734

Rejected Leases

During the 16 weeks ended June 18, 2011, we rejected 44 of our leases through the bankruptcy process. We reduced the reserves balance associated with these leases by $39.0 million, net to the allowance claim for damages of $168.8 million. The remaining closed locations reserves balance of $11.3 million pertains to locations for which the leases have not been rejected.  In connection with the 44 rejected leases, the related deferred real estate income, unfavorable lease liabilities, obligations under capital leases and real estate liabilities were written off, all which were recorded to "Reorganization items, net" in our Consolidated Statements of Operations. Refer to Note 14 – Reorganization Items, Net, for further discussion of our rejected leases.

Non-debtor Financing Agreements

Intercompany financing agreements with foreign non-Debtor subsidiaries of $94.1 million are not reflected in the above liabilities subject to compromise table as these amounts were eliminated on a consolidated basis.

XML



Consolidated Statements Of Cash Flows (USD $) In Thousands	3 Months Ended
	Jun. 18, 2011	Jun. 19, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (157,161)	$ (122,643)
Adjustments to reconcile net loss to net cash used in operating activities	92,890	82,782
Other changes in assets and liabilities:
Decrease in receivables	47,920	4,139
Decrease (increase) in inventories	26,573	(4,401)
(Increase) decrease in prepaid expenses and other current assets	(2,039)	1,209
Increase in other assets	(4,487)	(1,224)
(Decrease) increase in accounts payable	(21,151)	1,584
(Decrease) increase in accrued salaries, wages and benefits, and taxes	(1,853)	2,059
Increase (decrease) in other accruals	67,753	(1,763)
Decrease in other non-current liabilities	(67,943)	(19,978)
Other operating activities, net	(113)	(29)
Payment for reorganization items	(11,304)
Net cash used in operating activities	(30,915)	(58,265)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property	(11,177)	(19,668)
Proceeds from disposal of property	6,805	1,677
Decrease in restricted cash		302
Proceeds from sale of pharmacy assets	2,821
Net cash used in investing activities	(1,551)	(17,689)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		800
Principal payments on long-term debt	(55)	(69)
Principal payments on long-term real estate liabilities	(355)	(383)
Principal payments on capital leases	(3,360)	(3,775)
(Decrease) increase in book overdrafts	(2,825)	4,710
Payments of financing fees for debtor-in-possession financing	(1,415)
Deferred financing fees		(21)
Dividends paid on preferred stock		(7,000)
Proceeds from exercises of stock options		28
Net cash used in financing activities	(8,010)	(5,710)
Net decrease in cash and cash equivalents	(40,476)	(81,664)
Cash and cash equivalents at beginning of period	352,607	252,426
Cash and cash equivalents at end of period	312,131	170,762
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIIES:
Depreciation and amortization	59,444	70,379
Impairment of long-lived assets	55,418	5,890
Nonoperating income	(83)	(8,277)
Non-cash interest expense	3,726	12,785
Stock compensation expense (income)	491	(861)
Pension withdrawal costs	13,923
Employee benefit related costs	3,672	1,965
LIFO adjustment	1,122	856
Asset disposition initiatives in the normal course of business	64,662
Asset disposition initiatives relating to discontinued operations		4
Non-cash occupancy charges for locations closed in the normal course of business	813	466
(Gains) losses on disposal of owned property and write-down of property, net	(146)	1,025
Amortization of deferred real estate income	(1,030)	(1,371)
Gain on disposal of discontinued operations		(79)
Gain on sale of pharmacy assets	(2,821)
C&S contract effect	6,986
Provision for deferred income taxes	(1,719)
Reorganization items, net relating to continuing operations	(77,878)
Reorganization items, net relating to discontinued operations	(34,194)
Financing fees	504
Total adjustments to net loss	$ 92,890	$ 82,782

XML



Other Accruals

3 Months Ended

Jun. 18, 2011

Other Accruals

Other Accruals

6.  Other Accruals

Other accruals at June 18, 2011 and February 26, 2011 were comprised of the following (in thousands):

	At							At
	June 18, 2011							February 26, 2011
	Other Accruals							Other Accruals
	Prior to		Amounts					Prior to		Amounts
	Financial		Classified as					Financial		Classified as
	Statement		Subject to			Other		Statement		Subject to			Other
	Classification		Compromise1			Accruals		Classification		Compromise1			Accruals
Self-insurance reserves	$	52,446	$	(43,406	)	$	9,040	$	47,792	$	(45,466	)	$	2,326
Deferred taxes		27,064		-			27,064		28,335		-			28,335
Closed locations reserves		6,261		(6,261	)		-		11,358		(11,358	)		-
Damages claim for rejected leases		168,796		(168,796	)		-		106,642		(106,642	)		-
Pension withdrawal liabilities		10,461		(10,461	)		-		10,461		(10,461	)		-
GHI liability for employee benefits		7,946		(7,946	)		-		7,776		(7,776	)		-
Accrued occupancy-related costs for open stores		40,721		(22,200	)		18,521		48,742		(24,523	)		24,219
Deferred income		20,664		(11,931	)		8,733		23,299		(21,363	)		1,936
Deferred real estate income		1,799		(1,799	)		-		2,508		(2,508	)		-
Accrued audit, legal and other		10,377		(6,886	)		3,491		11,777		(8,118	)		3,659
Accrued interest		49,213		(43,021	)		6,192		35,600		(33,921	)		1,679
Other postretirement and postemployment benefits		2,918		(2,918	)		-		2,918		(2,918	)		-
Accrued advertising		488		-			488		718		-			718
Other accruals		11,208		(9,310	)		1,898		10,181		(8,005	)		2,176
Total	$	410,362	$	(334,935	)	$	75,427	$	348,107	$	(283,059	)	$	65,048

1Refer to Note 9 – Liabilities subject to compromise for additional information.

XML



Stock Based Compensation

3 Months Ended

Jun. 18, 2011

Stock Based Compensation

Stock Based Compensation

11.  Stock Based Compensation

At June 18, 2011, we had two stock-based compensation plans, the 2008 Long Term Incentive and Share Award Plan and the 2004 Non-Employee Director Compensation Plan.  The general terms of each plan are reported in our Fiscal 2010 Annual Report on Form 10-K.

The components of our compensation expense (income) related to stock-based incentive plans were as follows (in thousands):

	For the 16 Weeks Ended
	June 18, 2011			June 19, 2010
Stock options	$	756		$	(368	)
Restricted stock units		199			231
Performance restricted stock units		-			(973	)
Common stock granted to Directors		(464	)		249
Total stock-based compensation expense (income)	$	491		$	(861	)

There were no stock-based grants during the 16 weeks ended June 18, 2011.

Stock options

As of June 18, 2011, approximately $6.7 million, after tax, of total unrecognized compensation expense related to unvested stock option awards will be recognized over a weighted average period of 2.1 years.

Restricted Stock

None of the previously granted restricted stock units vested during the 16 weeks ended June 18, 2011.  As of June 18, 2011, approximately $1.8 million, net of tax, of total unrecognized compensation expense relating to restricted stock units granted during fiscal 2010 and fiscal 2009 is expected to be recognized through fiscal 2013.

2004 Non-Employee Director Compensation Plan

Although the 2004 Non-Employee Director Compensation Plan ("Director Plan") is still in effect, at this time our Company does not anticipate issuing an annual grant of common stock or common stock equivalent in fiscal 2011. As a result, our Company reversed previously recognized stock compensation expense expected to be issued at the Fiscal 2011 annual meeting during the 16 weeks ended June 18, 2011. Such stock compensation expense will not be recognized in our Consolidated Statements of Operations until formal changes are made to the Director Plan.

XML



Other Non-Current Liabilities

3 Months Ended

Jun. 18, 2011

Other Non-Current Liabilities

Other Non-Current Liabilities

7.  Other Non-Current Liabilities

Other non-current liabilities at June 18, 2011 and February 26, 2011 were comprised of the following (in thousands):

	At							At
	June 18, 2011							February 26, 2011
	Non-Current							Non-Current
	Liabilities							Liabilities
	Prior to Financial		Amounts Classified as			Other Non-		Prior to Financial		Amounts Classified as			Other Non-
	Statement		Subject to			Current		Statement		Subject to			Current
	Classification		Compromise1			Liabilities		Classification		Compromise1			Liabilities
Self-insurance reserves	$	365,797	$	(352,854	)	$	12,943	$	366,891	$	(354,704	)	$	12,187
Closed locations reserves		5,093		(5,093	)		-		39,192		(39,192	)		-
Pension withdrawal liabilities		102,152		(102,152	)		-		86,735		(86,735	)		-
GHI liability for employee benefits		88,755		(88,755	)		-		86,505		(86,505	)		-
Pension plan benefits		127,659		(127,659	)		-		125,000		(125,000	)		-
Other postretirement and postemployment benefits		38,913		(38,913	)		-		38,737		(38,737	)		-
Loans on life insurance policies		61,943		-			61,943		61,943		-			61,943
Deferred rent liabilities		51,570		(51,524	)		46		56,287		(56,287	)		-
Deferred income		22,676		(22,112	)		564		53,031		(53,031	)		-
Deferred real estate income		33,196		(33,196	)		-		86,801		(86,801	)		-
Unfavorable lease liabilities		825		(825	)		-		4,201		(4,201	)		-
Other non-current liabilities		10,721		(10,678	)		43		11,348		(11,316	)		32
Total	$	909,300	$	(833,761	)	$	75,539	$	1,016,671	$	(942,509	)	$	74,162

1Refer to Note 9 – Liabilities subject to compromise for additional information.

XML



Valuation Of Long-Lived Assets

3 Months Ended

Jun. 18, 2011

Valuation Of Long-Lived Assets

Valuation Of Long-Lived Assets

5.  Valuation of Long-Lived Assets

We review the carrying values of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable.

Impairments due to closure or conversion in the normal course of business

We review assets in stores planned for closure or conversion for impairment upon determination that such assets will not be used for their intended useful life.  During the 16 weeks ended June 18, 2011 and June 19, 2010, we recorded impairment losses on long-lived assets of nil and $0.5 million, respectively, related to stores that were closed or converted in the normal course of business.  These amounts were recorded within "Store operating, general and administrative expense" in our Consolidated Statements of Operations.

Impairments due to store closures

In February 2011, our Company obtained authority from the Bankruptcy Court to close 32 stores in six states as we continue to fully implement our comprehensive financial and operational restructuring.  As a result, we recorded an impairment charge of $31.4 million during fiscal 2010, of which $19.4 million, $9.0 million and $3.0 million related our Fresh, Pathmark, and Other reporting segments, respectively.  These store closures were completed on April 16, 2011.  During the 16 weeks ended June 18, 2011, we recorded an additional impairment charge of $0.4 million, of which $0.3 million and $0.1 million were attributed to our Pathmark and Fresh reporting segments, respectively. These amounts were recorded within "Goodwill, trademark, and long-lived asset impairment" in our Consolidated Statements of Operations.

In April and May 2011, our Company obtained approval from the Bankruptcy Court to sell, or alternatively, to close, an additional 25 stores located in Maryland, Delaware and the District of Columbia (the "Southern Stores").  During the first quarter of fiscal 2011, our Company held an auction whereby we agreed to sell our interests in 12 of our existing stores based in Maryland and the District of Columbia, all of which are a part of our Fresh reportable segment, for approximately $37.8 million.  The transactions closed during June and July 2011.During the 16 weeks ended June 18, 2011, we recorded an impairment charge of $2.9 million, all of which pertained to our Fresh reporting segment. These amounts were recorded within "Goodwill, trademark, and long-lived asset impairment" in our Consolidated Statements of Operations. These store closures were completed by July 9, 2011.

There were no such closures during the 16 weeks ended June 19, 2010.

Impairments due to unrecoverable assets

As a result of recently performed projections combined with continued cash flow loss experience, we determined that a triggering event had occurred that required us to test the related long-lived assets for potential impairment.  We recorded an impairment charge of $52.1 million and $5.4 million during the 16 weeks ended June 18, 2011 and  June 19, 2010, respectively, to partially write down these stores' long-lived assets, which consist of favorable leases, capital leases, and land and buildings, with a carrying amount of $84.3 million to their fair value of $32.2 million and with a carrying amount of $40.5 million to their fair value of $35.1 million for the 16 weeks ended June 18, 2011 and June 19, 2010, respectively. The impairment charge of $52.1 million recorded during the 16 weeks ended June 18, 2011 all related to our Pathmark reportable segment. The impairment charge of $5.4 million recorded during the 16 weeks ended June 19, 2010, all related to our Pathmark reporting segment with the exception of $0.9 million which was attributed to our Fresh reporting segment. These amounts were recorded within "Goodwill, trademark, and long-lived asset impairment" in our Consolidated Statements of Operations.

The effects of changes in estimates of useful lives were not material to ongoing depreciation expense.  If current operating levels do not improve, there may be a need to take further actions which may result in additional future impairments on long-lived assets, including the potential for impairment of assets that are held and used.

XML



Consolidated Balance Sheets (USD $) In Thousands	Jun. 18, 2011	Feb. 26, 2011
Assets
Cash and cash equivalents	$ 312,131	$ 352,607
Restricted cash	1,731	1,731
Accounts receivable, net of allowance for doubtful accounts of $5,189 and $5,554 at June 18, 2011 and February 26, 2011, respectively	161,982	209,966
Inventories, net	406,279	440,960
Prepaid expenses and other current assets	35,451	36,329
Assets held for sale	12,915
Total current assets	930,489	1,041,593
Non-current assets:
Property owned, net	1,040,903	1,163,853
Property under capital leases, net	60,296	63,346
Property, net	1,101,199	1,227,199
Goodwill	110,412	110,412
Intangible assets, net	120,988	124,288
Other assets	142,313	141,357
Total assets	2,405,401	2,644,849
Liabilities and Stockholders' Deficit
Current portion of long-term debt	350,000
Accounts payable	112,300	119,245
Book overdrafts	20,897	23,722
Accrued salaries, wages and benefits	105,111	109,428
Accrued taxes	32,309	26,175
Other accruals	75,427	65,048
Total current liabilities	696,044	343,618
Non-current liabilities:
Long-term debt		350,000
Other non-current liabilities	75,539	74,162
Total liabilities not subject to compromise	771,583	767,780
Liabilities subject to compromise	2,789,412	2,874,734
Total liabilities	3,560,995	3,642,514
Series A redeemable preferred stock - no par value, $1,000 redemption value; authorized - 700,000 shares; issued 179,020 shares at June 18, 2011 and February 26, 2011	145,293	143,299
Commitments and contingencies (Refer to Note 20)
Stockholders' deficit:
Common stock - $1 par value; authorized - 260,000,000 shares; issued and outstanding - 53,852,470 shares at June 18, 2011 and February 26, 2011	53,852	53,852
Additional paid-in capital	509,631	511,157
Accumulated other comprehensive loss	(76,545)	(75,309)
Accumulated deficit	(1,787,825)	(1,630,664)
Total stockholders' deficit	(1,300,887)	(1,140,964)
Total liabilities and stockholders' deficit	$ 2,405,401	$ 2,644,849

XML



Basis Of Presentation

3 Months Ended

Jun. 18, 2011

Basis Of Presentation

Basis Of Presentation

1.  Basis of Presentation

The accompanying Consolidated Statements of Operations, Consolidated Statements of Stockholders' Deficit and Comprehensive Loss, and Consolidated Statements of Cash Flows for the 16 weeks ended June 18, 2011 and June 19, 2010, and the Consolidated Balance Sheets at June 18, 2011 and February 26, 2011 of The Great Atlantic & Pacific Tea Company, Inc. ("we," "our," "us" or "our Company") are unaudited and, in the opinion of management, contain all adjustments that are of a normal and recurring nature necessary for a fair statement of financial position and results of operations for such periods.  The consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Fiscal 2010 Annual Report on Form 10-K.  Interim results are not necessarily indicative of results for a full year.

The consolidated financial statements include the accounts of our Company and all subsidiaries.  All intercompany accounts and transactions have been eliminated.

Bankruptcy Filing

On December 12, 2010, our Company and all of our U.S. subsidiaries (the "Debtors") filed voluntary petitions for relief (the "Bankruptcy Filing") under chapter 11 of title 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York in White Plains (the "Bankruptcy Court"), which are being jointly administered under case number 10-24549.   Management's decision to initiate the Bankruptcy Filing was in response to, among other things, our Company's deteriorating liquidity and management's conclusion that the challenges of successfully implementing additional financing initiatives and of obtaining necessary cost concessions from our Company's business and labor partners, was negatively impacting our Company's ability to implement our previously announced turnaround strategy.  Our Company's non-U.S. subsidiaries, which are immaterial on a consolidated basis and have no retail operations, were not part of the Bankruptcy Filing.

We are currently operating as debtors-in-possession pursuant to the Bankruptcy Filing and continuation of our Company as a going-concern is contingent upon, among other things, the Debtors' ability (i) to comply with the terms and conditions of the DIP Credit Agreement described in Note 8 – Indebtedness and Other Financial Liabilities; (ii) to develop a plan of reorganization and obtain confirmation of that plan under the Bankruptcy Code; (iii) to reduce debt and other liabilities through the bankruptcy process; (iv) to return to profitability, including by securing necessary near-term cost concessions from our business and labor partners; (v) to generate sufficient cash flow from operations; and (vi) to obtain financing sources to meet our future obligations.  The uncertainty regarding these matters raises substantial doubt about our ability to continue as a going concern.

Our Company was required to apply the FASB's provisions of Reorganizations effective on December 12, 2010, which is applicable to companies in chapter 11, which generally does not change the manner in which financial statements are prepared. However, it does require that the financial statements for periods subsequent to the filing of the Bankruptcy Filing petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items in the Consolidated Statements of Operations beginning in the year ended February 26, 2011. The balance sheet must distinguish pre-Bankruptcy Filing liabilities subject to compromise from both those pre-Bankruptcy Filing liabilities that are not subject to compromise and from post-Bankruptcy Filing liabilities.  As discussed in Note 8 - Indebtedness and Other Financial Liabilities, currently the Senior Secured Notes totaling $260.0 million have priority over the unsecured creditors of our Company. Based upon the uncertainty surrounding the ultimate treatment of the Notes in our reorganization plan, including the potential that these Notes may be impaired, these Notes are classified as "Liabilities subject to compromise" in our Consolidated Balance Sheets.  Our Company continues to evaluate creditors' claims for other claims that may also have priority over unsecured creditors. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be approved by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the plan of reorganization. In addition, cash used in reorganization items must be disclosed separately in our Consolidated Statements of Cash Flows.

Supply Agreement

On June 2, 2011, our Company entered into a definitive agreement with C&S Wholesale Grocers, Inc. ("C&S") effective May 29, 2011, whereby C&S will provide warehousing, transportation, procurement, purchasing and ancillary services (the "Services") in support of a substantial portion of our Company's supply chain. This agreement terminates and replaces the warehousing, logistics, procurement and purchasing agreement under which the parties have been operating since 2008.

The term of the agreement is through the effective date of our Company's plan of reorganization in its Bankruptcy Filing but may be extended by either party for a term concurrent with a fixed volume commitment based upon wholesale purchases of merchandise resulting in a term of approximately seven years. The cost structure of the agreement is a combination of a fixed cost and variable upcharge pricing model. The charges are subject to adjustment due to volume change or other material changes to the operating assumptions of the agreement.

Our Company expects it will realize a run-rate of more than $50 million in annual savings commencing with our Company's emergence from the Bankruptcy Filing pursuant to a plan of reorganization. The agreement provides our Company with important service enhancements, including detailed service specifications and key performance measures. The agreement also permits our Company to maintain product standards and specifications for all merchandise purchased for resale in our Company's stores.

Significant Accounting Policies

A summary of our significant accounting policies may be found in our Annual Report on Form 10-K for the year ended February 26, 2011.  There have been no significant changes in these policies during the 16 weeks ended June 18, 2011.

XML



Recently Issued Accounting Pronouncements

3 Months Ended

Jun. 18, 2011

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

2.  Recently Issued Accounting Pronouncements

Comprehensive Income. In June 2011, the FASB issued updated guidance on the presentation of comprehensive income, eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. All changes in our Company's stockholders' deficit will be presented in either a single continuous statement of comprehensive loss or in two separate but consecutive statements. The updated guidance is to be applied retrospectively and is effective for public entities for fiscal years, and interim periods within those years, ending after December 15, 2011 with early adoption permitted. The impact of this update is expected to be immaterial.

XML



Commitments And Contingencies

3 Months Ended

Jun. 18, 2011

Commitments And Contingencies

Commitments And Contingencies

20.  Commitments and Contingencies

Supply Agreement

On June 2, 2011, our Company entered into a definitive agreement with C&S effective May 29, 2011, whereby C&S will provide Services in support of a substantial portion of our Company's supply chain. This agreement terminates and replaces the warehousing, logistics, procurement and purchasing agreement under which the parties have been operating since 2008.

The term of the agreement is through the effective date of our Company's plan of reorganization in its Bankruptcy Filing but may be extended by either party for a term concurrent with a fixed volume commitment based upon wholesale purchases of merchandise resulting in a term of approximately seven years. The cost structure of the agreement is a combination of a fixed cost and variable upcharge pricing model. The charges are subject to adjustment due to volume change or other material changes to the operating assumptions of the agreement.

Our Company expects it will realize a run-rate of more than $50 million in annual savings commencing with our Company's emergence from the Bankruptcy Filing pursuant to a plan of reorganization. The agreement provides our Company with important service enhancements, including detailed service specifications and key performance measures. The agreement also permits our Company to maintain product standards and specifications for all merchandise purchased for resale in our Company's stores.

Lease Assignment

On August 14, 2007, Pathmark entered into a leasehold assignment contract for the sale of its leasehold interests in one of its stores to CPS Operating Company LLC, a Delaware limited liability company ("CPS").  Pursuant to the terms of the agreement, Pathmark was to receive $87.0 million for assigning and transferring to CPS all of Pathmark's interest in the lease and CPS was to have assumed all of the duties and obligations of Pathmark under the lease.  CPS deposited $6.0 million in escrow as a deposit against the purchase price for the lease, which is non-refundable to CPS, except as otherwise expressly provided in the agreement.  The assignment of the lease was scheduled to close on December 28, 2007.   On December 27, 2007, CPS issued a notice terminating the agreement for reason of a purported breach of the agreement, which, if proven, would require the return of the escrow. We are disputing the validity of CPS's notice of termination as we believe CPS's position is without merit.  Because we are challenging the validity of CPS's December 27, 2007 notice of termination, we issued our own notice to CPS on December 31, 2007, asserting CPS's breach of the agreement as a result of their failure to close on December 28, 2007.  CPS's breach, if proven, would entitle us to keep the escrow.  Both parties have taken legal action in New York state court to obtain the $6.0 million deposit held in escrow. In May 2011, the Bankruptcy Court entered an order authorizing the Pathmark and CPS to proceed with their New York state litigation notwithstanding the automatic stay.

Rejection of GHI Trucking Agreement

On February 4, 2011, the Bankruptcy Court entered an order authorizing Pathmark to reject a burdensome trucking agreement with GHI and enter into an interim replacement trucking arrangement with C&S.  Because Pathmark was GHI's largest customer, its rejection of the trucking agreement negatively impacted GHI's business, prompting GHI to layoff a significant number of its employees.  The local union representing GHI's employees subsequently brought suit against GHI in New Jersey federal court alleging that GHI's termination of its employees violated New Jersey state and federal WARN statutes and constituted a breach of GHI's collective bargaining agreement with the union.  On March 31, 2011, GHI filed a motion with the Bankruptcy Court seeking leave to file a third party complaint in the New Jersey action seeking in excess of $100 million in damages against our Company alleging, among other things, that our conduct in connection with rejecting the trucking agreement was tortious and that we were responsible for any WARN Act liability of GHI to its former employees.  The Bankruptcy Court denied GHI's motion, and GHI appealed the Bankruptcy Court's decision to the district court, which appeal is pending.

LaMarca et al v. The Great Atlantic & Pacific Tea Company, Inc ("Defendants")

On June 24, 2004, a class action complaint was filed in the Supreme Court of the State of New York against The Great Atlantic & Pacific Tea Company, Inc., d/b/a A&P, The Food Emporium, and Waldbaum's alleging violations of the overtime provisions of the New York Labor Law.  Three named plaintiffs, Benedetto LaMarca, Dolores Guiddy, and Stephen Tedesco, alleged on behalf of a class that our Company failed to pay overtime wages to full-time hourly employees who were either required or permitted to work more than 40 hours per week. This matter has been stayed by our Bankruptcy Filing and is a claim that is subject to compromise.  

Other

We are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business.  We are also subject to certain environmental claims.  While the outcome of these claims cannot be predicted with certainty, Management does not believe that the outcome of any of these legal matters will have a material adverse effect in our Consolidated results of operations, financial position or cash flows.

XML



Subsequent Events

3 Months Ended

Jun. 18, 2011

Subsequent Events

Subsequent Events

22.  Subsequent Events

On July 8, 2011, our Company and certain of its U.S. subsidiaries, each as a borrower, entered into the First Amendment to the DIP Credit Agreement with the Agent and the DIP Lenders.  Pursuant to the terms of the First Amendment to the DIP Credit Agreement, among other things, any of the dispositions by our Company and its subsidiaries of our Southern Stores as specified therein will not constitute a prepayment event, and the proceeds of such dispositions will not be required to be applied to prepayment of the loans under the DIP Credit Agreement.  The First Amendment to the DIP Credit Agreement also contains some other clarifying changes.

The above summary of material terms of the First Amendment to the DIP Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety, by reference to the complete text of the First Amendment to the DIP Credit Agreement.

XML



Redeemable Preferred Stock

3 Months Ended

Jun. 18, 2011

Redeemable Preferred Stock

Redeemable Preferred Stock

10.  Redeemable Preferred Stock

On August 4, 2009, our Company issued 60,000 shares of 8.0% Cumulative Convertible Preferred Stock, Series A-T, without par value, to affiliates of Tengelmann Warenhandelsgesellschaft KG ("Tengelmann") and 115,000 shares of 8.0% Cumulative Convertible Preferred Stock, Series A-Y, without par value, to affiliates of Yucaipa Companies LLC ("Yucaipa"), together referred to as the "Preferred Stock," for approximately $162.8 million, after deducting approximately $12.2 million in closing and issuance costs. Each share of the Preferred Stock has an initial liquidation preference of one thousand dollars, subject to adjustment.

The Preferred Stock issuance was classified within temporary stockholders' equity in our Consolidated Balance Sheets as of June 18, 2011 and February 26, 2011.  The holders of the Preferred Stock are entitled under a pre-bankruptcy agreement to an 8.0% dividend, payable quarterly in arrears in cash or in additional shares of Preferred Stock if our Company does not meet the liquidity levels required to pay the dividends.  However, no dividends have been paid during the pendency of our bankruptcy case.

On November 24, 2010 our Company's Board of Directors authorized a payment-in-kind ("PIK") dividend on our Preferred Stock, payable on December 15, 2010 to holders of record on November 15, 2010 ("Record Date"). Dividends are required to be PIK in the event our Company does not have the ability to pay the dividends in cash. As of the Record Date, we did not have the ability to pay the dividends in cash. The calculation of PIK dividends on our Preferred Stock is based upon the rate defined by the original terms of the Preferred Stock at 9.5% per annum. The PIK dividends of approximately $4.0 million are included in "Series A Redeemable Preferred Stock" in our Consolidated Balance Sheets.

Deferred financing fees amortization and embedded beneficial conversion features accretion for the 16 weeks ended June 18, 2011 and June 19, 2010 was $0.5 million and $1.5 million, respectively, during each period. During the 16 weeks ended June 19, 2010, we accrued Preferred Stock dividends of $4.3 million, within "Additional paid-in capital" and paid Preferred Stock cash dividends of $7.0 million.

XML



Goodwill And Other Intangible Assets

3 Months Ended

Jun. 18, 2011

Goodwill And Other Intangible Assets

Goodwill And Other Intangible Assets

3.   Goodwill and Other Intangible Assets

The carrying values of our finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable.   Our intangible assets that have finite useful lives are amortized over their estimated useful lives. Goodwill and other intangibles with indefinite useful lives that are not subject to amortization are tested for impairment in the fourth quarter of each fiscal year, or more frequently whenever events or changes in circumstances indicate that impairment may have occurred.  The latest impairment assessment of goodwill and indefinite lived intangible assets was completed in the fourth quarter of fiscal 2010 for all of our reporting units in our reportable segments.  This assessment concluded that there was no impairment.

Goodwill

The carrying amount of our goodwill was $110.4 million at June 18, 2011 and February 26, 2011, respectively.  Our goodwill allocation by segment at June 18, 2011 and February 26, 2011 was as follows (in thousands):

	Fresh			Gourmet		Other		Total
Goodwill	$	116,032		$	12,110	$	5,974	$	134,116
Accumulated impairment losses		(23,704	)		-		-		(23,704	)
Goodwill at February 26, 2011	$	92,328		$	12,110	$	5,974	$	110,412
Goodwill	$	116,032		$	12,110	$	5,974	$	134,116
Accumulated impairment losses		(23,704	)		-		-		(23,704	)
Goodwill at June 18, 2011	$	92,328		$	12,110	$	5,974	$	110,412

Intangible Assets, net

Intangible assets acquired as part of our acquisition of Pathmark in December 2007 consisted of the following (in thousands):

	Weighted Average Amortization Period (years)		Gross Carrying Amount		Accumulated Amortization at June 18, 2011		Accumulated Amortization at Feb. 26, 2011
Loyalty card customer relationships		5	$	19,200	$	13,114	$	11,815
In-store advertiser relationships		20		14,720		2,604		2,378
Pharmacy payor relationships		13		75,000		20,414		18,639
Pathmark trademark	Indefinite			48,200		-		-
Total			$	157,120	$	36,132	$	32,832

Amortization expense relating to our intangible assets for the 16 weeks ended June 18, 2011 and June 19, 2010 was $3.3 million during each period.

The following table summarizes the estimated future amortization expense for our finite-lived intangible assets (in thousands):

2011	$7,425
2012	9,670
2013	6,505
2014	6,505
2015	6,505
Thereafter	36,178

XML



Interest Expense, Net

3 Months Ended

Jun. 18, 2011

Interest Expense, Net

Interest Expense, Net

13.  Interest Expense, Net

Interest expense, net is comprised of the following (in thousands):

	For the 16 Weeks Ended
	June 18, 2011		June 19, 2010
$800 million Debtor-in-Possession Credit Agreement	$	11,469	$	-
$655 million Credit Agreement		711		4,005
Related Party Promissory Note, due Aug. 18, 2011		-		187
11.375% Senior Secured Notes, due Aug. 1, 2015		9,100		9,150
9.125% Senior Notes, due Dec. 15, 2011		-		360
5.125% Convertible Senior Notes, due June 15, 2011		-		2,601
6.750% Convertible Senior Notes, due Dec. 15, 2012		-		5,295
9.375% Notes, due August 1, 2039		-		5,815
Obligations under capital leases and real estate liabilities		16,262		15,442
Self-insurance and GHI interest		6,933		5,119
GHI discount rate adjustment and COLI non-cash interest		3,641		3,889
Amortization of deferred financing fees and discounts		332		8,734
Other		6		575
Subtotal		48,454		61,172
Interest and dividend income		-		(30	)
Interest expense, net	$	48,454	$	61,142

We recorded $11.5 million in contractual interest from the DIP Credit Agreement during the 16 weeks ended June 18, 2011. We continued to record contractual interest for our $260 million 11.375% Senior Secured Notes due 2015 that were issued in August 2009.  We did not record contractual interest expense of approximately $14.0 million for our Related Party Promissory Note, due August 18, 2011, 9.125% Senior Notes, due December 15, 2011, 5.125% Convertible Senior Notes, due June 15, 2011, 6.750% Convertible Senior Notes, due December 15, 2012, and 9.375% Notes, due August 1, 2039, all of which are unsecured obligations for which we ceased accruing interest during the fourth quarter 2010 as a result of the Bankruptcy Filing.  Debt discounts and deferred financing fees for all debt which is subject to compromise were reclassified into the carrying value of the respective indebtedness upon the Bankruptcy Filing and the balances were then adjusted to the face value of the debt.  As a result of this reclassification, we ceased amortization of deferred financing fees and discounts effective as of the Bankruptcy Filing date. Although we have recorded interest accretion expense on obligations under capital leases and real estate liabilities, self-insurance reserves, GHI and corporate owned life insurance obligations, we have not made a final determination as to the value of any underlying assets or the rejection/assumption of any of the obligations.  Once a determination is made, the accretion of the interest expense may change. 

XML



Reportable Segments

3 Months Ended

Jun. 18, 2011

Reportable Segments

Reportable Segments

21.  Reportable Segments

Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  Our chief operating decision maker is our President and Chief Executive Officer.

We have four reportable segments: Fresh, Pathmark, Gourmet and Other.  The Other segment includes our Food Basics and Wine, Beer & Spirits businesses.

The accounting policies for these segments are the same as those described in the summary of significant accounting policies included in our Fiscal 2010 Annual Report.  Assets and capital expenditures are not allocated to segments for internal reporting presentations.

Interim information on segments is as follows (in thousands):

	Sales by Category
	For the 16 Weeks Ended
	June 18, 2011		June 19, 2010
Grocery (1)	$	1,537,285	$	1,758,844
Meat (2)		428,711		491,482
Produce (3)		264,650		314,604
Total	$	2,230,646	$	2,564,930

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

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

(3)   The produce category includes produce and floral.

	For the 16 Weeks Ended
	June 18, 2011			June 19, 2010
Sales
Fresh	$	1,127,572		$	1,278,569
Pathmark		931,063			1,111,401
Gourmet		82,793			82,872
Other		89,218			92,088
Total sales	$	2,230,646		$	2,564,930
Segment (loss) income
Fresh	$	(19,390	)	$	13,472
Pathmark		(54,280	)		(24,808	)
Gourmet		6,451			6,511
Other		(277	)		737
Total segment loss		(67,496	)		(4,088	)
Corporate (4)		(16,476	)		(47,242	)
Reconciling items (5)		(137,976	)		(11,272	)
Loss from operations		(221,948	)		(62,602	)
Nonoperating income		83			8,277
Interest expense, net		(48,454	)		(61,142	)
Reorganization items, net		77,878			-
Loss from continuing operations before income taxes	$	(192,441	)	$	(115,467	)

	For the 16 Weeks Ended
	June 18, 2011		June 19, 2010
Segment depreciation and amortization – continuing operations
Fresh	$	20,418	$	23,392
Pathmark		22,200		26,771
Gourmet		2,170		2,751
Other		1,655		1,663
Total segment depreciation and amortization – continuing operations		46,443		54,577
Corporate		13,001		15,802
Total depreciation and amortization – continuing operations		59,444		70,379
Discontinued operations		-		-
Total company depreciation and amortization	$	59,444	$	70,379

  (4)   Represents a $21.4 million decrease in corporate costs attributable to store-related activities, primarily benefits and occupancy costs which are not allocated to segments and a $9.4 million decline in corporate and administrative costs.

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

	For the 16 Weeks Ended
	June 18, 2011			June 19, 2010
Goodwill, trademark and long-lived asset impairment	$	(55,418	)	$	(5,398	)
Net restructuring and other		(6,311	)		(3,932	)
Real estate related activity		(53,725	)		(1,947	)
Stock-based compensation (expense) income		(491	)		861
Pension withdrawal costs		(13,923	)		-
LIFO adjustment		(1,122	)		(856	)
C&S contract effect		(6,986	)		-
Total reconciling items	$	(137,976	)	$	(11,272	)

XML



Consolidated Statements Of Stockholders' Deficit And Comprehensive Loss (Parenthetical) (USD $) In Thousands	3 Months Ended
	Jun. 18, 2011	Jun. 19, 2010
Consolidated Statements Of Stockholders' Deficit And Comprehensive Loss
Pension and other post-retirement benefits, tax effect	$ 1,719	$ 0
Other comprehensive income, tax	$ 1,719	$ 0

XML



Reorganization Items, Net

3 Months Ended

Jun. 18, 2011

Reorganization Items, Net

Reorganization Items, Net

14.   Reorganization Items, Net

Reorganization items, net represent amounts incurred and recovered as a direct result of the Bankruptcy Filing and were comprised of the following (in thousands):

	For the 16 Weeks
	Ended
	June 18, 2011
Professional fees, net	$	(17,168	)
US Trustee fees		(255	)
Write-off of balance sheet items related to rejected contracts, net - continuing operations		30,513
C & S contract settlement		34,139
Reduction of closed locations reserves - continuing operations		30,649
Reorganization items, net - continuing operations		77,878
Write-off of real estate liabilities - discontinued operations		25,799
Reduction of closed locations reserves - discontinued operations		8,395
Provision for income taxes for reorganization items, net – discontinued operations		(14,361	)
Total reorganization items, net	$	97,711

For the 16 weeks ended June 18, 2011, professional fees of $17.2 million were accrued and $11.0 million were paid related to our Bankruptcy Filing. U.S. Trustee fees of approximately $0.3 million were incurred and paid during the 16 weeks ended June 18, 2011.

On June 2, 2011, our Company rejected its contract with C&S and entered into a new definitive agreement effective May 29, 2011.  As a result of our renegotiated contract, we eliminated $34.1 million of previously recorded unfavorable contract liability.  

During the 16 weeks ended June 18, 2011, we rejected 44 of our leases through the bankruptcy process and reduced the closed locations reserves balance associated with these leases by $39.0 million, $30.6 million of which was attributed to continuing operations and $8.4 million was attributed to discontinued operations, net to the allowable claim for damages of $37.9 million.  Our total closed locations reserves balance of $180.1 million relates to damage claims of $168.8 million and $11.3 million pertains to locations for which the leases have not been rejected as of June 18, 2011.  In connection with the rejection of the 44 leases, we also wrote off the related obligations under capital leases of $7.3 million, unfavorable lease liabilities of $3.2 million, real estate liabilities of $8.9 million, deferred real estate income of $9.4 million, with an offsetting write-off of other assets of $0.8 million, totaling $28.0 million, net.  Of this amount, $26.3 million relates to continuing operations and $1.7 million relates to discontinued operations.

During the 16 weeks ended June 18, 2011, we rejected 9 of our assigned leases through the bankruptcy process and wrote-off the related property, net of $13.5 million, with an offsetting write-off of deferred real estate income of $41.8 million, totaling $28.3 million. Of this amount, $4.2 million relates to continuing operations and $24.1 million relates to discontinued operations.

XML



Discontinued Operations

3 Months Ended

Jun. 18, 2011

Discontinued Operations

Discontinued Operations

 

16.  Discontinued Operations

We have had multiple transactions throughout the years which met the criteria for discontinued operations.  These events are described based on the year the transaction was initiated.

Summarized below is a reconciliation of the liabilities related to restructuring obligations resulting from these activities (in thousands):

	For the 16 Weeks Ended June 18, 2011
	Balance at		Interest								Balance at
	2/26/2011		Accretion(1)		Adjustments(2)			Utilization(3)			6/18/2011
2007 Events
Occupancy	$	49,317	$	80	$	(6,716	)	$	-		$	42,681
Pension withdrawal		57,581		1,079		-			-			58,660
2007 events total		106,898		1,159		(6,716	)		-			101,341
2005 Event
Occupancy		21,390		-		-			-			21,390
2003 Events
Occupancy		8,451		12		(1,641	)		(35	)		6,787
Total	$	136,739	$	1,171	$	(8,357	)	$	(35	)	$	129,518

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

(2)   At each balance sheet date, we assess the adequacy of the balance of the remaining liability to determine if any adjustments are required as a result of changes in circumstances and/or estimates.   These adjustments are recorded as a component of "Loss from operations of discontinued business" in our Consolidated Statements of Operations.

For the 16 Weeks Ended June 18, 2011

During the 16 weeks ended June 18, 2011, we recorded adjustments for the 2007 and 2003 events to reduce occupancy liabilities by $6.7 million and $1.6 million, respectively, due to an estimated allowable claim amount for property leases that were rejected in bankruptcy court during the first quarter.

(3)   Occupancy utilization represents payments made during those periods for rent, common area maintenance and real estate taxes.  Pension withdrawal utilization represents payments made to the union pension fund during the period.

Summarized below are the payments made to date from the time of the original charge and expected future payments related to these events (in thousands):

	2007 Events		2005 Event		2003 Event		Total
Total severance payments made to date	$	37,089	$	2,650	$	22,528	$	62,267
Expected future pension withdrawal payments		58,660		-		-		58,660
Total severance and pension withdrawal payments expected to be incurred		95,749		2,650		22,528		120,927
Total occupancy payments made to date		92,140		60,866		34,119		187,125
Expected future occupancy payments,
excluding interest accretion		42,681		21,390		6,787		70,858
Total occupancy payments expected to be incurred,
excluding interest accretion	$	134,821	$	82,256	$	40,906	$	257,983
Total severance and occupancy payments made to date	$	129,229	$	63,516	$	56,647	$	249,392
Expected future pension withdrawal and occupancy payments
expected to be incurred, excluding interest accretion		101,341		21,390		6,787		129,518
Total severance, pension withdrawal and occupancy payments expected to be incurred, excluding interest accretion	$	230,570	$	84,906	$	63,434	$	378,910

Payments to date were primarily for occupancy related costs such as rent, common area maintenance, real estate taxes, lease termination costs, severance, and benefits.  The remaining obligation relates to expected future payments under long term leases and expected future payments for early withdrawal from multi-employer union pension plans.  The expected completion dates for the 2007, 2005 and 2003 events are 2028, 2012 and 2012, respectively.

Summarized below are the amounts included in our balance sheet captions in our Company's Consolidated Balance Sheets related to these events (in thousands):

	June 18, 2011
	2007 Events		2005 Event		2003 Events		Total
Other accruals	$	-	$	-	$	-	$	-
Other non-current liabilities	$	-	$	-	$	-	$	-
Liabilities subject to compromise	$	101,341	$	21,390	$	6,787	$	129,518
	February 26, 2011
	2007 Events		2005 Event		2003 Events		Total
Other accruals	$	-	$	-	$	-	$	-
Other non-current liabilities	$	-	$	-	$	-	$	-
Liabilities subject to compromise	$	106,898	$	21,390	$	8,451	$	136,739

We evaluated the closed locations reserves balances as of June 18, 2011 based on current information and have concluded that they are adequate to cover future costs.  We will continue to monitor the status of the vacant and subsidized properties, severance and benefits, and pension withdrawal liabilities, and adjustments to the closed locations reserves balances may be recorded in the future, if necessary.

XML



Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jun. 18, 2011	Feb. 26, 2011
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 5,189	$ 5,554
Series A redeemable preferred stock, no par value
Series A redeemable preferred stock, redemption value	$ 1,000	$ 1,000
Series A redeemable preferred stock, shares authorized	700,000	700,000
Series A redeemable preferred stock, shares issued	179,020	179,020
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	260,000,000	260,000,000
Common stock, shares issued	53,852,470	53,852,470
Common stock, shares outstanding	53,852,470	53,852,470

XML



Indebtedness And Other Financial Liabilities

3 Months Ended

Jun. 18, 2011

Indebtedness And Other Financial Liabilities

Indebtedness And Other Financial Liabilities

8.   Indebtedness and Other Financial Liabilities

Our debt obligations at June 18, 2011 and February 26, 2011 consisted of the following (in thousands):

	At									At
	June 18, 2011									February 26, 2011
	Indebtedness									Indebtedness
	Prior to			Amounts						Prior to			Amounts
	Financial			Classified as						Financial			Classified as
	Statement			Subject to						Statement			Subject to
	Classification			Compromise1			Indebtedness			Classification			Compromise1			Indebtedness
Debtor-in-Possession Credit Agreement, due June 14, 2012	$	350,000		$	-		$	350,000		$	350,000		$	-		$	350,000
Related Party Promissory Note, due August 18, 2011		10,000			(10,000	)		-			10,000			(10,000	)		-
5.125% Convertible Senior Notes, due June 15, 2011		165,000			(165,000	)		-			165,000			(165,000	)		-
9.125% Senior Notes, due December 15, 2011		12,840			(12,840	)		-			12,840			(12,840	)		-
6.750% Convertible Senior Notes, due December 15, 2012		255,000			(255,000	)		-			255,000			(255,000	)		-
11.375% Senior Secured Notes, due August 1, 2015		260,000			(260,000	)		-			260,000			(260,000	)		-
9.375% Notes, due August 1, 2039		200,000			(200,000	)		-			200,000			(200,000	)		-
Other		2,438			(2,438	)		-			2,544			(2,544	)		-
Subtotal		1,255,278			(905,278	)		350,000			1,255,384			(905,384	)		350,000
Less current portion of long-term debt		(350,000	)		-			(350,000	)		(159	)		159			-
Long-term debt	$	905,278		$	(905,278	)	$	-		$	1,255,225		$	(905,225	)	$	350,000

1Refer to Note 9 – Liabilities subject to compromise for additional information.

DEBTOR-IN-POSSESSION CREDIT AGREEMENT

In connection with the Bankruptcy Filing, on December 13, 2010, the Bankruptcy Court entered its interim financing order, among other things, permitting us to enter into a Superpriority Debtor-in-Possession Credit Agreement (as amended and restated in its entirety by that certain Amended and Restated Superpriority Debtor-in-Possession Credit Agreement dated as of December 21, 2010, further amended and restated in its entirety by that certain Second Amended and Restated Superpriority Debtor-in-Possession Credit Agreement dated as of January 10, 2011, further amended and restated in its entirety by that certain Third Amended and Restated Superpriority Debtor-in-Possession Credit Agreement dated as of January 13, 2011, further amended (subsequent to the reporting period) by that certain First Amendment to the Third Amended and Restated Superpriority Debtor-in-Possession Credit Agreement dated as of July 8, 2011 ("the First Amendment to the DIP Credit Agreement"), as may be therefore further amended, amended and restated, supplemented or otherwise modified from time to time (the "DIP Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent (in such capacity, the "Agent"), the lenders from time to time party thereto (collectively, the "DIP Lenders") and our Company and certain subsidiaries as borrowers thereunder.  On December 14, 2010, we satisfied all of the conditions to the effectiveness of the DIP Credit Agreement and to the initial closing thereunder and consummated the transactions contemplated thereunder including the refinancing in full of our Company's and its applicable subsidiaries' obligations under the pre-existing first lien credit facility. The Bankruptcy Court entered a final order approving the DIP Credit Agreement on January 11, 2011.  Pursuant to the terms of the DIP Credit Agreement:

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

• our Company's and the Subsidiary Borrower's obligations under the DIP Credit Agreement and the other specified loan documents are guaranteed by our Company's certain other subsidiaries that are Debtors ("Subsidiary Guarantors" and, together with our Company and the Subsidiary Borrowers, the "Loan Parties"); and

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

Our Company will have the option to have interest on the revolving loans under the revolving credit facility provided under the DIP Credit Agreement accrue at an alternate base rate plus 200 basis points or at adjusted LIBOR plus 300 basis points. Our Company will have the option to have interest on the term loan provided under the DIP Credit Agreement accrue at an alternate base rate plus 600 basis points or at adjusted LIBOR (with a floor of 175 basis points) plus 700 basis points. The DIP Credit Agreement limits, among other things, our Company's and the other Loan Parties' ability to (i) incur indebtedness, (ii) incur or create liens, (iii) dispose of assets, (iv) prepay certain indebtedness and make other restricted payments, (v) enter into sale and leaseback transactions and (vi) modify the terms of certain indebtedness and certain material contracts. Notably, however, the DIP Credit Agreement permits our Company to use the proceeds generated from the sale of the Southern Stores in the operation of our business rather than requiring us to use those proceeds to reduce the Loan Parties' outstanding indebtedness under the DIP Credit Agreement.

The DIP Credit Agreement also contains certain financial covenants, including a minimum excess availability covenant of $100.0 million (or $75.0 million at any time after August 13, 2011 but on or before November 5, 2011, or $50.0 million at any time after November 5, 2011), minimum liquidity covenant of $100.0 million and minimum cumulative EBITDA covenant as defined in the DIP Credit Agreement.  Minimum cumulative EBITDA measured beginning on April 24, 2011 is as follows (in millions):

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

Meeting our EBITDA covenant requires increasing levels of performance throughout the year, including the successful implementation of our business improvement initiatives. As of the balance sheet date, we have entered into a definitive agreement with C&S to provide services and we are in the process of negotiating with union locals to obtain consensual modifications to collective bargaining agreements necessary for our successful reorganization. We may not achieve our minimum cumulative EBITDA covenant. A financial covenant violation could result in termination of the DIP Credit Agreement and/or termination of our access to funding thereunder. If either (or both) of those were to occur, our Company could be without sufficient cash availability to meet our operating needs or satisfy our obligations as they fall due, in which instance we may be unable to successfully reorganize.

The DIP Credit Agreement matures upon the earliest to occur of (a) June 14, 2012, (b) the acceleration of the loans and the termination of the commitment thereunder, and (c) the substantial consummation (as defined in Section 1101(2) of the Bankruptcy Code, which for purposes hereof shall be no later than the effective date thereof) of a plan of reorganization that is confirmed pursuant to an order entered by the Bankruptcy Court.

Warrants

Our Series B warrants issued as part of the acquisition of Pathmark on December 3, 2007, are exercisable at $32.40 and expire on June 9, 2015.  The Tengelmann Warenhandelsgesellschaft KG ("Tengelmann") stockholders have the right to approve any issuance of common stock under these warrants upon exercise (assuming Tengelmann's outstanding interest is at least 25% and subject to liquidity impairments defined within the Tengelmann Stockholder Agreement).  In addition, Tengelmann has the ability to exercise a "Put Right" whereby it has the ability to require our Company to purchase our common stock held by Tengelmann to settle these warrants.  Based on the rights provided to Tengelmann, our Company does not have sole discretion to determine whether the payment upon exercise of these warrants will be settled in cash or through issuance of an equivalent portion of our shares.  Therefore, these warrants are recorded as liabilities and marked-to-market each reporting period based on our Company's current stock price.

The value of the Series B warrants as of June 18, 2011 and February 26, 2011 was $0.1 million and $0.2 million, respectively, and is included in "Liabilities subject to compromise" in our Consolidated Balance Sheets.  Our "Nonoperating income" for the 16 weeks ended June 18, 2011 and June 19, 2010 was comprised of gains of approximately $0.1 million and $8.3 million, respectively, relating to market value adjustments for Series B warrants.   The following assumptions and estimates were used in the Black-Scholes model used to value the Series B warrants:

	At	At
	June 18, 2011	Feb. 26, 2011
Expected life	3.98 Years	4.29 Years
Volatility	116.7%	111.3%
Dividend yield range	0%	0%
Risk-free interest rate	1.53%	2.16%

Call Option and Financing Warrants

On or about October 3, 2008, Lehman Brothers OTC Derivatives, Inc. or "LBOTC," which accounts for 50% of our call option and financing warrant transactions, filed for bankruptcy protection, which is an event of default under such transactions.  We are monitoring the developments affecting LBOTC, noting the impact of the LBOTC bankruptcy effectively reduced conversion prices for 50% of our convertible senior notes to their stated prices of $36.40 for the 5.125% Notes and $37.80 for the 6.750% Notes.

In the event we terminate these transactions, or they are canceled in the LBOTC bankruptcy, or LBOTC otherwise fails to perform its obligations under such transactions, we would have the right to monetary damages in the form of an unsecured claim against LBOTC in an amount equal to the present value of our cost to replace these transactions with another party for the same period and on the same terms.

XML



Retirement Plans And Benefits

3 Months Ended

Jun. 18, 2011

Retirement Plans And Benefits

Retirement Plans And Benefits

12.  Retirement Plans and Benefits

Defined Benefit Plans

The components of our net pension cost were as follows (in thousands):

	For the 16 Weeks Ended
	June 18, 2011			June 19, 2010
Service cost	$	1,998		$	2,158
Interest cost		8,837			8,929
Expected return on plan assets		(9,795	)		(8,853	)
Amortization of:
Net prior service cost		28			81
Actuarial loss		539			585
Special termination benefits		-			50
Net pension cost	$	1,607		$	2,950

We did not contribute to our defined benefit plans during the first quarter of fiscal 2011. As a result of the Bankruptcy Filing, we do not plan to make any contributions to our defined benefit plans during the remainder of fiscal 2011. However, in the event that we successfully reorganize under chapter 11, our Company may be required to pay all such missed contributions immediately prior to our emergence from bankruptcy.  Thus, if our Company emerges from bankruptcy prior to the end of fiscal 2011, our Company may have to make sizable contributions to our defined benefit plans during fiscal 2011.

Postretirement Plans

The components of our net postretirement benefits cost were as follows (in thousands):

	For the 16 Weeks Ended
	June 18, 2011			June 19, 2010
Service cost	$	233		$	201
Interest cost		575			571
Amortization of:
Net prior service credit		-			(264	)
Actuarial gain		(85	)		(150	)
Net postretirement benefits cost	$	723		$	358

Our current estimates are subject to change due to changes in actuarial assumptions and further clarifications provided by regulatory guidance expected to be released in future years.

GHI Employee Obligation

As of June 18, 2011 and February 26, 2011, the fair value of our contractual obligation to Grocery Hauler Inc.'s ("GHI") employees was $96.7 million and $94.3 million, respectively, using discount rates of 5.25% and 5.50%, respectively, which were derived from the published zero-coupon AA corporate bond yields. Additions to our GHI employee obligation for current service costs is recorded within "Cost of merchandise sold" in our Consolidated Statements of Operations at its current value.  Accretion of the obligation to present value and impact of discount rates used to value the obligation are recorded within "Interest expense" in our Consolidated Statements of Operations.   During the 16 weeks ended June 18, 2011 and June 19, 2010, we recognized service costs of $5,700 and $0.2 million respectively, and interest expense of $4.2 million and $4.4 million, respectively, representing interest accretion on this obligation, as well as the impact of the lower discount rates used to value this obligation, resulting from declines in the published zero-coupon AA corporate bond yields during each period.  During the 16 weeks ended June 18, 2011, benefit payments of $1.8 million were made by the Pathmark Pension Plan.

Our employee obligation relating to pension benefits for GHI's employees are considered subject to compromise and are included within "Liabilities subject to compromise" in our Consolidated Balance Sheets as of June 18, 2011 and February 26, 2011.

Multi-employer Union Pension Plans

We participate in various multi-employer pension plans which are administered jointly by management and union representatives.  During the fourth quarter of fiscal 2008, we made a standard withdrawal from one of our multi-employer pension plans, to limit our pension benefit obligation to our employees, as we believed that this plan was likely to have funding challenges and would require higher contributions in the future, and recorded standard withdrawal liability of $28.9 million.  During the second quarter of fiscal 2010, we received notification that the trustees of the multi-employer pension plan have voted to go into a mass withdrawal.  The impact of the mass withdrawal to our Company is not currently estimable, therefore no adjustment has been recorded in our consolidated financial statements. We may have a potential additional withdrawal obligation of up to $50 million payable over a period of up to 25 years in the future.  This preliminary estimate is subject to change due to the uncertainty as to the number of participants that will be subject to mass withdrawal and the finalization of asset values and calculations by the multi-employer pension plan.

During the first quarter of fiscal 2011, we received notification from the trustees of a multi-employer union pension plan for payment of a partial withdrawal resulting from the closure of certain Pathmark stores in fiscal 2009. The impact of the partial withdrawal is a liability of approximately $13.9 million, which is included within "Liabilities subject to compromise" in our Consolidated Balance Sheets as of June 18, 2011. We could, under certain circumstances, be liable for unfunded vested benefits or other expenses of jointly administered union/management plans, which benefits could be significant and material for our Company.

XML



Consolidated Statements Of Operations (USD $) In Thousands, except Share data	3 Months Ended
	Jun. 18, 2011	Jun. 19, 2010
Consolidated Statements Of Operations
Sales	$ 2,230,646	$ 2,564,930
Cost of merchandise sold	(1,608,449)	(1,801,118)
Gross margin	622,197	763,812
Store operating, general and administrative expense	(788,727)	(821,016)
Goodwill, trademark and long-lived asset impairment	(55,418)	(5,398)
Loss from continuing operations before nonoperating income, interest expense, net and reorganization items, net	(221,948)	(62,602)
Nonoperating income	83	8,277
Interest expense, net	(48,454)	(61,142)
Reorganization items, net	77,878
Loss from continuing operations before income taxes	(192,441)	(115,467)
Benefit from (provision for) income taxes	14,650	(140)
Loss from continuing operations	(177,791)	(115,607)
Discontinued operations:
Income (loss) from operations of discontinued businesses, net of income tax benefit of $1,142 and $0 for the 16 weeks ended June 18, 2011 and June 19, 2010, respectively	797	(7,115)
Gain on disposal of discontinued operations, net of income tax provision of $0 for the 16 weeks ended June 19, 2010		79
Reorganization items, net of income tax provision of $14,361 for the 16 weeks ended June 18, 2011	19,833
Income (loss) from discontinued operations	20,630	(7,036)
Net loss	$ (157,161)	$ (122,643)
Net (loss) income per share - basic:
Continuing operations	$ (3.33)	$ (2.27)
Discontinued operations	$ 0.38	$ (0.13)
Net loss per share - basic	$ (2.95)	$ (2.40)
Net (loss) income per share - diluted:
Continuing operations	$ (3.33)	$ (4.60)
Discontinued operations	$ 0.38	$ (0.23)
Net loss per share - diluted	$ (2.95)	$ (4.83)
Weighted average common shares outstanding:
Basic	53,852,470	53,498,121
Diluted	53,852,470	30,524,651