<PAGE>

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K
                                 ANNUAL REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                         COMMISSION FILE NUMBER: 0-3777
                        PETRIE STORES LIQUIDATING TRUST
             (Exact Name of Registrant as Specified in Its Charter)

<Table>
<S>                                            <C>
                   NEW YORK                                      22-6679945
       (State or Other Jurisdiction of                        (I.R.S. Employer
        Incorporation or Organization)                      Identification No.)

           201 ROUTE 17, SUITE 300                                 07070
            RUTHERFORD, NEW JERSEY                               (Zip Code)
   (Address of Principal Executive Offices)
</Table>

              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                                 (201) 635-9637

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          UNITS OF BENEFICIAL INTEREST
                                (Title of Class)

     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

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

     As of March 28, 2005, the most recent practicable date prior to the
printing of this report, there were 52,350,238 units of beneficial interest of
the Petrie Stores Liquidating Trust (the "Liquidating Trust") outstanding. On
June 30, 2004, the last business day of the Liquidating Trust's most recently
completed second quarter, the aggregate market value of the units of beneficial
interest held by non-affiliates was approximately $11.1 million, based upon the
closing price of $0.46 per unit of beneficial interest (as quoted on the OTC
Bulletin Board). For purposes of this calculation, the Liquidating Trust has
assumed that HBK Investments L.P., HBK Finance L.P. and T. Rowe Price
Associates, Inc. are not affiliates of the Liquidating Trust.

                      DOCUMENTS INCORPORATED BY REFERENCE:

     None.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                     INDEX

<Table>
<S>              <C>                                                           <C>
                                      PART I
Item 1.          Business....................................................    1
Item 2.          Properties..................................................    2
Item 3.          Legal Proceedings...........................................    2
Item 4.          Submission of Matters to a Vote of Security Holders.........    3

                                      PART II
Item 5.          Market for the Registrant's Common Equity and Related
                 Security Holder Matters.....................................    3
Item 6.          Selected Financial Data.....................................    4
Item 7.          Management's Discussion and Analysis of Financial Condition
                 and Results of Operations...................................    4
Item 7A.         Quantitative and Qualitative Disclosures About Market
                 Risk........................................................   11
Item 8.          Financial Statements and Supplementary Data.................   11
Item 9.          Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure....................................   11
Item 9A.         Controls and Procedures.....................................   12

                                     PART III
Item 10.         Directors and Executive Officers of the Registrant..........   12
Item 11.         Executive Compensation......................................   14
Item 12.         Security Ownership of Certain Beneficial Owners and
                 Management and Related Security Holder Matters..............   14
Item 13.         Certain Relationships and Related Transactions..............   15
Item 14.         Principal Accountant Fees and Services......................   16

                                      PART IV
Item 15.         Exhibits and Financial Statement Schedules..................   16
</Table>

                                       -i-
<PAGE>

                                     PART I

ITEM 1.  BUSINESS.

GENERAL

     The Petrie Stores Liquidating Trust (the "Liquidating Trust") is the
successor to Petrie Stores Corporation, a New York corporation that was
dissolved effective February 5, 1997 ("Petrie"). Since January 24, 1995, Petrie
(and from January 22, 1996, the Liquidating Trust) has been in liquidation
pursuant to Petrie's shareholder-approved Plan of Liquidation and Dissolution
(the "Plan of Liquidation"). Prior to December 9, 1994, the date on which Petrie
sold its retail operations (as more fully described below), Petrie and its
subsidiaries operated a chain of retail stores that specialized in the sale of
women's apparel.

     During its fiscal year ended January 28, 1995, Petrie undertook a
reorganization of its operations in order to separate its investment in Toys "R"
Us, Inc. ("Toys 'R' Us") from its retail operations and distribute its shares of
Toys "R" Us common stock, par value $.01 per share ("Toys Common Stock"), to
Petrie's shareholders without the incurrence of any significant federal income
tax by Petrie or its shareholders. In connection with such reorganization, on
December 9, 1994, Petrie completed the sale (the "Sale") to PS Stores
Acquisition Corp. ("PS Stores") of all of the stock of Petrie's former
subsidiary, Petrie Retail, Inc. ("Petrie Retail"), which then owned all of
Petrie's retail operations, for $190 million in cash plus the assumption of
certain of Petrie's liabilities. The Sale was consummated pursuant to a Stock
Purchase Agreement, dated as of August 23, 1994 and amended as of November 3,
1994, between Petrie and WP Investors, Inc., an affiliate of E.M. Warburg,
Pincus & Co., Inc. (the "Retail Operations Stock Purchase Agreement").

     On January 24, 1995, Petrie exchanged (the "Exchange") with Toys "R" Us
39,853,403 shares of Toys Common Stock held by Petrie, plus $165 million in cash
derived from the Sale, for 42,076,420 shares of Toys Common Stock, pursuant to
an Acquisition Agreement, dated as of April 20, 1994 and amended as of May 10,
1994, between Petrie and Toys "R" Us (the "Toys Acquisition Agreement"). The
Toys Acquisition Agreement had required, among other things, that Petrie sell
its retail operations prior to the consummation of the Exchange and that,
following the Exchange, Petrie liquidate and dissolve and distribute to its
shareholders all of its remaining assets, less an adequate provision for
Petrie's actual and contingent liabilities.

     Since January 24, 1995, the date on which Petrie's shareholders approved
the Plan of Liquidation, Petrie and its successor, the Liquidating Trust, have
(i) made six liquidating distributions to shareholders (or, in the case of the
Liquidating Trust, to unit holders) of an aggregate of 33,098,720 shares of Toys
Common Stock and approximately $125.6 million in cash; (ii) sold an aggregate of
6,977,700 shares of Toys Common Stock; and (iii) delivered 2,000,000 shares of
Toys Common Stock to Canadian Imperial Bank of Commerce ("CIBC") in exchange for
a cash payment of approximately $61.4 million. As a result of the foregoing
transactions, the Liquidating Trust no longer holds any shares of Toys Common
Stock.

     The Liquidating Trust was established pursuant to an Agreement and
Declaration of Trust, dated as of December 6, 1995, between Petrie and the
trustees named therein (the "Liquidating Trust Agreement"). Pursuant to the
Liquidating Trust Agreement, on January 22, 1996 (the "Succession Date"), Petrie
transferred its assets (then consisting of approximately $131 million in cash
and cash equivalents and 5,055,576 shares of Toys Common Stock) to, and its
remaining fixed and contingent liabilities were assumed by (the "Succession"),
the Liquidating Trust. Each holder of Petrie common stock, par value $1.00 per
share ("Petrie Common Stock"), as of the close of business on the Succession
Date, became the holder of one unit of beneficial interest in the Liquidating
Trust ("Unit of Beneficial Interest") for each share of Petrie Common Stock
owned by such shareholder. Certificates representing shares of Petrie Common
Stock were automatically deemed to represent a corresponding number of units of
beneficial interest.

     On November 19, 2002, the expiration date of the Liquidating Trust was
extended from December 6, 2002 to December 6, 2006 (subject to further extension
by the Liquidating Trustees).

     The Liquidating Trust's activities are limited to winding up Petrie's
affairs in furtherance of the Plan of Liquidation. The Liquidating Trust was
established to enable Petrie to liquidate prior to fully winding up its

                                       -1-
<PAGE>

affairs, in accordance with the terms of a private letter ruling received by
Petrie from the IRS on November 15, 1994. The Liquidating Trust Agreement
prohibits the Liquidating Trustees from entering into or engaging in any trade
or business on behalf of the Liquidating Trust or its unit holders and from
receiving any property, making any distribution, satisfying or discharging any
claims, expenses, charges, liabilities or obligations or otherwise taking any
action which, in any case, is inconsistent with Petrie's complete liquidation
(as such term is used in and interpreted under Sections 368(a)(1)(C) and
(a)(2)(G) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder).

     The Liquidating Trust is a complete pass-through entity for federal income
tax purposes and, accordingly, is not subject to federal income tax. Instead,
each holder of units of beneficial interest in the Liquidating Trust is required
to take into account, in accordance with such holder's method of accounting, his
pro rata share of the Liquidating Trust's items of income, gain, loss, deduction
or credit, regardless of the amount or timing of distributions to such holder.

     The principal executive offices of the Liquidating Trust are located at 201
Route 17, Suite 300, Rutherford, New Jersey 07070 (telephone (201) 635-9637).

EMPLOYEES

     The Liquidating Trust has two part-time employees, Stephanie R. Joseph and
H. Bartlett Brown. Ms. Joseph serves as Manager and Chief Executive Officer of
the Liquidating Trust. Mr. Brown serves as Assistant Manager and Chief Financial
Officer of the Liquidating Trust.

ITEM 2.  PROPERTIES.

     Other than the Liquidating Trust's principal executive offices, the
Liquidating Trust neither owns nor leases any real property.

     As successor to Petrie, the Liquidating Trust is a guarantor of certain
leases for which Petrie Retail or an affiliate thereof has assumed liability.
See Item 7 and Notes to Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS.

     None.

                                       -2-
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not Applicable.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
         MATTERS.

UNITS OF BENEFICIAL INTEREST

     Since January 23, 1996, the Liquidating Trust's units of beneficial
interest have been quoted on the OTC Bulletin Board under the symbol "PSTLS."
The high and low closing prices per unit of beneficial interest are shown below:

<Table>
<Caption>
                                                              HIGH     LOW
                                                              -----   -----
<S>                                                           <C>     <C>
Year Ended December 31, 2003:
  First quarter (ended March 31, 2003)......................  $1.14   $0.60
  Second quarter (ended June 30, 2003)......................  $0.65   $0.61
  Third quarter (ended September 30, 2003)..................  $0.65   $0.62
  Fourth quarter (ended December 31, 2003)..................  $0.66   $0.64
Year Ended December 31, 2004:
  First quarter (ended March 31, 2004)......................  $0.86   $0.42
  Second quarter (ended June 30, 2004)......................  $0.46   $0.46
  Third quarter (ended September 30, 2004)..................  $0.50   $0.44
  Fourth quarter (ended December 31, 2004)..................  $0.48   $0.43
Year Ending December 31, 2005:
  First quarter (through March 28, 2005)....................  $0.48   $0.44
</Table>

     As of March 28, 2005, the most recent practicable date prior to the
printing of this report, there were approximately 2,300 holders of record of
units of beneficial interest of the Liquidating Trust. On March 31, 2005, the
Liquidating Trust announced that it will make a distribution to its unit holders
on April 21, 2005 of $15,705,071 in cash, or $0.30 for each unit of beneficial
interest held of record at the close of business on April 11, 2005. On January
30, 2004, the Liquidating Trust distributed to its unit holders a total of
$20,940,095 in cash, or $0.40 for each unit of beneficial interest held of
record at the close of business on January 20, 2004. On January 31, 2003, the
Liquidating Trust distributed to its unit holders a total of $26,175,119 in
cash, or $0.50 for each unit of beneficial interest held of record at the close
of business on January 21, 2003. The Liquidating Trustees will consider
additional distributions of cash to unit holders when the status of the
Liquidating Trust's remaining contingent liabilities is further clarified.

EQUITY COMPENSATION PLAN INFORMATION

     The Liquidating Trust does not have any compensation plans under which
equity securities are authorized for issuance.

                                       -3-
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

     Set forth below are selected consolidated financial data of the Liquidating
Trust as of and for the years ended December 31, 2004, 2003, 2002, 2001 and
2000. A liquidation basis of accounting was implemented for all years presented.

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                               -----------------------------------------------
                                               2004(2)   2003(3)    2002     2001(4)   2000(5)
                                               -------   -------   -------   -------   -------
                                                   (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S>                                            <C>       <C>       <C>       <C>       <C>
Corporate overhead benefit (expense)(1)......  $ 8,703   $ 2,002   $(1,270)  $    94   $ 6,262
Investment income............................      536       736     1,720     4,171     7,033
Net realized and unrealized (loss) on
  investments................................       --        --        --        --    (4,327)
                                               -------   -------   -------   -------   -------
Net income...................................  $ 9,239   $ 2,738   $   450   $ 4,265   $ 8,968
                                               =======   =======   =======   =======   =======
Income per unit:.............................  $  0.18   $  0.05   $  0.01   $  0.08   $  0.17
                                               =======   =======   =======   =======   =======
Weighted average number of units.............   52,350    52,350    52,350    52,350    52,350
                                               =======   =======   =======   =======   =======
Total assets.................................  $43,846   $65,154   $88,916   $88,996   $86,344
                                               =======   =======   =======   =======   =======
</Table>

---------------

(1) Corporate overhead generally consists of costs and expenses related to the
    liquidation and dissolution of Petrie, including, but not limited to, legal
    fees, real estate advisory fees, insurance, salaries for the Liquidating
    Trust's two part-time employees, trustee fees, accounting fees, transfer
    agent fees and printing and related expenses.

(2) The benefit in corporate overhead for the year ended December 31, 2004
    reflects the reduction of $9 million in the Liquidating Trust's total
    accrual for lease liabilities as discussed under "Item 7 -- Management's
    Discussion and Analysis of Financial Condition and Results of Operations"
    below.

(3) The benefit in corporate overhead for the year ended December 31, 2003,
    reflects the receipt of approximately $1.8 million on or about July 1, 2003,
    as partial payment of the Liquidating Trust's claim against the Petrie
    Retail bankruptcy estate, and the receipt of approximately $949,000 on or
    about December 30, 2003, of a refund in respect of previous tax years to
    which the Liquidating Trust was entitled pursuant to a settlement agreement
    between the Liquidating Trust and the Petrie Retail bankruptcy estate.

(4) The benefit in corporate overhead for the year ended December 31, 2001
    reflects the receipt by the Liquidating Trust of approximately $1.5 million
    as partial payment of the Liquidating Trust's claim against the Petrie
    Retail bankruptcy estate.

(5) The benefit in corporate overhead for the year ended December 31, 2000
    reflects a reduction of $3.8 million in the Liquidating Trust's total
    accrual for lease liabilities following the settlement and release of claims
    asserted by certain landlords. By order of the Bankruptcy Court in Petrie
    Retail's bankruptcy dated April 12, 2000, the Liquidating Trust was released
    from its contractual liability with respect to the United Auto Workers
    District 65 Security Plan Pension Fund. Accordingly, the Liquidating Trust
    reversed a $3 million accrual related to this contingent liability.
    Additionally, during the year ended December 31, 2000, the Liquidating Trust
    received $765,000 as partial payment of the Liquidating Trust's claim
    against the Petrie Retail bankruptcy estate.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

     The following discussion should be read in conjunction with the financial
statements and the notes thereto of the Liquidating Trust appearing elsewhere in
this report.

     As previously disclosed, Petrie sold its retail operations to PS Stores on
December 9, 1994, and on January 24, 1995 (the date on which Petrie's
shareholders approved the Plan of Liquidation), Petrie commenced its
liquidation. As a result, effective January 28, 1995, Petrie changed its basis
of accounting from a going-concern basis to a liquidation basis. During all
periods since such date, the Liquidating Trust's

                                       -4-
<PAGE>

activities have been limited to continuing Petrie's liquidation in furtherance
of the Plan of Liquidation. For financial statement purposes, the Liquidating
Trust is deemed to be the successor to Petrie.

CRITICAL ACCOUNTING POLICIES

     The Liquidating Trust's financial statements are prepared in accordance
with accounting practices generally accepted in the United States for companies
presenting liquidation basis financial statements, and require management to
make estimates and assumptions. The Liquidating Trust believes that, of its
significant accounting policies, the policies described below under "Liquidity
and Capital Resources -- Contingent Liabilities" may involve a higher degree of
judgment and complexity.

RESULTS OF OPERATIONS

  YEAR ENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003

     The Liquidating Trust's net income for the year ended December 31, 2004 was
$9,239,000, as compared to net income of $2,738,000 for the year ended December
31, 2003.

     For the year ended December 31, 2004, the Liquidating Trust had a benefit
in corporate overhead of $8,703,000, as compared to a benefit in corporate
overhead of $2,002,000 for the year ended December 31, 2003. The Liquidating
Trust's corporate overhead generally consists of costs and expenses related to
the liquidation and dissolution of Petrie, including, but not limited to, costs
and expenses that the Liquidating Trust incurred as a result of Petrie Retail's
failure to perform its obligations in connection with its bankruptcy filing,
legal fees, real estate advisory fees, salaries for the Liquidating Trust's two
part-time employees, trustee fees, accounting fees, transfer agent fees and
printing and related expenses. The benefit in corporate overhead for the year
ended December 31, 2004 reflects a $9,233,000 reduction in the Liquidating
Trust's accrual for lease liabilities as discussed below under "-- Contingent
Liabilities". In addition, during the year ended December 31, 2004, the
Liquidating Trust reduced certain expenses, including by decreasing the salaries
of its officers and Liquidating Trustees and the expenses of its advisors. As a
result, the amount of expenses that constituted corporate overhead was lower
during the year ended December 31, 2004 than during the year ended December 31,
2003. The benefit in corporate overhead for the year ended December 31, 2003
reflects the receipt of $1,836,000, on or about July 1, 2003, as partial payment
of the Liquidating Trust's claim against the Petrie Retail bankruptcy estate,
and the receipt of approximately $949,000 on or about December 30, 2003, of a
refund in respect of previous tax years to which the Liquidating Trust was
entitled pursuant to a settlement agreement between the Liquidating Trust and
the Petrie Retail bankruptcy estate.

     During the year ended December 31, 2004, the Liquidating Trust earned
$536,000 in investment income, as compared to $736,000 earned during the year
ended December 31, 2003. The decrease in investment income earned during the
year ended December 31, 2004 is due to fewer assets available for investment and
lower interest rates.

  YEAR ENDED DECEMBER 31, 2003 COMPARED TO THE YEAR ENDED DECEMBER 31, 2002

     The Liquidating Trust's net income for the year ended December 31, 2003 was
$2,738,000, as compared to net income of $450,000 for the year ended December
31, 2002.

     For the year ended December 31, 2003, the Liquidating Trust realized a
benefit in corporate overhead of $2,002,000, as compared to an expense of
$1,270,000 for the year ended December 31, 2002. The Liquidating Trust's
corporate overhead generally consists of costs and expenses related to the
liquidation and dissolution of Petrie, including, but not limited to, costs and
expenses that the Liquidating Trust incurred as a result of Petrie Retail's
failure to perform its obligations in connection with its bankruptcy filing,
legal fees, real estate advisory fees, salaries for the Liquidating Trust's two
part-time employees, trustee fees, accounting fees, transfer agent fees and
printing and related expenses. The amount of expenses that constituted corporate
overhead was lower during the year ended December 31, 2003 than during the year
ended December 31, 2002. The benefit in corporate overhead for the year ended
December 31, 2003 reflects the receipt of $1,836,000, on or about July 1, 2003,
as partial payment of the Liquidating Trust's claim against the Petrie Retail
bankruptcy

                                       -5-
<PAGE>

estate, and the receipt of approximately $949,000 on or about December 30, 2003,
of a refund in respect of previous tax years to which the Liquidating Trust was
entitled pursuant to a settlement agreement between the Liquidating Trust and
the Petrie Retail bankruptcy estate.

     During the year ended December 31, 2003, the Liquidating Trust earned
$736,000 in investment income, as compared to $1,720,000 earned during the year
ended December 31, 2002. The decrease in investment income earned during the
year ended December 31, 2003 is due to lower prevailing interest rates and fewer
assets available for investment.

LIQUIDITY AND CAPITAL RESOURCES

  GENERAL

     Pursuant to an agreement dated as of December 24, 2003, the Liquidating
Trust and Toys "R" Us agreed to terminate the Liquidating Trust's obligations
under a letter agreement dated as of January 24, 1995 to provide notice to Toys
"R" Us (and an opportunity for Toys "R" Us to object) prior to making any
liquidating distributions. Accordingly, the Liquidating Trust is no longer
obligated to provide notice to Toys "R" Us prior to making distributions.

     As of December 31, 2004, the Liquidating Trust had approximately $44
million in cash, cash equivalents and investments in U.S. Treasury obligations.
After giving effect to the distribution of $15,705,071 announced on March 31,
2005, the Liquidating Trust will have approximately $28 million in cash, cash
equivalents and investments in U.S. Treasury obligations. The Liquidating Trust
believes that it has sufficient liquid funds available to satisfy the
foreseeable liabilities of the Liquidating Trust (including, without limitation,
costs and expenses related to the administration of the Liquidating Trust such
as legal fees, real estate advisory fees, insurance, salaries for the
Liquidating Trust's two part-time employees, trustee fees, accounting fees,
transfer agent fees and printing and related expenses).

  CONTINGENT LIABILITIES

     As successor to Petrie, the Liquidating Trust has accrued for certain
contingent liabilities with respect to existing or potential claims, lawsuits
and other proceedings, which primarily relate to guarantees of certain retail
store leases, expiring at various times through 2011 for which Petrie Retail or
an affiliate thereof assumed liability, and certain other liabilities that were
assumed by Petrie Retail (but as to which Petrie's liability has not been
released) in connection with the Sale (collectively, the "Assumed Obligations")
to the extent that Petrie Retail or its successor fails to perform. The
Liquidating Trust accrues such liabilities when it is probable that future costs
will be incurred and when such costs can be reasonably estimated. Such accruals
are based on developments to date, the Liquidating Trust's estimates of the
outcome of these matters and its experience (including that of its predecessor,
Petrie) in contesting, litigating and settling matters. The Liquidating Trust
had accrued approximately $16 million for the aforementioned contingent
liabilities at December 31, 2004 and approximately $25 million at December 31,
2003. As the scope of these liabilities becomes further refined and additional
analysis is performed, there may be changes in the estimates of future costs,
which could have a material effect on the Liquidating Trust's financial
condition, liquidity and future ability to make liquidating distributions.

     Petrie Retail's Bankruptcy.  On October 12, 1995, Petrie Retail filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District
of New York (the "Bankruptcy Court"). In connection with its filing for
bankruptcy protection, Petrie Retail failed to perform or make payments with
respect to certain of the Assumed Obligations, including, but not limited to,
Assumed Obligations relating to store leases for which Petrie Retail or an
affiliate thereof had assumed liability, state and federal taxes, employment
agreements, insurance premiums and certain other claims and contractual
obligations. Accordingly, the Liquidating Trust has been and may continue to be
required to make payments in respect of certain of the Assumed Obligations.

     On December 23, 1997, the Liquidating Trust filed over 110 claims in the
Bankruptcy Court against Petrie Retail and certain of its affiliates with
respect to an aggregate of approximately $14 million in payments which had then
been made by the Liquidating Trust as a result of the failure by Petrie Retail
or an affiliate thereof to perform or pay certain of the Assumed Obligations.
The Liquidating Trust subsequently amended

                                       -6-
<PAGE>

these claims such that it asserted fixed claims representing a total of
approximately $16.9 million against Petrie Retail's estate. The Liquidating
Trust also filed approximately 600 additional claims in the Bankruptcy Court
against Petrie Retail and certain of its affiliates with respect to payments
which the Liquidating Trust may in the future be required to make as a result of
the failure by Petrie Retail or its affiliates to perform or pay Assumed
Obligations.

     On December 8, 1998, the Bankruptcy Court confirmed a plan of
reorganization for Petrie Retail (the "Petrie Retail Plan"), which modified the
plan of reorganization filed by Petrie Retail and Warburg Pincus Ventures, L.P.
("Warburg") with the Bankruptcy Court on August 6, 1998, as amended. Under the
confirmed Petrie Retail Plan, Petrie Retail sold substantially all of its
remaining operating assets to Urban Acquisition Corp., an affiliate of Urban
Brands, Inc., a retailer that operates under the Ashley Stewart trade name, for
$52.25 million, and retained 13 of its store leases, for which Warburg was
required to contribute $12 million to the bankruptcy estate, assume $3.1 million
of Petrie Retail's executive severance obligations and waive approximately $3.8
million in fees and expenses allegedly owed to it under Petrie Retail's
debtor-in-possession financing arrangement.

     On April 12, 2000, the Bankruptcy Court approved a stipulation of
settlement between the distribution company (the "Distribution Company")
designated by the Petrie Retail Plan and the Liquidating Trust, under which the
Liquidating Trust and the Distribution Company settled their disputes regarding
the claims that the Liquidating Trust filed against Petrie Retail. Pursuant to
the stipulation of settlement, (i) the Liquidating Trust was allowed a single
unsecured claim against Petrie Retail in the amount of approximately $14.4
million, subject to increase upon resolution of the Distribution Company's
objections to certain landlord claims against Petrie Retail, (ii) the
Distribution Company agreed to release to the Liquidating Trust approximately
$5.5 million held in a collateral account by June 30, 2000 (provided that the
Distribution Company did not pay $10 million or more to the United Auto Workers
District 65 Security Plan Pension Fund prior to that date), and (iii) the
Distribution Company and the Liquidating Trust exchanged mutual releases. On
June 28, 2000, the approximately $5.5 million held in the collateral account was
released and transferred to the Liquidating Trust in accordance with the
settlement. On December 15, 2000, the Bankruptcy Court entered an order allowing
the Liquidating Trust an unsecured claim against the Distribution Company in the
amount of $15.3 million. On December 21, 2000, the Liquidating Trust received
$765,000 as partial payment of its claim against the Distribution Company. On
December 18, 2001, the Liquidating Trust received $1,530,000 as partial payment
of the Liquidating Trust's claim against the Distribution Company. On or about
July 1, 2003, the Liquidating Trust received an additional $1,836,000 as partial
payment of the Liquidating Trust's claim against the Distribution Company. As of
March 28, 2005, the Liquidating Trust's remaining claim against the Distribution
Company was $11,169,000. There can be no assurance as to the timing of the
payment, if any, of the remainder of the Liquidating Trust's claim against the
Distribution Company or the amount of any further payments that the Distribution
Company will make to creditors asserting unsecured claims. Accordingly, no
amounts have been accrued as receivables for potential reimbursement or
recoveries from the reorganized Petrie Retail entity.

     On or about December 30, 2003, the Liquidating Trust received a refund in
respect of previous tax years of approximately $949,000 to which the Liquidating
Trust was entitled pursuant to a settlement agreement between the Liquidating
Trust and the Petrie Retail bankruptcy estate.

     On April 10, 1998, PS Stores, the parent of Petrie Retail, filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code with the Bankruptcy Court. After such filing, the
Liquidating Trust filed claims in the Bankruptcy Court against PS Stores
substantially similar to those filed against Petrie Retail. On December 8, 1998,
the Bankruptcy Court confirmed PS Stores' proposed plan of reorganization, and
in August 1999, pursuant to a settlement approved by the Bankruptcy Court, the
Liquidating Trust received a payment in the amount of approximately $200,000
from PS Stores' bankruptcy estate.

     Store Leases.  As described above, in December 1998, Petrie Retail disposed
of substantially all its remaining operations and store leases as part of the
Petrie Retail Plan. Of the roughly 1600 stores that Petrie Retail operated prior
to filing its bankruptcy petition in October 1995, (i) 722 leases were rejected,
(ii) 615

                                       -7-
<PAGE>

leases were assigned to third party retailers, including (A) 410 leases which
were part of Petrie Retail's former G&G Shops Inc. division and were included in
the sale of such division to an investor group led by Pegasus Partners, L.P. and
certain executives of such division, (B) 85 leases which were sold to Urban
Acquisition Corp. as part of the Petrie Retail Plan and (C) 120 leases which
were not part of Petrie Retail's former G&G Shops Inc. division and which were
sold to third party retailers other than Urban Acquisition Corp., (iii) 13
leases were retained by the reorganized Petrie Retail entity for stores which
are currently managed by Urban Acquisition Corp. and which Urban Acquisition
Corp. has the right to purchase at a later date and (iv) approximately 250
leases expired or were terminated by mutual landlord and tenant consent.

     After taking into account settlements and releases obtained from landlords,
the Liquidating Trust, as successor to Petrie, remains the guarantor of 140 of
the retail leases, including 61 leases that were rejected during the pendency of
the Petrie Retail bankruptcy (the "Rejected Leases") and 79 other leases
described below. The Liquidating Trust's exposure relating to the 140 retail
leases, without giving effect to any present value discount and assuming the
landlord in each case is unable to mitigate its damages, but after giving effect
to the factors described in the following paragraph, would be approximately $17
million. Such exposure includes approximately $15 million in potential liability
related to 61 of the Rejected Leases described above, which amount is included
in the Liquidating Trust's accrued expenses and other liabilities at December
31, 2004.

     In the fourth quarter of 2004, the Liquidating Trust commissioned its real
estate advisor to visit the properties underlying the Rejected Leases to assess
the level of risk of liability associated with such properties (including
whether the property was vacant). After receiving a report as to such property
visits, the Liquidating Trust determined to reduce its accrual related to
exposure under the Rejected Leases by $9 million. In making such determination
to reduce the accrual, the Liquidating Trust assessed a number of factors,
including (1) applicable law related to the impact of an affirmative defense
available to the Liquidating Trust relating to the expiration of the statute of
limitations within which claims relating to certain of the Rejected Leases would
have had to have been made (the "Statute of Limitations Defense"), (2) the
absence of any new landlord claims over the past several years related to
rejected store leases, (3) the Liquidating Trust's previous settlement history
related to rejected lease claims and (4) reports prepared by the Liquidating
Trust's real estate advisor. Prior to giving effect to the reduction in its
accrual related to Rejected Leases, the Liquidating Trust's theoretical exposure
relating to these leases, without giving effect to any present value discount,
and assuming the landlord in each case is unable to mitigate its damages, was
approximately $24 million. The approximately $15 million in potential liability
related to the 61 Rejected Leases is an estimate of the Liquidating Trust's
exposure under such leases after giving full effect to the factors described in
this paragraph. As of December 31, 2003, the Liquidating Trust's assessment of
these liabilities resulted in a liability of $25 million.

     The Liquidating Trust's exposure also includes approximately $2 million in
potential liability related to 20 of the store leases which were either assigned
to third party retailers or are still held by the successor of Petrie Retail and
were not rejected in the Petrie Retail bankruptcy (the "Assigned Non-Rejected
Leases") and a de minimis amount related to 59 of the leases which have expired
or were terminated by mutual landlord and tenant consent described above (the
"Terminated Non-Rejected Leases"). Amounts related to Assigned Non-Rejected
Leases and Terminated Non-Rejected Leases are not included in the Liquidating
Trust's accrued expenses and other liabilities at December 31, 2004. The
potential exposure related to Assigned Non-Rejected Leases includes potential
liability related to lease extension options that may be exercised following the
assignment of leases to third party retailers; however, such liability related
to the Assigned Non-Rejected Leases is not included in the potential liability
described in the first sentence of this paragraph until the actual lease renewal
term commences.

     The Liquidating Trust's lease exposure calculations related to Rejected
Leases, Assigned Non-Rejected Leases and Terminated Non-Rejected Leases reflect
the estimated sum of all base rent and additional rent (such as taxes and common
area charges) due under a lease through the end of the current lease term, but
do not reflect potential penalties, interest and other charges to which a
landlord may be entitled. Such additional charges (which may in part be
unenforceable) are not expected to materially increase the Liquidating Trust's
lease guarantee liability.

                                       -8-
<PAGE>

     A significant number of leases discussed above under which a landlord might
claim that the Liquidating Trust, as successor to Petrie, has liability as a
lease guarantor either expressly contain mitigation provisions or relate to
property in states that imply such provisions as a matter of law. Mitigation
generally requires, among other things, that a landlord of a closed store seek
to reduce its damages, including by attempting to locate a new tenant.

     Employment Agreements.  As previously disclosed, on October 23, 1995,
Petrie Retail notified three former executives of Petrie that, as a result of
Petrie Retail's bankruptcy filing, Petrie Retail would no longer honor its
obligations under the employment agreements each executive had entered into with
Petrie which had been assumed by Petrie Retail in connection with the sale of
the retail operations. On April 25, 1996, the Liquidating Trust entered into
settlement agreements with two of the former executives and on January 27, 1997
entered into a settlement agreement with the estate of the third executive.
Pursuant to such settlement agreements, the Liquidating Trust agreed to pay each
substantially all the amounts due under respective agreements with Petrie. The
two former executives have since died and, as a result, the Liquidating Trust's
obligations under the settlement agreements with such executives have been
terminated. The total cost of these settlements to the Liquidating Trust was
approximately $3 million. As of December 31, 2004 and 2003, there were no future
obligations of the Liquidating Trust to such former executives.

     Insurance Premium Adjustment.  In April 2002, the Liquidating Trust
received a bill from Zurich N.A. ("Zurich"), an insurer of Petrie, for $551,338
in respect of retrospective premium adjustments purportedly owed by Petrie
pursuant to general liability, automobile and workers' compensation insurance
agreements between Zurich and Petrie. The amount claimed by Zurich related to
policy terms 1988/1989 through and including 1994/1995, and was based on the
value of claims made as of December 31, 2001. Such amount was paid by the
Liquidating Trust on September 26, 2002.

     In April 2004, The Liquidating Trust received a bill from Zurich for
$84,343 in respect of retrospective premium adjustments purportedly owed by
Petrie pursuant to general liability, automobile and workers' compensation
insurance agreements between Zurich and Petrie. The amount claimed by Zurich
related to policy terms 1988/1989 through and including 1994/1995, and was based
on the value of claims made as of December 31, 2003. This amount was included in
accrued expenses and other liabilities at December 31, 2003. Such amount was
paid by the Liquidating Trust on May 12, 2004.

     In March 2005, the Liquidating Trust received a bill from Zurich for
$106,781 in respect of retrospective premium adjustments purportedly owed by
Petrie pursuant to general liability, automobile and workers' compensation
insurance agreements between Zurich and Petrie. The amount claimed by Zurich
relates to policy terms 1988/1989 through and including 1994/1995, and was based
on the value of claims made as of December 31, 2004.

     The Liquidating Trust believes, based on the most recently available
information, that appropriate accruals have been established in the accompanying
financial statements to provide for any losses that may be incurred with respect
to the aforementioned contingencies.

OFF-BALANCE SHEET ARRANGEMENTS

     The Liquidating Trust did not have any off-balance sheet arrangements
during the year ended December 31, 2004.

                                       -9-
<PAGE>

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

     Information relating to the Liquidating Trust's significant contractual
obligations is summarized below.

<Table>
<Caption>
                                                           PAYMENT DUE BY PERIOD
                                        -----------------------------------------------------------
                                                LESS THAN       1-3            3-5        MORE THAN
CONTRACTUAL OBLIGATIONS                 TOTAL    1 YEAR        YEARS          YEARS        5 YEARS
-----------------------                 -----   ---------   ------------   ------------   ---------
<S>                                     <C>     <C>         <C>            <C>            <C>
Long-Term Debt Obligations............    --        --            --             --           --
Capital Lease Obligations.............    --        --            --             --           --
Operating Lease Obligations(1)........    --        --            --             --           --
Purchase Obligations..................    --        --            --             --           --
Other Long-Term Liabilities Reflected
  on the Registrant's Balance Sheet
  under GAAP(2).......................    --        --            --             --           --
Total.................................    --        --            --             --           --
</Table>

---------------

(1) The Liquidating Trust leases its principal executive office on a
    month-to-month basis. Payments are equal to approximately $1,200 per month.

(2) The Liquidating Trust has a theoretical exposure relating to retail leases
    for which Petrie Retail or an affiliate thereof assumed liability, to the
    extent that Petrie Retail or its successor fails to perform. Without giving
    effect to any present value discount and assuming the landlord in each case
    is unable to mitigate its damages, but after giving effect to the factors
    discussed under "-- Contingent Liabilities -- Store Leases," such exposure
    amounts to approximately $17 million. As further explained on pages 7-9
    under "-- Contingent Liabilities -- Store Leases," the Liquidating Trust has
    accrued for $15 million of this liability. Because of the uncertainty of
    when the Liquidating Trust may be called upon to satisfy these obligations,
    it is not presently determinable when, if ever, payments in respect of these
    obligations would be made.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

     Except for historical matters, the matters discussed in this Form 10-K are
forward-looking statements that involve risks and uncertainties. Forward-looking
statements include, but are not limited to, statements relating to the
Liquidating Trust's contingent liabilities contained above in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Notes to Financial Statements.

     The Liquidating Trust wishes to caution readers that in addition to factors
that may be described elsewhere in this Form 10-K, the following important
factors, among others, could cause the Liquidating Trust's assets and
liabilities to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Liquidating Trust, and could materially
affect the Liquidating Trust's financial condition, liquidity and future ability
to make liquidating distributions:

          (1) A decision by Petrie Retail's successor to close additional stores
     for which the Liquidating Trust, as successor to Petrie, has liability as a
     guarantor;

          (2) Other actions by Petrie Retail's successor which cause the default
     of obligations assumed by Petrie Retail in connection with the Sale for
     which the Liquidating Trust, as successor to Petrie, may be deemed to have
     liability;

          (3) A decision by a court that the Liquidating Trust, as successor to
     Petrie, has liability as a guarantor of certain leases notwithstanding
     Petrie's receipt from the landlords thereof of releases of guarantees with
     respect to such leases;

          (4) A decision by a court that the Statute of Limitations Defense is
     not available to the Liquidating Trust with respect to one or more Rejected
     Leases;

          (5) An adverse material change in general economic conditions and the
     interest rate environment;

                                       -10-
<PAGE>

          (6) The effects of, and changes in, laws and regulations and other
     activities of federal and local governments, agencies and similar
     organizations; and

          (7) The costs and other effects of other legal and administrative
     cases and proceedings, settlements and claims relating to the Liquidating
     Trust's contingent liabilities.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Liquidating Trust invests its available cash in short-term United
States Treasury Obligations. Although the rate of interest paid on short-term
United States Treasury Obligations may fluctuate over time based on changes in
the general level of U.S. interest rates, each of such investments is made at a
fixed interest rate over the duration of the investment and each has a maturity
of less than 365 days. In addition, the Liquidating Trust Agreement prohibits
the Liquidating Trust from making certain investments with a maturity of greater
than one year and certain other investments that could expose the Liquidating
Trust to market risk. The Liquidating Trust believes that its exposure to market
risk fluctuations for its investments is not material as of December 31, 2004.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See pages F-1 through F-10 annexed hereto.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     As previously reported, on November 2, 2004, Ernst & Young LLP ("E&Y")
orally advised the Liquidating Trust and on November 4, 2004, the Liquidating
Trust received a letter from E&Y, stating that E&Y had resigned as the
Liquidating Trust's independent registered public accounting firm. E&Y indicated
to the Trust that it resigned because it could no longer conclude that it was
"independent" within the meaning of the rules and regulations of the Securities
and Exchange Commission due to a consulting arrangement that had been in effect
since 1994 between E&Y and H. Bartlett Brown, the Liquidating Trust's Assistant
Manager and Chief Financial Officer, who is also a former E&Y partner, pursuant
to which Mr. Brown spent, on average, approximately 20-30 hours per month
advising E&Y on certain partnership tax matters and certain pension benefit and
related issues for former E&Y partners.

     E&Y's reports on the Liquidating Trust's financial statements for the two
most recent fiscal years did not contain an adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles.

     During the two most recent fiscal years and the subsequent interim period
through E&Y's resignation, the Liquidating Trust did not have any disagreements
with E&Y on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of E&Y, would have caused E&Y to make reference
to the subject matter of the disagreement in connection with its reports nor did
E&Y advise the Liquidating Trust as to any "reportable events," as such term is
defined in Item 304(a)(1)(v) of Regulation S-K of the SEC.

     E&Y advised the Trust that it will not consent to the future use or
reissuance of its past opinions with respect to the Trust's financial
statements. The Trust has conducted a re-audit of its financial statements for
the fiscal years ended December 31, 2002 and 2003 in connection with the
preparation and filing of this Annual Report on Form 10-K.

     On December 10, 2004, the Trustees of the Trust approved the engagement of
Weiser LLP ("Weiser") as the Liquidating Trust's independent registered public
accounting firm, and on December 23, 2004, the Liquidating Trust entered into an
engagement letter with Weiser pursuant to which Weiser agreed to serve as the
Trust's independent registered public accounting firm.

     During the two most recent fiscal years and the subsequent interim period
to date, the Trust has not consulted with Weiser regarding any of the matters
listed in Item 304(a)(2)(i)-(ii) of Regulation S-K of the SEC.

                                       -11-
<PAGE>

ITEM 9A.  CONTROLS AND PROCEDURES.

     (a) Disclosure Controls and Procedures. The Liquidating Trust's Manager and
Chief Executive Officer and Assistant Manager and Chief Financial Officer have
evaluated the effectiveness of the Liquidating Trust's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, such officers
have concluded that, as of the end of such period, the Liquidating Trust's
disclosure controls and procedures are effective.

     (b) Internal Control Over Financial Reporting. There have not been any
changes in the Liquidating Trust's internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
during the Liquidating Trust's fourth quarter that have materially affected, or
are reasonably likely to materially affect, the Liquidating Trust's internal
control over financial reporting.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

LIQUIDATING TRUSTEES AND EXECUTIVE OFFICERS

     The following table shows, as of March 28, 2005, the Liquidating Trustees
and the Liquidating Trust's executive officers, their respective ages, the year
each person became a Liquidating Trustee or officer of the Liquidating Trust and
all positions currently held with the Liquidating Trust by each such person:

<Table>
<Caption>
                              TRUSTEE OR
NAME                   AGE   OFFICER SINCE          POSITION WITH THE LIQUIDATING TRUST
----                   ---   -------------          -----------------------------------
<S>                    <C>   <C>             <C>
Stephanie R.
  Joseph.............  58        1995        Manager and Chief Executive Officer; Liquidating
                                             Trustee
H. Bartlett Brown....  69        1995        Assistant Manager and Chief Financial Officer
Joseph H. Flom.......  81        1995        Liquidating Trustee
Bernard Petrie.......  79        1995        Liquidating Trustee
Raymond S. Troubh....  78        1995        Chairman of the Board of the Liquidating Trustees
</Table>

     Biographical information concerning the Liquidating Trustees and the
Liquidating Trust's executive officers is provided below.

     Stephanie R. Joseph became Secretary and Principal Legal Officer of Petrie
in February 1995 and Manager, Chief Executive Officer and Liquidating Trustee of
the Liquidating Trust in December 1995. She is the founder and President of The
Directors' Network Inc., a corporate consulting firm that prepares directors for
their boardroom responsibilities, since March 1994. From May 1984 until June
1992, she was employed as the Associate General Counsel of American Express
Company.

     H. Bartlett Brown became Treasurer, Chief Financial Officer and Principal
Accounting Officer of Petrie in February 1995 and Assistant Manager and Chief
Financial Officer of the Liquidating Trust in December 1995. Mr. Brown is a
retired tax consultant. He was a partner in Ernst & Young LLP, an accounting
firm, from October 1970 until September 1994.

     Joseph H. Flom became a Liquidating Trustee in December 1995. He has been a
partner in Skadden, Arps, Slate, Meagher & Flom LLP, a law firm, and counsel to
Petrie, the Liquidating Trust, the Estate of Milton Petrie, and The Carroll and
Milton Petrie Foundation for more than the past five years. Mr. Flom is Chairman
of the Board of Trustees of the Woodrow Wilson International Center for
Scholars; a director of United Way of New York City; a director of the
American-Israel Friendship League; and a trustee of the New York University
Medical Center.

     Bernard Petrie became both a director of Petrie and a Liquidating Trustee
in December 1995. He is an attorney and has been self-employed for more than the
past five years.

                                       -12-
<PAGE>

     Raymond S. Troubh became a Liquidating Trustee and Chairman of the Board of
Liquidating Trustees in December 1995. Mr. Troubh served as Treasurer of Petrie
from December 9, 1994 to February 7, 1995. He is a financial consultant, a
former governor of the American Stock Exchange and a former general partner of
Lazard Freres & Co., an investment banking firm. Mr. Troubh is a director of
Diamond Offshore Drilling, Inc., an offshore drilling company; General American
Investors Company, an investment company; Gentiva Health Services, Inc., a
healthcare company; Portland General Electric Company, an electric utility;
Triarc Companies, Inc., a diversified holding company; and WHX Corporation, a
holding company.

FINANCIAL EXPERT

     The Liquidating Trustees have determined that Mr. Raymond S. Troubh is a
"financial expert," as such term is defined in Item 401 of Securities and
Exchange Commission Regulation S-K. Mr. Troubh is independent, as that term is
defined in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of
1934.

MEETINGS AND STANDING COMMITTEES

     The Liquidating Trustees met four times during the year ended December 31,
2004. During such period, the Liquidating Trustees had no standing committees.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires the Liquidating Trust's trustees
and executive officers, and persons who own more than ten percent of the
Liquidating Trust's units of beneficial interest, to file with the Securities
and Exchange Commission certain reports of ownership and changes in ownership of
the units of beneficial interest, and to furnish the Liquidating Trust with
copies of all Section 16(a) forms they file. To the Liquidating Trust's
knowledge, based solely on a review of the copies of such reports furnished to
the Liquidating Trust, for the year ended December 31, 2004, all Section 16(a)
filing requirements applicable to its executive officers, trustees and holders
of more than ten percent of the Liquidating Trust's units of beneficial interest
were complied with.

CODE OF ETHICS

     The Liquidating Trust has adopted a code of ethics that applies to its
Manager and Chief Executive Officer and its Assistant Manager and Chief
Financial Officer. A copy of such code of ethics, which was filed with the
Securities and Exchange Commission as Exhibit 14.1 to the Liquidating Trust's
Annual Report on Form 10-K for the year ended December 31, 2003, may be obtained
by any person without charge, upon written request to the Liquidating Trust at
its principal executive office.

                                       -13-
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION.

GENERAL

     The following table sets forth the total annual compensation paid by the
Liquidating Trust to its Manager and Chief Executive Officer, who is the only
executive officer of the Liquidating Trust whose compensation exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                               ANNUAL COMPENSATION
                                           ----------------------------
                                             YEAR                            ALL OTHER
NAME AND PRINCIPAL POSITION                 ENDED     SALARY(1)   BONUS   COMPENSATION(2)
---------------------------                --------   ---------   -----   ---------------
<S>                                        <C>        <C>         <C>     <C>
Stephanie R. Joseph......................  12/31/04   $124,167      --        $36,250
Manager, Chief Executive Officer and
  Liquidating Trustee....................  12/31/03    130,000      --         45,000
                                           12/31/02    130,000      --         45,000
</Table>

---------------

(1) Effective June 1, 2004, Ms. Joseph's salary was reduced from $130,000 per
    year to $120,000 per year, as part of the Liquidating Trust's overall
    reduction in expenses.

(2) Ms. Joseph receives compensation for her service as a Liquidating Trustee.
    Effective June 1, 2004, this amount was reduced from $45,000 per year to
    $30,000 per year, as part of the Liquidating Trust's overall reduction in
    expenses.

COMPENSATION OF LIQUIDATING TRUSTEES

     Prior to June 1, 2004, Liquidating Trustees were compensated for their
service as Liquidating Trustees in the amount of $30,000 per fiscal year, with
the exception of Raymond S. Troubh and Stephanie R. Joseph, who were compensated
$45,000 per fiscal year for their service as Liquidating Trustees. Effective
June 1, 2004, Liquidating Trustees are compensated for their service as
Liquidating Trustees at the rate of $20,000 per fiscal year, with the exception
of Raymond S. Troubh and Stephanie R. Joseph, who are compensated at the rate of
$30,000 per fiscal year for their service as Liquidating Trustees. During the
year ended December 31, 2004, Messrs. Bernard Petrie and Joseph H. Flom each
were compensated $24,167, and Mr. Troubh and Ms. Joseph were compensated
$36,250, for their service as Liquidating Trustees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     During the year ended December 31, 2004, the Liquidating Trustees did not
have a compensation committee, and each of the Liquidating Trustees other than
Stephanie R. Joseph participated in deliberations of the Liquidating Trustees
concerning executive officer compensation. During the year ended December 31,
2004, no executive officer of the Liquidating Trust served as a director of or
member of the compensation committee (or other board committee performing
equivalent functions, or in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served as a
Liquidating Trustee.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SECURITY
        HOLDER MATTERS.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth certain information with respect to (i) the
only persons who, to the best knowledge of the Liquidating Trust, are the
beneficial owners of more than five percent of the outstanding units of
beneficial interest of the Liquidating Trust and (ii) the number of units of
beneficial interest of the

                                       -14-
<PAGE>

Liquidating Trust owned by each of the Liquidating Trustees, the officers of the
Liquidating Trust and the Liquidating Trustees and officers as a group.

<Table>
<Caption>
                                                              TOTAL NUMBER OF
                                                                 UNITS OF         PERCENT OF
                                                            BENEFICIAL INTEREST   OUTSTANDING
                                                               BENEFICIALLY       BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER                               OWNED           INTERESTS
------------------------------------                        -------------------   -----------
<S>                                                         <C>                   <C>
The Carroll and Milton Petrie Foundation(1)...............      28,111,274           53.7%
  Four Times Square
  New York, New York 10036-6522
HBK Investments L.P. and HBK Finance L.P.(2)..............       9,518,600           18.2%
  777 Main Street, Suite 2750
  Fort Worth, Texas 76102
T. Rowe Price Associates, Inc.(3).........................       4,715,200            9.0%
  100 E. Pratt Street
  Baltimore, Maryland 21202
H. Bartlett Brown.........................................              --             --
Joseph H. Flom(4).........................................              --             --
Stephanie R. Joseph.......................................              --             --
Bernard Petrie(4).........................................          34,800              *
Raymond S. Troubh.........................................              --             --
All managers and Liquidating Trustees as a group (5
  individuals, including those named above)...............          34,800              *
</Table>

---------------

 *  Less than one percent of the outstanding units of beneficial interest.

(1) Based on information contained in the Statement on Schedule 13D filed by The
    Carroll and Milton Petrie Foundation with the Securities and Exchange
    Commission on November 24, 2003.

(2) Based on information contained in Amendment No. 4 to the Statement on
    Schedule 13G filed by HBK Investments L.P. and HBK Finance L.P. with the
    Securities and Exchange Commission on February 7, 2003.

(3) Based on information contained in Amendment No. 8 to the Statement on
    Schedule 13G filed by T. Rowe Price Associates, Inc. ("Price Associates")
    with the Securities and Exchange Commission on February 14, 2005. These
    securities are owned by various individual and institutional investors which
    Price Associates serves as investment adviser with power to direct
    investments and sole power to vote the securities. For purposes of the
    reporting requirements of the Securities Exchange Act of 1934, as amended,
    Price Associates is deemed to be a beneficial owner of such securities.
    Price Associates has, however, expressly disclaimed that it is, in fact, the
    beneficial owner of such securities.

(4) Based on information contained in the Statement on Schedule 13D filed by The
    Carroll and Milton Petrie Foundation (the "Foundation") with the Securities
    and Exchange Commission on November 24, 2003, the Foundation is the
    beneficial owner of 28,111,274 units of beneficial interest. Mr. Joseph
    Flom, Mr. Jerome A. Manning, Mr. Bernard Petrie and Mrs. Carroll Petrie
    serve as the Trustees of the Foundation. The Trustees of the Foundation
    share equally the power to dispose of, and to vote, the units of beneficial
    interest held by the Foundation. Messrs. Flom and Petrie disclaim beneficial
    ownership of the units of beneficial interest held by the Foundation.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to the
Liquidating Trust and The Carroll and Milton Petrie Foundation, which owns
approximately 53.7% of the Liquidating Trust's outstanding units of beneficial
interest. Skadden, Arps, Slate, Meagher & Flom LLP has provided services to both
the Liquidating Trust and The Carroll and Milton Petrie Foundation during the
year ended December 31, 2004.

                                       -15-
<PAGE>

Joseph H. Flom, a Liquidating Trustee, an executor of the Estate of Milton
Petrie and a Trustee of The Carroll and Milton Petrie Foundation, is a partner
in Skadden, Arps, Slate, Meagher & Flom LLP.

     Messrs. Flom and Petrie are Trustees of The Carroll and Milton Petrie
Foundation and are entitled to compensation, but they have elected not to
receive such compensation.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     E&Y served as the Liquidating Trust's independent auditors from 1995 until
November 2004. Fees for services provided by E&Y for the past two completed
fiscal years ended December 31 were as follows:

<Table>
<Caption>
                                                               2004       2003
                                                              -------   --------
<S>                                                           <C>       <C>
Audit Fees..................................................  $12,200   $ 49,050
Audit-Related Fees..........................................       --         --
Tax Fees....................................................  $77,182   $ 72,200
All Other Fees..............................................       --         --
Total.......................................................  $89,382   $121,250
</Table>

     On December 23, 2004, the Liquidating Trust entered into an engagement
letter with Weiser pursuant to which Weiser agreed to serve as the Liquidating
Trust's independent registered public accounting firm. Fees for services
provided by Weiser for the past two completed fiscal years ended December 31
were as follows:

<Table>
<Caption>
                                                                2004     2003
                                                              --------   ----
<S>                                                           <C>        <C>
Audit Fees..................................................  $ 75,980     --
Audit-Related Fees..........................................        --     --
Tax Fees....................................................  $ 53,863     --
All Other Fees..............................................        --     --
Total.......................................................  $129,843     --
</Table>

     Audit fees include fees for the audit of the Liquidating Trust's annual
financial statements and the reviews of the financial statements included in the
Liquidating Trust's quarterly reports on Form 10-Q. Tax fees include fees
incurred to compile and distribute tax reporting information to holders of the
Liquidating Trust's units of beneficial interest.

PRE-APPROVAL POLICIES AND PROCEDURES

     On an annual basis the Liquidating Trustees review and approve all services
expected to be performed by its independent public accounting firm in the
ensuing one-year period.

                                    PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

     (a)(1),(2) List of Financial Statements.

     See Index to Financial Statements at page F-1.

                                       -16-
<PAGE>

     (a)(3) List of Exhibits.

<Table>
<S>            <C>
    2.1        Plan of Liquidation and Dissolution of Petrie (incorporated
               herein by reference to Exhibit 2.2 to the Liquidating
               Trust's Registration Statement on Form 8-B, filed with the
               Securities and Exchange Commission on December 19, 1995).

    3.1        Agreement and Declaration of Trust, dated as of December 6,
               1995, by and between Petrie and Joseph H. Flom, Stephanie R.
               Joseph, Bernard Petrie, Laurence A. Tisch and Raymond S.
               Troubh, as trustees (incorporated herein by reference to
               Exhibit 3.1 to the Liquidating Trust's Registration
               Statement on Form 8-B, filed with the Securities and
               Exchange Commission on December 19, 1995).

   10.1        Acquisition Agreement, dated as of April 20, 1994, between
               Petrie and Toys "R" Us (incorporated herein by reference to
               Annex B to Petrie's Proxy Statement, dated as of November 3,
               1994).

   10.2        Amendment No. 1 to the Acquisition Agreement, dated as of
               May 10, 1994, between Petrie and Toys "R" Us (incorporated
               herein by reference to Annex B to Petrie's Proxy Statement,
               dated as of November 3, 1994).

   10.3        Stock Purchase Agreement, dated as of August 23, 1994,
               between Petrie and WP Investors (incorporated herein by
               reference to Annex A to Petrie's Proxy Statement, dated as
               of November 3, 1994).

   10.4        Amendment No. 1 to the Stock Purchase Agreement, dated as of
               December 9, 1994, among WP Investors, PS Stores and Petrie
               (incorporated herein by reference to Annex A to Petrie's
               Proxy Statement, dated as of November 3, 1994).

   10.5        Assignment and Assumption Agreement, dated as of December 9,
               1994, between Petrie and Petrie Retail (agreements of a
               substantially similar nature were entered into between
               Petrie and the following affiliates of Petrie Retail on or
               about December 9,1994: Franklin 203 Corporation, G&G Shops
               of North Carolina, Inc., Hartfield Stores, Inc., Whitney
               Stores, Inc, Marianne Clearwater Corporation, Davids
               Woodbridge, Inc. and Jean Nicole, Inc.) (incorporated herein
               by reference to Exhibit 10.5 to the Liquidating Trust's
               Annual Report on Form 10-K for the fiscal year ended January
               22, 1996).

   10.6        Cross-Indemnification and Procedure Agreement, dated as of
               December 9, 1994, between PS Stores and Petrie (incorporated
               herein by reference to Exhibit 10.5 to Petrie's Annual
               Report on Form 10-K for the fiscal year ended January 28,
               1995).

   10.7        Buyer Indemnification Agreement, dated as of December 9,
               1994, among Toys "R" Us, Petrie, PS Stores, Petrie Retail
               and all subsidiaries of PS Stores (incorporated herein by
               reference to Exhibit 10.6 to Petrie's Annual Report on Form
               10-K for the fiscal year ended January 28, 1995).

   10.8        Seller Indemnification Agreement, dated as of December 9,
               1994, among Toys "R" Us, Petrie, PS Stores, Petrie Retail
               and all subsidiaries of PS Stores (incorporated herein by
               reference to Exhibit 10.7 to Petrie's Annual Report on Form
               10-K for the fiscal year ended January 28, 1995).

   10.9        Side Letter Agreement, dated as of January 24, 1995, between
               Petrie and Toys "R" Us (incorporated herein by reference to
               Exhibit 10.3 to Petrie's Current Report on Form 8-K, dated
               as of January 24, 1995).

   10.10       Agreement, dated as of December 24, 2003, between the
               Liquidating Trust and Toys "R" Us (incorporated herein by
               reference to Exhibit 10.10 to the Liquidating Trust's Annual
               Report on Form 10-K for the fiscal year ended December 31,
               2003).

   14.1        Code of Ethics of Petrie Stores Liquidating Trust
               (incorporated herein by reference to Exhibit 14.1 to the
               Liquidating Trust's Annual Report on Form 10-K for the
               fiscal year ended December 31, 2003).

   31.1        Certification of Chief Executive Officer pursuant to Rule
               13A-14 of the Securities Exchange Act of 1934, as adopted
               pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   31.2        Certification of Chief Financial Officer pursuant to Rule
               13A-14 of the Securities Exchange Act of 1934, as adopted
               pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   32.1        Certification of Chief Executive 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.
</Table>

                                       -17-
<PAGE>

                                   SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.

                                          PETRIE STORES LIQUIDATING TRUST

                                          By: /s/ STEPHANIE R. JOSEPH
                                            ------------------------------------
                                            Stephanie R. Joseph
                                            Manager and Chief Executive Officer

Dated: March 31, 2005

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.

                                          By: /s/ H. BARTLETT BROWN
                                            ------------------------------------
                                            H. Bartlett Brown
                                            Assistant Manager, Chief Financial
                                              Officer and Principal Accounting
                                              Officer

                                          By: /s/ STEPHANIE R. JOSEPH
                                            ------------------------------------
                                            Stephanie R. Joseph
                                            Manager, Chief Executive Officer and
                                              Trustee

                                          By: /s/ JOSEPH H. FLOM
                                            ------------------------------------
                                            Joseph H. Flom
                                            Trustee

                                          By: /s/ BERNARD PETRIE
                                            ------------------------------------
                                            Bernard Petrie
                                            Trustee

                                          By: /s/ RAYMOND S. TROUBH
                                            ------------------------------------
                                            Raymond S. Troubh
                                            Trustee

Dated: March 31, 2005

                                       -18-
<PAGE>

                        PETRIE STORES LIQUIDATING TRUST

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<S>                                                           <C>
FINANCIAL STATEMENTS
  Report of Independent Registered Accounting Firm..........  F-2
  Statements of Net Assets in Liquidation -- December 31,
     2004 and December 31, 2003.............................  F-3
  Statements of Changes in Net Assets in Liquidation -- For
     the years ended December 31, 2004, 2003 and 2002.......  F-4
  Notes to Financial Statements.............................  F-5
</Table>

                                       F-1
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Holders of Units of Beneficial Interest
Petrie Stores Liquidating Trust

     We have audited the accompanying statements of net assets in liquidation of
the Petrie Stores Liquidating Trust (successor to Petrie Stores Corporation and
its former subsidiaries) as of December 31, 2004 and 2003, and the related
statements of changes in net assets in liquidation for each of the three years
in the period ended December 31, 2004. These financial statements are the
responsibility of the management of the Petrie Stores Liquidating Trust. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets in liquidation of the Petrie Stores
Liquidating Trust (successor to Petrie Stores Corporation and its former
subsidiaries) as of December 31, 2004 and December 31, 2003 and the changes in
net assets in liquidation for each of the three years in the period ended
December 31, 2004, in conformity with U.S. generally accepted accounting
principles.

     As more fully discussed in Note 4 to the financial statements, in the
fourth quarter of the year ended December 31, 2004, Petrie Liquidating Trust
determined that its accrual for certain contingent liabilities should be reduced
by approximately $9 million.

                                          Weiser LLP

New York, NY
March 30, 2005

                                       F-2
<PAGE>

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                    STATEMENTS OF NET ASSETS IN LIQUIDATION

<Table>
<Caption>
                                                               DECEMBER 31,      DECEMBER 31,
                                                                   2004              2003
                                                              ---------------   ---------------
                                                                       (IN THOUSANDS)
<S>                                                           <C>               <C>
                                            ASSETS
Cash and cash equivalents...................................      $   211           $ 1,168
U.S. Treasury Obligations...................................       43,624            63,986
Prepaid expenses............................................           11                --
                                                                  -------           -------
Total assets................................................       43,846            65,154

                                          LIABILITIES
Accrued expenses and other liabilities......................       15,988            25,595
Commitments and contingencies
                                                                  -------           -------
Net assets in liquidation...................................      $27,858           $39,559
                                                                  =======           =======
</Table>

                            See accompanying notes.
                                       F-3
<PAGE>

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

               STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION

<Table>
<Caption>
                                                            YEAR ENDED        YEAR ENDED        YEAR ENDED
                                                           DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                               2004              2003              2002
                                                          ---------------   ---------------   ---------------
                                                                (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S>                                                       <C>               <C>               <C>
Net assets in liquidation at beginning of year..........     $ 39,559          $ 62,996           $62,546
                                                             --------          --------           -------
Investment income.......................................          536               736             1,720
Corporate overhead benefit (expense) (included a
  reduction in the contingent liability in the amount of
  $9 million in 2004)...................................        8,703             2,002            (1,270)
                                                             --------          --------           -------
Net income for the year.................................        9,239             2,738               450
                                                             --------          --------           -------
Liquidating distributions...............................      (20,940)          (26,175)               --
                                                             --------          --------           -------
Net assets in liquidation at end of year................     $ 27,858          $ 39,559           $62,996
                                                             ========          ========           =======
Net income per unit.....................................     $   0.18          $   0.05           $  0.01
                                                             ========          ========           =======
Weighted average number of units........................       52,350            52,350            52,350
                                                             ========          ========           =======
</Table>

                            See accompanying notes.
                                       F-4
<PAGE>

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2004

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

  BASIS OF PRESENTATION

     The Petrie Stores Liquidating Trust (the "Liquidating Trust") is the
successor to Petrie Stores Corporation ("Petrie"). Prior to December 9, 1994,
Petrie operated a chain of retail stores that specialized in women's apparel and
were located throughout the United States (including Puerto Rico and the U.S.
Virgin Islands). At Petrie's Annual Meeting, held on December 6, 1994, Petrie's
shareholders approved the sale of Petrie's retail operations (the "Sale"). At
Petrie's Reconvened Annual Meeting, held on January 24, 1995, Petrie's
shareholders approved (i) an exchange of shares of Toys "R" Us, Inc. ("Toys 'R'
Us") common stock ("Toys Common Stock") with Toys "R" Us (Note 3) and (ii) the
liquidation and dissolution of Petrie pursuant to a plan of liquidation and
dissolution (the "Plan of Liquidation").

     Pursuant to the Plan of Liquidation and the Agreement and Declaration of
Trust, dated as of December 6, 1995 (the "Liquidating Trust Agreement"), between
Petrie and the trustees named therein (the "Liquidating Trustees"), effective as
of the close of business on January 22, 1996 (the "Succession Date"), Petrie
transferred its remaining assets (then consisting of approximately $131 million
in cash and cash equivalents and 5,055,576 shares of Toys Common Stock) to, and
its remaining fixed and contingent liabilities were assumed by (the
"Succession"), the Liquidating Trust. The assets of the Liquidating Trust are
subject to various contingent liabilities, the amounts of which are subject to
inherent uncertainty in the valuation process. The amounts actually realized or
settled could be materially different from those reflected in the financial
statements (Note 4).

     On November 19, 2002, the expiration date of the Liquidating Trust was
extended from December 6, 2002 to December 6, 2006 (subject to further extension
by the Liquidating Trustees).

     Beginning with the period ended December 31, 1996, the Liquidating Trust
has adopted the calendar year as its fiscal year. A liquidation basis of
accounting was implemented as of January 28, 1995. Under such basis, assets and
liabilities have been recorded at estimated fair values. In accordance with the
liquidation basis of accounting, the financial statements reflect the estimated
costs of liquidating the assets and distributing the proceeds to holders of
beneficial interests. The statements of net assets in liquidation at December
31, 2004 and December 31, 2003 do not distinguish between current and long-term
balances as would be reflected if such statements had been prepared on a
going-concern basis.

  CASH EQUIVALENTS

     Cash equivalents consist of highly liquid investments of less than 90 days'
maturity from the date of purchase. These investments are carried at cost plus
accrued interest, which approximates fair market value.

  INVESTMENTS IN U.S. TREASURY OBLIGATIONS

     Investments in U.S. Treasury obligations are carried at fair market value
(which approximates cost) and unrealized gains or losses thereon are recognized
in the statement of changes in net assets in liquidation.

  INCOME TAXES

     The Liquidating Trust is a complete pass-through entity for federal income
tax purposes and, accordingly, is not itself subject to federal income tax.
Instead, for federal income tax purposes, each Petrie shareholder (i) is deemed
to have received on the Succession Date, and therefore own, a pro rata share of
the assets transferred by Petrie to the Liquidating Trust, subject to a pro rata
share of Petrie's liabilities assumed by the Liquidating Trust, and (ii) is
subject to the same federal income tax consequences with respect to the receipt,
ownership or disposition of such assets as if such shareholder had directly
received, owned or disposed of such assets, subject to such liabilities.

                                       F-5
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  EARNINGS PER UNIT

     Earnings per unit have been computed based on the weighted average number
of units outstanding. Since there are no dilutive securities outstanding for any
of the periods presented, basic and diluted earnings per unit are the same.

  CONCENTRATION OF CREDIT RISK

     Certain financial instruments potentially subject the Liquidating Trust to
concentrations of credit risk. These financial instruments consist primarily of
temporary cash investments and U.S. Treasury obligations. The Liquidating Trust
places its temporary cash investments with high credit quality financial
institutions to limit its credit exposure.

  USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. The Liquidating Trust's most significant estimate is associated with
the accrual for certain contingent liabilities (see note 4).

2.  RELATED PARTY TRANSACTIONS.

     Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to the
Liquidating Trust. Joseph H. Flom, a Liquidating Trustee, is a partner in
Skadden, Arps, Slate, Meagher & Flom LLP. At December 31, 2004 and December 31,
2003, the accrued expenses and other liabilities of the Liquidating Trust
included in the Statements of Net Assets in Liquidation included $161,450 and
$86,890, respectively, for amounts owed to Skadden, Arps, Slate, Meagher & Flom
LLP. During the years ended 2004, 2003 and 2002, the corporate overhead expense
of the Liquidating Trust included in the Statements of Changes in Net Assets in
Liquidation included $168,000, $152,400 and $504,000, respectively, of expenses
to Skadden, Arps, Slate, Meagher & Flom LLP.

3.  LIQUIDATING DISTRIBUTIONS.

     Pursuant to an agreement dated as of December 24, 2003, the Liquidating
Trust and Toys "R" Us agreed to terminate the Liquidating Trust's obligations
under a letter agreement dated as of January 24, 1995 to provide notice to Toys
"R" Us (and an opportunity for Toys "R" Us to object) prior to making any
liquidating distributions. Accordingly, the Liquidating Trust is no longer
obligated to provide notice to Toys "R" Us prior to making distributions.

     On January 30, 2004, the Liquidating Trust distributed to its unit holders
a total of $20,940,095 in cash. In the distribution, unit holders received $0.40
in cash for each unit of beneficial interest held of record at the close of
business on January 20, 2004. This distribution is reflected in the statement of
changes in net assets in liquidation for the year ended December 31, 2004.

     On January 31, 2003, the Liquidating Trust distributed to its unit holders
a total of $26,175,119 in cash. In the distribution, unit holders received $0.50
in cash for each unit of beneficial interest held of record at the close of
business on January 21, 2003. This distribution is reflected in the statement of
changes in net assets in liquidation for the year ended December 31, 2003.

4.  COMMITMENTS AND CONTINGENCIES.

     As successor to Petrie, the Liquidating Trust has accrued for certain
contingent liabilities with respect to existing or potential claims, lawsuits
and other proceedings, which primarily relate to guarantees of certain

                                       F-6
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

retail store leases, expiring at various times through 2011 for which Petrie
Retail or an affiliate thereof assumed liability, and certain other liabilities
that were assumed by Petrie Retail (but as to which Petrie's liability has not
been released) in connection with the Sale (collectively, the "Assumed
Obligations") to the extent that Petrie Retail or its successor fails to
perform. The Liquidating Trust accrues such liabilities when it is probable that
future costs will be incurred and when such costs can be reasonably estimated.
Such accruals are based on developments to date, the Liquidating Trust's
estimates of the outcome of these matters and its experience (including that of
its predecessor, Petrie) in contesting, litigating and settling matters. The
Liquidating Trust, as successor to Petrie, accrued approximately $16 million for
the aforementioned contingent liabilities at December 31, 2004 and $25 million
for the aforementioned contingent liabilities at December 31, 2003. As the scope
of these liabilities becomes further refined, there may be changes in the
estimates of future costs, which could have a material effect on the Liquidating
Trust's financial condition, liquidity and future ability to make liquidating
distributions.

     Petrie Retail's Bankruptcy.  On October 12, 1995, Petrie Retail filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District
of New York (the "Bankruptcy Court"). In connection with its filing for
bankruptcy protection, Petrie Retail failed to perform or make payments with
respect to certain of the Assumed Obligations, including, but not limited to,
Assumed Obligations relating to store leases for which Petrie Retail or an
affiliate thereof had assumed liability, state and federal taxes, employment
agreements, insurance premiums and certain other claims and contractual
obligations. Accordingly, the Liquidating Trust has been and may continue to be
required to make payments in respect of certain of the Assumed Obligations.

     On December 23, 1997, the Liquidating Trust filed over 110 claims in the
Bankruptcy Court against Petrie Retail and certain of its affiliates with
respect to an aggregate of approximately $14 million in payments which had then
been made by the Liquidating Trust as a result of the failure by Petrie Retail
or an affiliate thereof to perform or pay certain of the Assumed Obligations.
The Liquidating Trust subsequently amended these claims such that it asserted
fixed claims representing a total of approximately $16.9 million against Petrie
Retail's estate. The Liquidating Trust also filed approximately 600 additional
claims in the Bankruptcy Court against Petrie Retail and certain of its
affiliates with respect to payments which the Liquidating Trust may in the
future be required to make as a result of the failure by Petrie Retail or its
affiliates to perform or pay Assumed Obligations.

     On December 8, 1998, the Bankruptcy Court confirmed a plan of
reorganization for Petrie Retail (the "Petrie Retail Plan"), which modified the
plan of reorganization filed by Petrie Retail and Warburg Pincus Ventures, L.P.
("Warburg") with the Bankruptcy Court on August 6, 1998, as amended. Under the
confirmed Petrie Retail Plan, Petrie Retail sold substantially all of its
remaining operating assets to Urban Acquisition Corp., an affiliate of Urban
Brands, Inc., a retailer that operates under the Ashley Stewart trade name, for
$52.25 million, and retained 13 of its store leases, for which Warburg was
required to contribute $12 million to the bankruptcy estate, assume $3.1 million
of Petrie Retail's executive severance obligations and waive approximately $3.8
million in fees and expenses allegedly owed to it under Petrie Retail's
debtor-in-possession financing arrangement.

     On April 12, 2000, the Bankruptcy Court approved a stipulation of
settlement between the distribution company (the "Distribution Company")
designated by the Petrie Retail Plan and the Liquidating Trust, under which the
Liquidating Trust and the Distribution Company settled their disputes regarding
the claims that the Liquidating Trust filed against Petrie Retail. Pursuant to
the stipulation of settlement, (i) the Liquidating Trust was allowed a single
unsecured claim against Petrie Retail in the amount of approximately $14.4
million, subject to increase upon resolution of the Distribution Company's
objections to certain landlord claims against Petrie Retail, (ii) the
Distribution Company agreed to release to the Liquidating Trust approximately
$5.5 million held in a collateral account by June 30, 2000 (provided that the
Distribution

                                       F-7
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Company did not pay $10 million or more to the United Auto Workers District 65
Security Plan Pension Fund prior to that date), and (iii) the Distribution
Company and the Liquidating Trust exchanged mutual releases. On June 28, 2000,
the approximately $5.5 million held in the collateral account was released and
transferred to the Liquidating Trust in accordance with the settlement. On
December 15, 2000, the Bankruptcy Court entered an order allowing the
Liquidating Trust an unsecured claim against the Distribution Company in the
amount of $15.3 million. On December 21, 2000, the Liquidating Trust received
$765,000 as partial payment of the Liquidating Trust's claim against the
Distribution Company. On December 18, 2001, the Liquidating Trust received
$1,530,000 as partial payment of the Liquidating Trust's claim against the
Distribution Company. On or about July 1, 2003, the Liquidating Trust received
an additional $1,836,000 as partial payment of the Liquidating Trust's claim
against the Distribution Company. As of March 28, 2005, the Liquidating Trust's
remaining claim against the Distribution Company was $11,169,000. There can be
no assurance as to the timing of the payment, if any, of the remainder of the
Liquidating Trust's claim against the Distribution Company or the amount of any
further payments that the Distribution Company will make to creditors asserting
unsecured claims. Accordingly, no amounts have been accrued as receivables for
potential reimbursement or recoveries from the reorganized Petrie Retail entity.
On or about December 30, 2003, the Liquidating Trust received a refund in
respect of previous tax years of approximately $949,000 to which the Liquidating
Trust was entitled pursuant to a settlement agreement between the Liquidating
Trust and the Petrie Retail bankruptcy estate.

     On April 10, 1998, PS Stores, the parent of Petrie Retail, filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code with the Bankruptcy Court. After such filing, the
Liquidating Trust filed claims in the Bankruptcy Court against PS Stores
substantially similar to those filed against Petrie Retail. On December 8, 1998,
the Bankruptcy Court confirmed PS Stores' proposed plan of reorganization, and
in August 1999, pursuant to a settlement approved by the Bankruptcy Court, the
Liquidating Trust received a payment in the amount of approximately $200,000
from PS Stores' bankruptcy estate.

     Store Leases.  As described above, in December 1998, Petrie Retail disposed
of substantially all its remaining operations and store leases as part of the
Petrie Retail Plan. Of the roughly 1600 stores that Petrie Retail operated prior
to filing its bankruptcy petition in October 1995, (i) 722 leases were rejected,
(ii) 615 leases were assigned to third party retailers, including (A) 410 leases
which were part of Petrie Retail's former G&G Shops Inc. division and were
included in the sale of such division to an investor group led by Pegasus
Partners, L.P. and certain executives of such division, (B) 85 leases which were
sold to Urban Acquisition Corp. as part of the Petrie Retail Plan and (C) 120
leases which were not part of Petrie Retail's former G&G Shops Inc. division and
which were sold to third party retailers other than Urban Acquisition Corp.,
(iii) 13 leases were retained by the reorganized Petrie Retail entity for stores
which are currently managed by Urban Acquisition Corp. and which Urban
Acquisition Corp. has the right to purchase at a later date and (iv)
approximately 250 leases expired or were terminated by mutual landlord and
tenant consent.

     After taking into account settlements and releases obtained from landlords,
the Liquidating Trust, as successor to Petrie, remains the guarantor of 140 of
the retail leases, including 61 leases that were rejected during the pendency of
the Petrie Retail bankruptcy (the "Rejected Leases") and 79 other leases
described below. The Liquidating Trust's theoretical exposure relating to the
140 retail leases, without giving effect to any present value discount, and
assuming the landlord in each case is unable to mitigate its damages, but after
giving effect to the factors described in the following paragraph, would be
approximately $17 million. Such exposure includes approximately $15 million in
potential liability related to 61 of the Rejected Leases described above, which
amount is included in the Liquidating Trust's accrued expenses and other
liabilities at December 31, 2004.

                                       F-8
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     In the fourth quarter of 2004, the Liquidating Trust commissioned its real
estate advisor to visit the properties underlying the Rejected Leases to assess
the level of risk of liability associated with such properties (including
whether the property was vacant). After receiving a report as to such property
visits, the Liquidating Trust determined to reduce its accrual related to
exposure under the Rejected Leases by $9 million. In making such determination
to reduce the accrual, the Liquidating Trust assessed a number of factors,
including (1) applicable law related to the impact of an affirmative defense
available to the Liquidating Trust relating to the expiration of the statute of
limitations within which claims relating to certain of the Rejected Leases would
have had to have been made, (2) the absence of any new landlord claims over the
past several years related to rejected store leases, (3) the Liquidating Trust's
previous settlement history related to rejected lease claims and (4) reports
prepared by the Liquidating Trust's real estate advisor. As of December 31,
2004, the Liquidating Trust's theoretical exposure relating to these leases,
without giving effect to any present value discount, and assuming the landlord
in each case is unable to mitigate its damages, was approximately $24 million.
The approximately $15 million in potential liability related to the 61 Rejected
Leases is an estimate of the Liquidating Trust's liability under such leases
after giving full effect to the factors described in this paragraph. As of
December 31, 2003, the Liquidating Trust's assessment of these liabilities
resulted in a liability of $25 million.

     The Liquidating Trust's exposure also includes approximately $2 million in
potential liability related to 20 of the store leases which were either assigned
to third party retailers or are still held by the successor of Petrie Retail and
were not rejected in the Petrie Retail bankruptcy (the "Assigned Non-Rejected
Leases") and a de minimis amount related to 59 of the leases which have expired
or were terminated by mutual landlord and tenant consent described above (the
"Terminated Non-Rejected Leases"). Amounts related to Assigned Non-Rejected
Leases and Terminated Non-Rejected Leases are not included in the Liquidating
Trust's accrued expenses and other liabilities at December 31, 2004. The
potential exposure related to Assigned Non-Rejected Leases includes potential
liability related to lease extension options that may be exercised following the
assignment of leases to third party retailers; however, such liability related
to the Assigned Non-Rejected Leases is not included in the potential liability
described in the first sentence of this paragraph until the actual lease renewal
term commences.

     The Liquidating Trust's lease exposure calculations related to Rejected
Leases, Assigned Non-Rejected Leases and Terminated Non-Rejected Leases reflect
the estimated sum of all base rent and additional rent (such as taxes and common
area charges) due under a lease through the end of the current lease term, but
do not reflect potential penalties, interest and other charges to which a
landlord may be entitled. Such additional charges (which may in part be
unenforceable) are not expected to materially increase the Liquidating Trust's
lease guarantee liability.

     A significant number of leases discussed above under which a landlord might
claim that the Liquidating Trust, as successor to Petrie, has liability as a
lease guarantor either expressly contain mitigation provisions or relate to
property in states that imply such provisions as a matter of law. Mitigation
generally requires, among other things, that a landlord of a closed store seek
to reduce its damages, including by attempting to locate a new tenant.

     Employment Agreements.  On October 23, 1995, Petrie Retail notified three
former executives of Petrie that, as a result of Petrie Retail's bankruptcy
filing, Petrie Retail would no longer honor its obligations under the employment
agreements each executive had entered into with Petrie which had been assumed by
Petrie Retail in connection with the sale of the retail operations. On April 25,
1996, the Liquidating Trust entered into settlement agreements with two of the
former executives and on January 27, 1997 entered into a settlement agreement
with the estate of the third executive. Pursuant to such settlement agreements,
the Liquidating Trust agreed to pay each substantially all the amounts due under
respective agreements with Petrie. The two former executives have since died
and, as a result, the Liquidating Trust's obligations under the settlement
agreements with such executives have been terminated. The total cost of these
settlements to

                                       F-9
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the Liquidating Trust was approximately $3 million. As of December 31, 2004 and
2003, there were no future obligations of the Liquidating Trust to such former
executives.

     Insurance Premium Adjustment.  In April 2002, the Liquidating Trust
received a bill from Zurich N.A. ("Zurich"), an insurer of Petrie, for $551,338
in respect of retrospective premium adjustments purportedly owed by Petrie
pursuant to general liability, automobile and workers' compensation insurance
agreements between Zurich and Petrie. The amount claimed by Zurich related to
policy terms 1988/1989 through and including 1994/1995, and was based on the
value of claims made as of December 31, 2001. Such amount was paid by the
Liquidating Trust on September 26, 2002.

     In April 2004, The Liquidating Trust received a bill from Zurich for
$84,343 in respect of retrospective premium adjustments purportedly owed by
Petrie pursuant to general liability, automobile and workers' compensation
insurance agreements between Zurich and Petrie. The amount claimed by Zurich
related to policy terms 1988/1989 through and including 1994/1995, and was based
on the value of claims made as of December 31, 2003. This amount was included in
accrued expenses and other liabilities at December 31, 2003. Such amount was
paid by the Liquidating Trust on May 12, 2004.

     In March 2005, the Liquidating Trust received a bill from Zurich for
$106,781 in respect of retrospective premium adjustments purportedly owed by
Petrie pursuant to general liability, automobile and workers' compensation
insurance agreements between Zurich and Petrie. The amount claimed by Zurich
relates to policy terms 1988/1989 through and including 1994/1995, and was based
on the value of claims made as of December 31, 2004.

     The Liquidating Trust believes, based on the most recently available
information, that appropriate accruals have been established in the accompanying
financial statements to provide for any losses that may be incurred with respect
to the aforementioned contingencies.

5.  SUBSEQUENT EVENTS.

     On March 31, 2005, the Liquidating Trust announced that it will make a
distribution of an aggregate of $15,705,071 in cash on April 21, 2005 to its
unit holders. In the distribution, unit holders will receive $0.30 in cash for
each unit of beneficial interest of the Liquidating Trust held of record at the
close of business on April 11, 2005.

6.  QUARTERLY FINANCIAL DATA (UNAUDITED).

     Summarized quarterly financial data for the years ended December 31, 2004
and December 31, 2003 are as follows:

<Table>
<Caption>
                                                                          QUARTER
                                                              --------------------------------
                                                              FIRST   SECOND    THIRD   FOURTH
                                                              -----   ------    -----   ------
                                                               (IN THOUSANDS, EXCEPT PER UNIT
                                                                          AMOUNTS)
<S>                                                           <C>     <C>       <C>     <C>
Year ended December 31, 2004:
Net income (loss)...........................................  $(249)  $  (93)   $  18   $9,563(3)
                                                              =====   ======    =====   ======
Net income per unit.........................................  $0.00   $ 0.00    $0.00   $ 0.18
                                                              =====   ======    =====   ======
Year ended December 31, 2003
Net income..................................................  $   1   $1,847(1) $  16   $  874(2)
                                                              =====   ======    =====   ======
Net income per unit.........................................  $0.00   $ 0.04    $0.00   $ 0.01
                                                              =====   ======    =====   ======
</Table>

---------------

(1) On or about July 1, 2003, the Liquidating Trust received $1,836,000 as
    partial settlement of the Liquidating Trust's claim against the Petrie
    Retail bankruptcy estate. This payment was accrued as of June 30, 2003.

                                       F-10
<PAGE>
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(2) On or about December 30, 2003, the Liquidating Trust received a refund in
    respect of previous tax years of approximately $949,000 to which the
    Liquidating Trust was entitled pursuant to a settlement agreement between
    the Liquidating Trust and the Petrie Retail bankruptcy estate.

(3) In the fourth quarter of 2004, the Liquidating Trust determined to reduce
    its accrual for its exposure under the Rejected Leases by approximately $9
    million. See Note 4 above.

                                       F-11