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Filed Pursuant to Rule 424(b)(3)
File Number 333-168065
Prospectus Supplement No. 4
(To prospectus dated November 1, 2010)
Tops Holding Corporation
Tops Markets, LLC
$350,000,000
10.125% Senior Secured Notes due 2015
This prospectus supplement No. 4 supplements and amends the prospectus dated November 1, 2010, as supplemented and amended by prospectus supplement No. 1 dated November 22, 2010, prospectus supplement No. 2 dated April 1, 2011 and prospectus supplement No. 3 dated June 7, 2011 (the “Prospectus”). This prospectus supplement should be read in conjunction with the Prospectus, as previously supplemented and may not be delivered or utilized without the Prospectus.
On August 29, 2011, Tops Holding Corporation filed with the Securities and Exchange Commission its quarterly report for the period ended July 16, 2011.
The date of this prospectus supplement is August 30, 2011.
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þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Delaware (State or other jurisdiction of incorporation or organization) | 26-1252536 (I.R.S. Employer Identification No.) | |
6363 Main Street, | ||
Williamsville, New York 14221 (Address of principal executive office, including zip code) | (716) 635-5000 (Telephone Number) |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ (Do not check if a smaller reporting company) | Smaller reporting companyo |
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ITEM 1. | FINANCIAL STATEMENTS |
July 16, 2011 | January 1, 2011 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 18,636 | $ | 17,419 | ||||
Accounts receivable, net | 55,577 | 57,044 | ||||||
Inventory, net | 118,880 | 117,328 | ||||||
Prepaid expenses and other current assets | 9,686 | 14,093 | ||||||
Assets held for sale | 600 | 650 | ||||||
Income taxes refundable | 203 | 200 | ||||||
Current deferred tax assets | 2,265 | 2,265 | ||||||
Total current assets | 205,847 | 208,999 | ||||||
Property and equipment, net | 371,049 | 378,575 | ||||||
Intangible assets, net (Note 3) | 74,347 | 79,072 | ||||||
Other assets | 12,351 | 13,705 | ||||||
Total assets | $ | 663,594 | $ | 680,351 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 89,410 | $ | 93,311 | ||||
Accrued expenses and other current liabilities (Note 4) | 76,182 | 79,123 | ||||||
Current portion of capital lease obligations | 12,092 | 11,095 | ||||||
Current portion of long-term debt (Note 5) | 420 | 402 | ||||||
Total current liabilities | 178,104 | 183,931 | ||||||
Capital lease obligations | 165,571 | 172,216 | ||||||
Long-term debt (Note 5) | 362,731 | 365,262 | ||||||
Other long-term liabilities | 19,863 | 21,099 | ||||||
Non-current deferred tax liabilities | 4,019 | 3,354 | ||||||
Total liabilities | 730,288 | 745,862 | ||||||
Shareholders’ deficit: | ||||||||
Common shares ($0.001 par value; 300,000 authorized shares, 144,776 shares issued & outstanding) | — | — | ||||||
Paid-in capital | (2,056 | ) | (2,668 | ) | ||||
Accumulated deficit | (64,302 | ) | (62,507 | ) | ||||
Accumulated other comprehensive loss, net of tax | (336 | ) | (336 | ) | ||||
Total shareholders’ deficit | (66,694 | ) | (65,511 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 663,594 | $ | 680,351 | ||||
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12-week periods ended | 28-week periods ended | |||||||||||||||
July 16, 2011 | July 17, 2010 | July 16, 2011 | July 17, 2010 | |||||||||||||
Net sales | $ | 559,514 | $ | 541,833 | $ | 1,276,773 | $ | 1,206,848 | ||||||||
Cost of goods sold | (395,139 | ) | (380,778 | ) | (895,883 | ) | (838,946 | ) | ||||||||
Distribution costs | (9,393 | ) | (10,422 | ) | (23,556 | ) | (23,510 | ) | ||||||||
Gross profit | 154,982 | 150,633 | 357,334 | 344,392 | ||||||||||||
Operating expenses: | ||||||||||||||||
Wages, salaries and benefits | (76,356 | ) | (73,227 | ) | (175,338 | ) | (167,506 | ) | ||||||||
Selling and general expenses | (23,438 | ) | (24,039 | ) | (56,821 | ) | (55,802 | ) | ||||||||
Administrative expenses (inclusive of share-based compensation expense of $264, $182, $612 and $426) | (18,019 | ) | (22,528 | ) | (43,502 | ) | (62,507 | ) | ||||||||
Rent expense, net | (4,212 | ) | (4,180 | ) | (10,115 | ) | (10,017 | ) | ||||||||
Depreciation and amortization | (11,746 | ) | (14,984 | ) | (26,787 | ) | (33,714 | ) | ||||||||
Advertising | (4,412 | ) | (6,302 | ) | (10,402 | ) | (12,355 | ) | ||||||||
Impairment (Note 7) | (1,891 | ) | — | (1,891 | ) | — | ||||||||||
Total operating expenses | (140,074 | ) | (145,260 | ) | (324,856 | ) | (341,901 | ) | ||||||||
Operating income | 14,908 | 5,373 | 32,478 | 2,491 | ||||||||||||
Bargain purchase | — | — | — | 15,681 | ||||||||||||
Loss on debt extinguishment | — | — | — | (1,008 | ) | |||||||||||
Interest expense, net | (14,297 | ) | (14,074 | ) | (33,588 | ) | (32,484 | ) | ||||||||
Income (loss) before income taxes | 611 | (8,701 | ) | (1,110 | ) | (15,320 | ) | |||||||||
Income tax (expense) benefit (Note 6) | (318 | ) | (214 | ) | (685 | ) | 9,699 | |||||||||
Net income (loss) | $ | 293 | $ | (8,915 | ) | $ | (1,795 | ) | $ | (5,621 | ) | |||||
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28-week periods ended | ||||||||
July 16, 2011 | July 17, 2010 | |||||||
Cash flows provided by operating activities: | ||||||||
Net loss | $ | (1,795 | ) | $ | (5,621 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 35,729 | 40,710 | ||||||
LIFO inventory valuation adjustments | 2,161 | (84 | ) | |||||
Impairment | 1,891 | — | ||||||
Amortization of deferred financing costs | 1,411 | 1,204 | ||||||
Deferred income taxes | 665 | (10,288 | ) | |||||
Share-based compensation expense | 612 | 426 | ||||||
Bargain purchase | — | (15,681 | ) | |||||
Loss on debt extinguishment | — | 1,008 | ||||||
Other | 255 | 499 | ||||||
Changes in operating assets and liabilities: | ||||||||
Decrease (increase) in accounts receivable | 1,467 | (6,347 | ) | |||||
Increase in inventory, net | (3,713 | ) | (3,239 | ) | ||||
Decrease in prepaid expenses and other current assets | 4,407 | 3,722 | ||||||
(Increase) decrease in income taxes refundable | (3 | ) | 214 | |||||
(Decrease) increase in accounts payable | (3,909 | ) | 14,445 | |||||
(Decrease) increase in accrued expenses and other current liabilities | (2,853 | ) | 1,890 | |||||
(Decrease) increase in other long-term liabilities | (1,271 | ) | 2,427 | |||||
Net cash provided by operating activities | 35,054 | 25,285 | ||||||
Cash flows used in investing activities: | ||||||||
Cash paid for property and equipment | (25,908 | ) | (19,059 | ) | ||||
Proceeds from sale of assets | 650 | 17,483 | ||||||
Acquisition of Penn Traffic assets | — | (85,023 | ) | |||||
Net cash used in investing activities | (25,258 | ) | (86,599 | ) | ||||
Cash flows (used in) provided by financing activities: | ||||||||
Borrowings on ABL Facility | 356,300 | 58,100 | ||||||
Repayments on ABL Facility | (358,800 | ) | (72,100 | ) | ||||
Principal payments on capital leases | (5,803 | ) | (4,586 | ) | ||||
Proceeds from long-term debt borrowings | — | 112,125 | ||||||
Repayments of long-term debt borrowings | (227 | ) | (36,199 | ) | ||||
Deferred financing costs incurred | (57 | ) | (5,328 | ) | ||||
Change in bank overdraft position | 8 | 657 | ||||||
Proceeds from issuance of common shares | — | 30,000 | ||||||
Net cash (used in) provided by financing activities | (8,579 | ) | 82,669 | |||||
Net increase in cash and cash equivalents | 1,217 | 21,355 | ||||||
Cash and cash equivalents—beginning of period | 17,419 | 19,722 | ||||||
Cash and cash equivalents—end of period | $ | 18,636 | $ | 41,077 | ||||
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12-week periods ended | 28-week periods ended | |||||||||||||||||||||||||||||||
July 16, 2011 | July 17, 2010 | July 16, 2011 | July 17, 2010 | |||||||||||||||||||||||||||||
% of | % of | % of | % of | |||||||||||||||||||||||||||||
Amount | Total | Amount | Total | Amount | Total | Amount | Total | |||||||||||||||||||||||||
Non-perishables(1) | $ | 308,003 | 55.0 | % | $ | 307,903 | 56.8 | % | $ | 718,213 | 56.2 | % | $ | 695,517 | 57.6 | % | ||||||||||||||||
Perishables(2) | 155,393 | 27.8 | % | 154,236 | 28.5 | % | 344,051 | 26.9 | % | 330,147 | 27.4 | % | ||||||||||||||||||||
Fuel | 52,127 | 9.3 | % | 34,834 | 6.4 | % | 110,493 | 8.7 | % | 75,882 | 6.3 | % | ||||||||||||||||||||
Pharmacy | 40,211 | 7.2 | % | 41,338 | 7.6 | % | 95,305 | 7.5 | % | 97,353 | 8.1 | % | ||||||||||||||||||||
Other(3) | 3,780 | 0.7 | % | 3,522 | 0.7 | % | 8,711 | 0.7 | % | 7,949 | 0.6 | % | ||||||||||||||||||||
$ | 559,514 | 100.0 | % | $ | 541,833 | 100.0 | % | $ | 1,276,773 | 100.0 | % | $ | 1,206,848 | 100.0 | % | |||||||||||||||||
(1) | Non-perishables consist of grocery, dairy, frozen, general merchandise, health and beauty care and other non-perishable related products. | |
(2) | Perishables consist of produce, meat, seafood, bakery, deli, floral, prepared foods and other perishable related products. | |
(3) | Other primarily consists of franchise income and service commission income, including lottery, money orders and money transfers. |
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Weighted | ||||||||||||||||
Gross | Net | Average | ||||||||||||||
Carrying | Accumulated | Carrying | Amortization | |||||||||||||
July 16, 2011 | Amount | Amortization | Amount | Period | ||||||||||||
Acquired Penn Traffic intangible assets: | ||||||||||||||||
Favorable/unfavorable lease rights | $ | 7,023 | $ | (1,451 | ) | $ | 5,572 | 7.9 | ||||||||
Tradenames | 4,200 | (1,131 | ) | 3,069 | 8.5 | |||||||||||
Customer relationships | 1,700 | (461 | ) | 1,239 | 11.0 | |||||||||||
Other intangible assets: | ||||||||||||||||
Tradename | 41,011 | — | 41,011 | Indefinite life | ||||||||||||
Customer relationships | 26,051 | (17,146 | ) | 8,905 | 8.0 | |||||||||||
Favorable/unfavorable lease rights | 14,369 | (7,768 | ) | 6,601 | 9.3 | |||||||||||
Franchise agreements | 11,538 | (3,807 | ) | 7,731 | 11.0 | |||||||||||
Other | 406 | (187 | ) | 219 | 4.0 | |||||||||||
$ | 106,298 | $ | (31,951 | ) | $ | 74,347 | 9.0 | |||||||||
Gross | Net | |||||||||||
Carrying | Accumulated | Carrying | ||||||||||
January 1, 2011 | Amount | Amortization | Amount | |||||||||
Acquired Penn Traffic intangible assets: | ||||||||||||
Favorable/unfavorable lease rights | $ | 7,023 | $ | (899 | ) | $ | 6,124 | |||||
Tradenames | 4,200 | (700 | ) | 3,500 | ||||||||
Customer relationships | 1,700 | (300 | ) | 1,400 | ||||||||
Other intangible assets: | ||||||||||||
Tradename | 41,011 | — | 41,011 | |||||||||
Customer relationships | 26,051 | (14,931 | ) | 11,120 | ||||||||
Favorable/unfavorable lease rights | 14,369 | (7,003 | ) | 7,366 | ||||||||
Franchise agreements | 11,538 | (3,242 | ) | 8,296 | ||||||||
Other | 497 | (242 | ) | 255 | ||||||||
$ | 106,389 | $ | (27,317 | ) | $ | 79,072 | ||||||
2011 (remaining period) | $ | 3,875 | ||
2012 | 6,857 | |||
2013 | 6,012 | |||
2014 | 5,212 | |||
2015 | 3,977 | |||
Thereafter | 7,403 |
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July 16, 2011 | January 1, 2011 | |||||||
Wages, taxes and benefits | $ | 17,039 | $ | 18,918 | ||||
Lottery | 9,674 | 10,083 | ||||||
Interest payable | 9,111 | 8,318 | ||||||
Property and equipment expenditures | 6,018 | 6,107 | ||||||
Sales and use tax | 4,950 | 2,101 | ||||||
Self-insurance reserves | 4,013 | 1,406 | ||||||
Utilities | 3,617 | 2,980 | ||||||
Money orders | 3,029 | 3,651 | ||||||
Gift cards | 2,508 | 4,271 | ||||||
Union medical, pension and 401(k) | 2,454 | 4,598 | ||||||
Repairs and maintenance | 2,125 | 2,054 | ||||||
Vacation | 1,925 | 1,110 | ||||||
Professional and legal fees | 1,531 | 3,640 | ||||||
Advertising | 702 | 1,920 | ||||||
Other | 7,486 | 7,966 | ||||||
$ | 76,182 | $ | 79,123 | |||||
July 16, 2011 | January 1, 2011 | |||||||
Senior Notes | $ | 350,000 | $ | 350,000 | ||||
Discount on Senior Notes, net | (2,700 | ) | (2,914 | ) | ||||
ABL Facility | 12,500 | 15,000 | ||||||
Other loans | 2,302 | 2,400 | ||||||
Mortgage note payable | 1,049 | 1,178 | ||||||
Total debt | 363,151 | 365,664 | ||||||
Current portion | (420 | ) | (402 | ) | ||||
Total long-term debt | $ | 362,731 | $ | 365,262 | ||||
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12-week periods ended | 28-week periods ended | |||||||||||||||
July 16, 2011 | July 17, 2010 | July 16, 2011 | July 17, 2010 | |||||||||||||
Current | $ | — | $ | (214 | ) | $ | (20 | ) | $ | (589 | ) | |||||
Deferred | (318 | ) | — | (665 | ) | 10,288 | ||||||||||
$ | (318 | ) | $ | (214 | ) | $ | (685 | ) | $ | 9,699 | ||||||
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CONDENSED CONSOLIDATED BALANCE SHEET
JULY 16, 2011
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 17,849 | $ | 787 | $ | — | $ | 18,636 | ||||||||||
Accounts receivable, net | — | 43,747 | 11,830 | — | 55,577 | |||||||||||||||
Intercompany receivables | — | 3,326 | 9,296 | (12,622 | ) | — | ||||||||||||||
Inventory, net | — | 80,730 | 38,150 | — | 118,880 | |||||||||||||||
Prepaid expenses and other current assets | — | 7,848 | 1,838 | — | 9,686 | |||||||||||||||
Assets held for sale | — | — | 600 | — | 600 | |||||||||||||||
Income taxes refundable | — | 203 | — | — | 203 | |||||||||||||||
Current deferred tax assets | — | 1,657 | — | 608 | 2,265 | |||||||||||||||
Total current assets | — | 155,360 | 62,501 | (12,014 | ) | 205,847 | ||||||||||||||
Property and equipment, net | — | 294,749 | 76,300 | — | 371,049 | |||||||||||||||
Intangible assets, net | — | 64,467 | 9,880 | — | 74,347 | |||||||||||||||
Other assets | — | 12,351 | 3,041 | (3,041 | ) | 12,351 | ||||||||||||||
Investment in subsidiaries | (77,309 | ) | 107,615 | — | (30,306 | ) | — | |||||||||||||
Total assets | $ | (77,309 | ) | $ | 634,542 | $ | 151,722 | $ | (45,361 | ) | $ | 663,594 | ||||||||
Liabilities and Shareholders’ (Deficit) Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 67,519 | $ | 21,891 | $ | — | $ | 89,410 | ||||||||||
Intercompany payables | 3,326 | 9,296 | — | (12,622 | ) | — | ||||||||||||||
Accrued expenses and other current liabilities | 882 | 60,795 | 15,249 | (744 | ) | 76,182 | ||||||||||||||
Current portion of capital lease obligations | — | 11,759 | 333 | — | 12,092 | |||||||||||||||
Current portion of long-term debt | — | 420 | — | — | 420 | |||||||||||||||
Current deferred tax liabilities | — | — | 11 | (11 | ) | — | ||||||||||||||
Total current liabilities | 4,208 | 149,789 | 37,484 | (13,377 | ) | 178,104 | ||||||||||||||
Capital lease obligations | — | 162,033 | 3,538 | — | 165,571 | |||||||||||||||
Long-term debt | — | 365,772 | — | (3,041 | ) | 362,731 | ||||||||||||||
Other long-term liabilities | — | 16,707 | 3,156 | — | 19,863 | |||||||||||||||
Non-current deferred tax liabilities | — | 16,743 | (71 | ) | (12,653 | ) | 4,019 | |||||||||||||
Total liabilities | 4,208 | 711,044 | 44,107 | (29,071 | ) | 730,288 | ||||||||||||||
Total shareholders’ (deficit) equity | (81,517 | ) | (76,502 | ) | 107,615 | (16,290 | ) | (66,694 | ) | |||||||||||
Total liabilities and shareholders’ (deficit) equity | $ | (77,309 | ) | $ | 634,542 | $ | 151,722 | $ | (45,361 | ) | $ | 663,594 | ||||||||
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CONDENSED CONSOLIDATED BALANCE SHEET
JANUARY 1, 2011
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 16,689 | $ | 730 | $ | — | $ | 17,419 | ||||||||||
Accounts receivable, net | — | 43,696 | 13,348 | — | 57,044 | |||||||||||||||
Intercompany receivables | — | 2,850 | 13,091 | (15,941 | ) | — | ||||||||||||||
Inventory, net | — | 80,060 | 37,268 | — | 117,328 | |||||||||||||||
Prepaid expenses and other current assets | — | 11,445 | 2,648 | — | 14,093 | |||||||||||||||
Assets held for sale | — | — | 650 | — | 650 | |||||||||||||||
Income taxes refundable | — | 200 | — | — | 200 | |||||||||||||||
Current deferred tax assets | — | 1,657 | — | 608 | 2,265 | |||||||||||||||
Total current assets | — | 156,597 | 67,735 | (15,333 | ) | 208,999 | ||||||||||||||
Property and equipment, net | — | 309,856 | 68,719 | — | 378,575 | |||||||||||||||
Intangible assets, net | — | 68,048 | 11,024 | — | 79,072 | |||||||||||||||
Other assets | — | 13,705 | 3,041 | (3,041 | ) | 13,705 | ||||||||||||||
Investment in subsidiaries | (75,094 | ) | 104,799 | — | (29,705 | ) | — | |||||||||||||
Total assets | $ | (75,094 | ) | $ | 653,005 | $ | 150,519 | $ | (48,079 | ) | $ | 680,351 | ||||||||
Liabilities and Shareholders’ (Deficit) Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 69,881 | $ | 23,430 | $ | — | $ | 93,311 | ||||||||||
Intercompany payables | 2,850 | 13,091 | — | (15,941 | ) | — | ||||||||||||||
Accrued expenses and other current liabilities | 544 | 62,099 | 17,224 | (744 | ) | 79,123 | ||||||||||||||
Current portion of capital lease obligations | — | 10,754 | 341 | — | 11,095 | |||||||||||||||
Current portion of long-term debt | — | 402 | — | — | 402 | |||||||||||||||
Current deferred tax liabilities | — | — | 11 | (11 | ) | — | ||||||||||||||
Total current liabilities | 3,394 | 156,227 | 41,006 | (16,696 | ) | 183,931 | ||||||||||||||
Capital lease obligations | — | 168,743 | 3,473 | — | 172,216 | |||||||||||||||
Long-term debt | — | 368,303 | — | (3,041 | ) | 365,262 | ||||||||||||||
Other long-term liabilities | — | 17,941 | 3,158 | — | 21,099 | |||||||||||||||
Non-current deferred tax liabilities | — | 16,078 | (1,917 | ) | (10,807 | ) | 3,354 | |||||||||||||
Total liabilities | 3,394 | 727,292 | 45,720 | (30,544 | ) | 745,862 | ||||||||||||||
Total shareholders’ (deficit) equity | (78,488 | ) | (74,287 | ) | 104,799 | (17,535 | ) | (65,511 | ) | |||||||||||
Total liabilities and shareholders’ (deficit) equity | $ | (75,094 | ) | $ | 653,005 | $ | 150,519 | $ | (48,079 | ) | $ | 680,351 | ||||||||
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 12-WEEK PERIOD ENDED JULY 16, 2011
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 417,903 | $ | 141,840 | $ | (229 | ) | $ | 559,514 | |||||||||
Cost of goods sold | — | (300,520 | ) | (94,619 | ) | — | (395,139 | ) | ||||||||||||
Distribution costs | — | (6,619 | ) | (2,774 | ) | — | (9,393 | ) | ||||||||||||
Gross profit | — | 110,764 | 44,447 | (229 | ) | 154,982 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Wages, salaries and benefits | — | (54,701 | ) | (21,655 | ) | — | (76,356 | ) | ||||||||||||
Selling and general expenses | — | (16,357 | ) | (7,310 | ) | 229 | (23,438 | ) | ||||||||||||
Administrative expenses | (646 | ) | (12,746 | ) | (4,627 | ) | — | (18,019 | ) | |||||||||||
Rent expense, net | — | (2,157 | ) | (2,055 | ) | — | (4,212 | ) | ||||||||||||
Depreciation and amortization | — | (8,930 | ) | (2,816 | ) | — | (11,746 | ) | ||||||||||||
Advertising | — | (3,072 | ) | (1,340 | ) | — | (4,412 | ) | ||||||||||||
Impairment | — | (1,891 | ) | — | (1,891 | ) | ||||||||||||||
Total operating expenses | (646 | ) | (97,963 | ) | (41,694 | ) | 229 | (140,074 | ) | |||||||||||
Operating (loss) income | (646 | ) | 12,801 | 2,753 | — | 14,908 | ||||||||||||||
Interest expense, net | — | (14,249 | ) | (48 | ) | — | (14,297 | ) | ||||||||||||
Equity (loss) income from subsidiaries | (132 | ) | 1,634 | — | (1,502 | ) | — | |||||||||||||
(Loss) income before income taxes | (778 | ) | 186 | 2,705 | (1,502 | ) | 611 | |||||||||||||
Income tax expense | — | (318 | ) | (1,071 | ) | 1,071 | (318 | ) | ||||||||||||
Net (loss) income | $ | (778 | ) | $ | (132 | ) | $ | 1,634 | $ | (431 | ) | $ | 293 | |||||||
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 12-WEEK PERIOD ENDED JULY 17, 2010
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 403,964 | $ | 138,069 | $ | (200 | ) | $ | 541,833 | |||||||||
Cost of goods sold | — | (286,525 | ) | (94,253 | ) | — | (380,778 | ) | ||||||||||||
Distribution costs | — | (7,166 | ) | (3,256 | ) | — | (10,422 | ) | ||||||||||||
Gross profit | — | 110,273 | 40,560 | (200 | ) | 150,633 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Wages, salaries and benefits | — | (52,139 | ) | (21,088 | ) | — | (73,227 | ) | ||||||||||||
Selling and general expenses | — | (15,862 | ) | (8,377 | ) | 200 | (24,039 | ) | ||||||||||||
Administrative expenses | (783 | ) | (16,724 | ) | (5,021 | ) | — | (22,528 | ) | |||||||||||
Rent expense, net | — | (1,598 | ) | (2,582 | ) | — | (4,180 | ) | ||||||||||||
Depreciation and amortization | — | (13,476 | ) | (1,508 | ) | — | (14,984 | ) | ||||||||||||
Advertising | — | (4,498 | ) | (1,804 | ) | — | (6,302 | ) | ||||||||||||
Total operating expenses | (783 | ) | (104,297 | ) | (40,380 | ) | 200 | (145,260 | ) | |||||||||||
Operating (loss) income | (783 | ) | 5,976 | 180 | — | 5,373 | ||||||||||||||
Interest (expense) income, net | — | (14,311 | ) | 237 | — | (14,074 | ) | |||||||||||||
Equity (loss) income from subsidiaries | (8,297 | ) | 252 | — | 8,045 | — | ||||||||||||||
(Loss) income before income taxes | (9,080 | ) | (8,083 | ) | 417 | 8,045 | (8,701 | ) | ||||||||||||
Income tax expense | — | (214 | ) | (165 | ) | 165 | (214 | ) | ||||||||||||
Net (loss) income | $ | (9,080 | ) | $ | (8,297 | ) | $ | 252 | $ | 8,210 | $ | (8,915 | ) | |||||||
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 28-WEEK PERIOD ENDED JULY 16, 2011
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 958,836 | $ | 318,530 | $ | (593 | ) | $ | 1,276,773 | |||||||||
Cost of goods sold | — | (683,238 | ) | (212,645 | ) | — | (895,883 | ) | ||||||||||||
Distribution costs | — | (16,800 | ) | (6,756 | ) | — | (23,556 | ) | ||||||||||||
Gross profit | — | 258,798 | 99,129 | (593 | ) | 357,334 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Wages, salaries and benefits | — | (125,986 | ) | (49,352 | ) | — | (175,338 | ) | ||||||||||||
Selling and general expenses | — | (39,681 | ) | (17,733 | ) | 593 | (56,821 | ) | ||||||||||||
Administrative expenses | (1,426 | ) | (31,141 | ) | (10,935 | ) | — | (43,502 | ) | |||||||||||
Rent expense, net | — | (5,303 | ) | (4,812 | ) | — | (10,115 | ) | ||||||||||||
Depreciation and amortization | — | (20,358 | ) | (6,429 | ) | — | (26,787 | ) | ||||||||||||
Advertising | — | (7,226 | ) | (3,176 | ) | — | (10,402 | ) | ||||||||||||
Impairment | — | — | (1,891 | ) | — | (1,891 | ) | |||||||||||||
Total operating expenses | (1,426 | ) | (229,695 | ) | (94,328 | ) | 593 | (324,856 | ) | |||||||||||
Operating (loss) income | (1,426 | ) | 29,103 | 4,801 | — | 32,478 | ||||||||||||||
Interest expense, net | — | (33,449 | ) | (139 | ) | — | (33,588 | ) | ||||||||||||
Equity (loss) income from subsidiaries | (2,215 | ) | 2,816 | — | (601 | ) | — | |||||||||||||
(Loss) income before income taxes | (3,641 | ) | (1,530 | ) | 4,662 | (601 | ) | (1,110 | ) | |||||||||||
Income tax expense | — | (685 | ) | (1,846 | ) | 1,846 | (685 | ) | ||||||||||||
Net (loss) income | $ | (3,641 | ) | $ | (2,215 | ) | $ | 2,816 | $ | 1,245 | $ | (1,795 | ) | |||||||
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 28-WEEK PERIOD ENDED JULY 17, 2010
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 919,407 | $ | 287,950 | $ | (509 | ) | $ | 1,206,848 | |||||||||
Cost of goods sold | — | (647,085 | ) | (191,861 | ) | — | (838,946 | ) | ||||||||||||
Distribution costs | — | (16,756 | ) | (6,754 | ) | — | (23,510 | ) | ||||||||||||
Gross profit | — | 255,566 | 89,335 | (509 | ) | 344,392 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Wages, salaries and benefits | — | (121,000 | ) | (46,506 | ) | — | (167,506 | ) | ||||||||||||
Selling and general expenses | — | (38,400 | ) | (17,911 | ) | 509 | (55,802 | ) | ||||||||||||
Administrative expenses | (1,265 | ) | (51,153 | ) | (10,089 | ) | — | (62,507 | ) | |||||||||||
Rent expense, net | — | (5,025 | ) | (4,992 | ) | — | (10,017 | ) | ||||||||||||
Depreciation and amortization | — | (30,205 | ) | (3,509 | ) | — | (33,714 | ) | ||||||||||||
Advertising | — | (9,371 | ) | (2,984 | ) | — | (12,355 | ) | ||||||||||||
Total operating expenses | (1,265 | ) | (255,154 | ) | (85,991 | ) | 509 | (341,901 | ) | |||||||||||
Operating (loss) income | (1,265 | ) | 412 | 3,344 | — | 2,491 | ||||||||||||||
Bargain purchase | — | — | 15,681 | — | 15,681 | |||||||||||||||
Loss on debt extinguishment | — | (1,008 | ) | — | — | (1,008 | ) | |||||||||||||
Interest (expense) income, net | — | (32,616 | ) | 132 | — | (32,484 | ) | |||||||||||||
Equity (loss) income from subsidiaries | (16,020 | ) | 17,781 | — | (1,761 | ) | — | |||||||||||||
(Loss) income before income taxes | (17,285 | ) | (15,431 | ) | 19,157 | (1,761 | ) | (15,320 | ) | |||||||||||
Income tax expense | — | (589 | ) | (1,376 | ) | 11,664 | 9,699 | |||||||||||||
Net (loss) income | $ | (17,285 | ) | $ | (16,020 | ) | $ | 17,781 | $ | 9,903 | $ | (5,621 | ) | |||||||
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 28-WEEK PERIOD ENDED JULY 16, 2011
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (476 | ) | $ | 24,304 | $ | 11,226 | $ | — | $ | 35,054 | |||||||||
Cash flows used in investing activities: | ||||||||||||||||||||
Cash paid for property and equipment | — | (10,516 | ) | (15,392 | ) | — | (25,908 | ) | ||||||||||||
Proceeds from sale of assets | — | — | 650 | — | 650 | |||||||||||||||
Change in intercompany receivables position | — | (476 | ) | 3,796 | (3,320 | ) | — | |||||||||||||
Net cash used in investing activities | — | (10,992 | ) | (10,946 | ) | (3,320 | ) | (25,258 | ) | |||||||||||
Cash flows provided by (used in) financing activities: | ||||||||||||||||||||
Borrowings on ABL Facility | — | 356,300 | — | — | 356,300 | |||||||||||||||
Repayments on ABL Facility | — | (358,800 | ) | — | — | (358,800 | ) | |||||||||||||
Principal payments on capital leases | — | (5,580 | ) | (223 | ) | — | (5,803 | ) | ||||||||||||
Repayments of long-term debt borrowings | — | (227 | ) | — | — | (227 | ) | |||||||||||||
Deferred financing costs incurred | — | (57 | ) | — | — | (57 | ) | |||||||||||||
Change in bank overdraft position | — | 8 | — | — | 8 | |||||||||||||||
Change in intercompany payables position | 476 | (3,796 | ) | — | 3,320 | — | ||||||||||||||
Net cash provided by (used in) financing activities | 476 | (12,152 | ) | (223 | ) | 3,320 | (8,579 | ) | ||||||||||||
Net increase in cash and cash equivalents | — | 1,160 | 57 | — | 1,217 | |||||||||||||||
Cash and cash equivalents—beginning of period | — | 16,689 | 730 | — | 17,419 | |||||||||||||||
Cash and cash equivalents—end of period | $ | — | $ | 17,849 | $ | 787 | $ | — | $ | 18,636 | ||||||||||
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 28-WEEK PERIOD ENDED JULY 17, 2010
(Dollars in thousands)
Tops Holding | Guarantor | |||||||||||||||||||
Corporation | Tops Markets, LLC | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (475 | ) | $ | 20,209 | $ | 5,551 | $ | — | $ | 25,285 | |||||||||
Cash flows used in investing activities: | ||||||||||||||||||||
Acquisition of Penn Traffic assets | — | — | (85,023 | ) | — | (85,023 | ) | |||||||||||||
Proceeds from sale of assets | — | — | 17,483 | — | 17,483 | |||||||||||||||
Cash paid for property and equipment | — | (14,130 | ) | (4,929 | ) | — | (19,059 | ) | ||||||||||||
Investment in subsidiaries | (30,000 | ) | (85,023 | ) | — | 115,023 | — | |||||||||||||
Change in intercompany receivables position | — | (475 | ) | (17,260 | ) | 17,735 | — | |||||||||||||
Net cash used in investing activities | (30,000 | ) | (99,628 | ) | (89,729 | ) | 132,758 | (86,599 | ) | |||||||||||
Cash flows provided by financing activities: | ||||||||||||||||||||
Proceeds from long-term debt borrowings | — | 112,125 | — | — | 112,125 | |||||||||||||||
Repayments of long-term debt borrowings | — | (36,199 | ) | — | — | (36,199 | ) | |||||||||||||
Borrowings on ABL Facility | — | 58,100 | — | — | 58,100 | |||||||||||||||
Repayments on ABL Facility | — | (72,100 | ) | — | — | (72,100 | ) | |||||||||||||
Proceeds from issuance of common stock | 30,000 | 30,000 | — | (30,000 | ) | 30,000 | ||||||||||||||
Deferred financing costs incurred | — | (5,328 | ) | — | — | (5,328 | ) | |||||||||||||
Principal payments on capital leases | — | (4,405 | ) | (181 | ) | — | (4,586 | ) | ||||||||||||
Capital contribution | — | — | 85,023 | (85,023 | ) | — | ||||||||||||||
Change in bank overdraft position | — | 657 | — | — | 657 | |||||||||||||||
Change in intercompany payables position | 475 | 17,260 | — | (17,735 | ) | — | ||||||||||||||
Net cash provided by financing activities | 30,475 | 100,110 | 84,842 | (132,758 | ) | 82,669 | ||||||||||||||
Net increase in cash and cash equivalents | — | 20,691 | 664 | — | 21,355 | |||||||||||||||
Cash and cash equivalents—beginning of period | — | 19,712 | 10 | — | 19,722 | |||||||||||||||
Cash and cash equivalents—end of period | $ | — | $ | 40,403 | $ | 674 | $ | — | $ | 41,077 | ||||||||||
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | risks of claims relating to the Acquisition that may not have been properly discharged in the bankruptcy process; |
• | the severity of current economic conditions and the impact on consumer demand and spending and our pricing strategy; |
• | pricing and market strategies, the expansion, consolidation and other activities of competitors, and our ability to respond to the promotional practices of competitors; |
• | our ability to effectively increase or maintain our profit margins; |
• | the success of our expansion and renovation plans; |
• | fluctuations in utility, fuel and commodity prices which could impact consumer spending and buying habits and the cost of doing business; |
• | risks inherent in our motor fuel operations; |
• | our exposure to local economies and other adverse conditions due to our geographic concentration; |
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• | risks of natural disasters and severe weather conditions; |
• | supply problems with our suppliers and vendors; |
• | our relationships with unions and unionized employees, and the terms of future collective bargaining agreements or labor strikes; |
• | increased operating costs resulting from rising employee benefit costs or pension funding obligations; |
• | changes in, or the failure or inability to comply with, laws and governmental regulations applicable to the operation of our pharmacy and other businesses; |
• | the adequacy of our insurance coverage against claims of our customers in connection with our pharmacy services; |
• | estimates of the amount and timing of payments under our self-insurance policies; |
• | risks of liability under environmental laws and regulations; |
• | our ability to maintain and improve our information technology systems; |
• | events that give rise to actual or potential food contamination, drug contamination or food-borne illness or any adverse publicity relating to these types of concerns, whether or not valid; |
• | threats or potential threats to security; |
• | our ability to retain key personnel; |
• | risks of data security breaches or losses of confidential customer information; |
• | risks relating to our substantial indebtedness; |
• | claims or legal proceedings against us; |
• | decisions by our controlling shareholders that may conflict with the interests of the holders of our debt; and |
• | other factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended January 1, 2011 and elsewhere in this 10-Q. |
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12-week periods ended | ||||||||||||||||
July 16, 2011 | July 17, 2010 | $ Change | % Change | |||||||||||||
Inside sales | $ | 507,387 | $ | 506,999 | $ | 388 | 0.1 | % | ||||||||
Gasoline sales | 52,127 | 34,834 | 17,293 | 49.6 | % | |||||||||||
Net sales | $ | 559,514 | $ | 541,833 | $ | 17,681 | 3.3 | % | ||||||||
12-week | 12-week | |||||||||||||||||||||||
period ended | % of | period ended | % of | $ | % | |||||||||||||||||||
July 16, 2011 | Net Sales | July 17, 2010 | Net Sales | Change | Change | |||||||||||||||||||
Cost of goods sold | $ | (395,139 | ) | 70.6 | % | $ | (380,778 | ) | 70.3 | % | $ | 14,361 | 3.8 | % | ||||||||||
Distribution costs | (9,393 | ) | 1.7 | % | (10,422 | ) | 1.9 | % | (1,029 | ) | (9.9 | )% | ||||||||||||
Gross profit | $ | 154,982 | 27.7 | % | $ | 150,633 | 27.8 | % | $ | 4,349 | 2.9 | % | ||||||||||||
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12-week | 12-week | |||||||||||||||||||||||
period ended | % of | period ended | % of | $ | % | |||||||||||||||||||
July 16, 2011 | Net Sales | July 17, 2010 | Net Sales | Change | Change | |||||||||||||||||||
Wages, salaries and benefits | $ | 76,356 | 13.6 | % | $ | 73,227 | 13.5 | % | $ | 3,129 | 4.3 | % | ||||||||||||
Selling and general expenses | 23,438 | 4.2 | % | 24,039 | 4.4 | % | (601 | ) | (2.5 | )% | ||||||||||||||
Administrative expenses | 18,019 | 3.2 | % | 22,528 | 4.1 | % | (4,509 | ) | (20.0 | )% | ||||||||||||||
Rent expense, net | 4,212 | 0.8 | % | 4,180 | 0.8 | % | 32 | 0.8 | % | |||||||||||||||
Depreciation and amortization | 11,746 | 2.1 | % | 14,984 | 2.8 | % | (3,238 | ) | (21.6 | )% | ||||||||||||||
Advertising | 4,412 | 0.8 | % | 6,302 | 1.2 | % | (1,890 | ) | (30.0 | )% | ||||||||||||||
Impairment | 1,891 | 3.4 | % | — | N/A | 1,891 | N/A | |||||||||||||||||
Total | $ | 140,074 | 25.0 | % | $ | 145,260 | 26.8 | % | $ | (5,186 | ) | (3.6 | )% | |||||||||||
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28-week periods ended | ||||||||||||||||
July 16, 2011 | July 17, 2010 | $ Change | % Change | |||||||||||||
Inside sales | $ | 1,166,280 | $ | 1,130,966 | $ | 35,314 | 3.1 | % | ||||||||
Gasoline sales | 110,493 | 75,882 | 34,611 | 45.6 | % | |||||||||||
Net sales | $ | 1,276,773 | $ | 1,206,848 | $ | 69,925 | 5.8 | % | ||||||||
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28-week | 28-week | |||||||||||||||||||||||
period ended | % of | period ended | % of | $ | % | |||||||||||||||||||
July 16, 2011 | Net Sales | July 17, 2010 | Net Sales | Change | Change | |||||||||||||||||||
Cost of goods sold | $ | (895,883 | ) | 70.2 | % | $ | (838,946 | ) | 69.5 | % | $ | 56,937 | 6.8 | % | ||||||||||
Distribution costs | (23,556 | ) | 1.8 | % | (23,510 | ) | 1.9 | % | 46 | 0.2 | % | |||||||||||||
Gross profit | $ | 357,334 | 28.0 | % | $ | 344,392 | 28.5 | % | $ | 12,942 | 3.8 | % | ||||||||||||
28-week | 28-week | |||||||||||||||||||||||
period ended | % of | period ended | % of | $ | % | |||||||||||||||||||
July 16, 2011 | Net Sales | July 17, 2010 | Net Sales | Change | Change | |||||||||||||||||||
Wages, salaries and benefits | $ | 175,338 | 13.7 | % | $ | 167,506 | 13.9 | % | $ | 7,832 | 4.7 | % | ||||||||||||
Selling and general expenses | 56,821 | 4.5 | % | 55,802 | 4.6 | % | 1,019 | 1.8 | % | |||||||||||||||
Administrative expenses | 43,502 | 3.4 | % | 62,507 | 5.2 | % | (19,005 | ) | (30.4 | )% | ||||||||||||||
Rent expense, net | 10,115 | 0.8 | % | 10,017 | 0.8 | % | 98 | 1.0 | % | |||||||||||||||
Depreciation and amortization | 26,787 | 2.1 | % | 33,714 | 2.8 | % | (6,927 | ) | (20.5 | )% | ||||||||||||||
Advertising | 10,402 | 0.8 | % | 12,355 | 1.0 | % | (1,953 | ) | (15.8 | )% | ||||||||||||||
Impairment | 1,891 | 0.1 | % | — | N/A | 1,891 | N/A | |||||||||||||||||
Total | $ | 324,856 | 25.4 | % | $ | 341,901 | 28.3 | % | $ | (17,045 | ) | (5.0 | )% | |||||||||||
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28-week periods ended | ||||||||
July 16, 2011 | July 17, 2010 | |||||||
Cash provided by (used in): | ||||||||
Operating activities | $ | 35,054 | $ | 25,285 | ||||
Investing activities | (25,258 | ) | (86,599 | ) | ||||
Financing activities | (8,579 | ) | 82,669 |
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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Expected Fiscal Year of Maturity | ||||||||||||||||||||||||||||
Remainder | ||||||||||||||||||||||||||||
of 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Fair Value | ||||||||||||||||||||||
Debt: | ||||||||||||||||||||||||||||
Fixed rate | $ | 177 | $ | 434 | $ | 2,295 | $ | 280 | $ | 350,165 | $ | — | $ | 395,094 | ||||||||||||||
Average interest rate | 7.1 | % | 7.1 | % | 3.5 | % | 7.1 | % | 10.1 | % | N/A | |||||||||||||||||
Variable rate | $ | — | $ | — | $ | 12,500 | $ | — | $ | — | $ | — | $ | 12,500 | ||||||||||||||
Average interest rate | N/A | N/A | 4.79 | % | N/A | N/A | N/A |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
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Item 6. EXHIBITS
Exhibit No. | ||||
31.1* | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2* | Certification of Chief Operating Officer and Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1* | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2* | Certification of the Chief Operating Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
101* | The following financial information from the quarterly report on Form 10-Q of Tops Holding Corporation for the quarter ended July 16, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements. |
* | This prospectus supplement does not contain all of the exhibits filed with the Company’s quarterly report for the period ended July 16, 2011. Exhibits 31.1, 31.2, 32.1, 32.2 and 101 are not filed with and should not be deemed a part of this prospectus supplement. |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TOPS HOLDING CORPORATION
By: | /s/ William R. Mills William R. Mills Senior Vice President, Chief Financial Officer August 30, 2011 |
2