8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 26, 2010

THE PANTRY, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-25813	56-1574463
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

305 Gregson Drive Cary, North Carolina	27511
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (919) 774-6700

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 26, 2010, The Pantry, Inc. (the “Company”) entered into the following agreements with Marathon Petroleum Company LLC (“Marathon”):

·   Branded Product Supply and Trademark License Agreement (the “Product Supply Agreement”);

·   Master Conversion Agreement; and

·   Guaranteed Supply Agreement.

The Product Supply Agreement and Master Conversion Agreement, each summarized below, relate to the Company’s purchase of branded Marathon gasoline and distillate to be offered at certain of the Company’s convenience stores that will feature Marathon branding or Marathon/Kangaroo Express co-branding.  The Guaranteed Supply Agreement, summarized below, relates to the Company’s purchase of unbranded Marathon gasoline and distillate to be offered at certain of the Company’s Kangaroo or Kangaroo Express convenience stores.

The Company is required under the Product Supply Agreement and Guaranteed Supply Agreement to purchase a minimum volume of a combination of Marathon branded and unbranded gasoline and distillates, annually, to supply approximately 285 Marathon branded outlets and approximately 320 unbranded outlets.  Subject to the foregoing, if the Company fails to purchase the annual minimum amounts specified in the Master Conversion Agreement and Guaranteed Supply Agreement, Marathon has the right to terminate those agreements and receive the unamortized balance of Marathon’s investment provided for under the Master Conversion Agreement.

A summary of each of the Product Supply Agreement, Master Conversion Agreement and Guaranteed Supply Agreement is included below.  The summaries are not meant to be complete and are qualified in their entirety by reference to the agreements themselves, copies of which the Company intends to file as exhibits to its Annual Report on Form 10-K for the fiscal year ending September 30, 2010.

Product Supply Agreement

The Product Supply Agreement provides for Marathon to supply, and the Company to purchase, certain minimum amounts of gasoline and distillate for the Company’s specified convenience store locations to feature Marathon branding.  The price at which the Company is required to purchase gasoline and distillate is specified in the Product Supply Agreement and is based upon Marathon’s branded jobber terminal price per gallon. Additionally, the Product Supply Agreement provides the Company with a non-exclusive, limited license to use certain of Marathon’s intellectual property marks in connection with the advertising, distribution and resale of Marathon® branded gasoline, distillates and certain other products at the Company’s convenience stores that will sell Marathon’s products.  The Pr oduct Supply Agreement contains indemnity provisions typical of fuel supply agreements.  The term of the Product Supply Agreement expires on June 30, 2013, subject to the Company’s right to renew for periods which extend to December 31, 2017.

Master Conversion Agreement

The Master Conversion Agreement is related to the Product Supply Agreement summarized above and provides that Marathon will reimburse the Company for the costs incurred in converting the specified convenience store locations to comply with Marathon branding requirements, which costs will be amortized during the term of the Master Conversion Agreement.  Under the Master Conversion Agreement, Marathon agrees to provide the Company with specified rebates, based on the volume of the Company’s purchases, for gasoline and distillate purchased by the Company from Marathon during the term of the Master Conversion Agreement.  The Master Conversion Agreement’s term expires on December 31, 2017.

Guaranteed Supply Agreement

The Guaranteed Supply Agreement provides for Marathon to supply the Company with unbranded gasoline and distillate for use at certain of the Company’s Kangaroo and Kangaroo Express convenience store locations specified in the Guaranteed Supply Agreement.  Under the Guaranteed Supply Agreement, the Company is required to purchase certain minimum amounts of unbranded gasoline and distillates from Marathon at prices based upon Marathon’s wholesale reseller terminal price per gallon, less specified rebates for which the Company may be eligible based upon its volume of gasoline and distillate purchases.  The Guaranteed Supply Agreement contains indemnity provisions typical of fuel supply agreements.  The Guaranteed Supply Agreement’s term expires on the date of expiration of the Master Convers ion Agreement.

A copy of the press release announcing the agreements between the Company and Marathon is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)           Exhibits

Exhibit No.	Description
99.1	Press release dated July 29, 2010

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 hereunto duly authorized.

		THE PANTRY, INC.
	By:		/s/ Frank G. Paci
			Frank G. Paci Executive Vice President, Chief Financial Officer and Secretary
Date: July 30, 2010

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press Release dated July 29, 2010

EX-99.1

Exhibit 99.1

     

The Pantry Announces Fuel Agreement with Marathon

Kangaroo Express and Marathon Joint Branding

To Debut This Fall

CARY, N.C., July 29, 2010 – The Pantry, Inc. (Nasdaq:PTRY), operator of Kangaroo Express stores and the leading independently operated convenience store chain in the southeastern United States, today announced a fuel supply agreement with Marathon Petroleum Company LLC, the refining, marketing and transportation operations of Marathon Oil Corporation (NYSE:MRO).

Under the terms of the agreement, Marathon will supply fuel to more than 600 Pantry locations, with a joint branding relationship at approximately 285 of these sites.  The store and fuel forecourt re-branding will initially be introduced in Charlotte, N.C.  Throughout the remainder of the year, all joint brand location conversions will be completed across a seven-state southeastern marketing region.

“We are very pleased to announce this agreement with Marathon, which marks an important step in our commitment to provide guests of Kangaroo Express stores with the finest brands available,” said Terry Marks, President and Chief Executive Officer, The Pantry. “An equally important consideration for us is reliability of supply, and Marathon’s reputation for outstanding customer service is well known throughout the industry. This partnership is a true win for the guests and shareholders of The Pantry.”

“With its enviable footprint in the growing southeastern region, The Pantry is well known as one of the nation’s leading independently-operated convenience store chains.  We are excited to partner with them as they launch their “Fresh Initiative” throughout their stores to enhance the experience of the customer. This is a company clearly on the move”, said Tom Kelley, Marathon’s senior vice president of Marketing. “The combination of The Pantry’s extensive store network and Marathon’s supply infrastructure that includes our premier Garyville refinery will be an ideal fit to provide their customers quality fuels.”

The Pantry’s “Fresh Initiative” will be introduced to the re-branded Kangaroo Express convenience stores in Charlotte, bringing new great tasting coffee and fresh food to guests in a fast, friendly, and clean store environment. The Fresh Initiative includes renovations and remodeling of select stores with the Kangaroo Express banner across the southeastern United States.

About Marathon

Marathon is an integrated international energy company engaged in exploration and

production; oil sands mining; integrated gas; and refining, marketing and transportation

operations. Marathon, which is based in Houston, has principal operations in the United States, Angola, Canada, Equatorial Guinea, Indonesia, Libya, Norway, Poland and the United Kingdom. Marathon is the fourth largest United States-based integrated oil company and the nation's fifth largest refiner. For more information, please visit the Company’s website at http://www.marathon.com.

About The Pantry

Headquartered in Cary, North Carolina, The Pantry, Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of July 29, 2010, the Company operates 1,641 stores in eleven states under select banners, including Kangaroo Express(R), its primary operating banner. The Pantry's stores offer a broad selection of merchandise, as well as fuel and other ancillary services designed to appeal to the convenience needs of its customers.

Safe Harbor Statement

This press release includes statements relating to future plans or events that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation: The Pantry’s ability to enhance its operating performance through its in-store initiatives; fluctuations in domestic and global petroleum and fuel markets; realizing expected benefits from fuel supply agreements with Marathon; changes in the competitive landscape of the conven ience store industry, including fuel stations and other non-traditional retailers located in The Pantry’s markets; the effect of national and regional economic conditions on the convenience store industry and The Pantry’s markets; the global financial crisis and uncertainty in global  economic conditions; and financial difficulties of suppliers, including The Pantry’s principal suppliers of fuel and merchandise, and their ability to continue to supply its stores. For further information regarding cautionary statements and factors affecting future results and events of The Pantry, please refer to The Pantry’s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission.  In addition, the forward-looking statements included in this press release are based on estimates and plans as of July 29, 2010. While The Pantry may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so.

Media Contacts:

David Henninger

The Pantry

919-566-1378

Angelia Graves

Marathon

419-421-2703