<PAGE>   1

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

                       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, 2000

                         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

   FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
                                  REPORT: N/A

        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 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 (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  [ ]

     As of March 27, 2001, 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; and
the aggregate market value of the units of beneficial interest held by
non-affiliates was $18,908,956, based upon the closing price on March 27, 2001
of $ 25/32 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>   2

                                     INDEX

<TABLE>
<S>         <C>                                                           <C>
PART I
  Item 1.   Business....................................................    2
  Item 2.   Properties..................................................    3
  Item 3.   Legal Proceedings...........................................    3
  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...................................    4
  Item 6.   Selected Financial Data.....................................    4
  Item 7.   Management's Discussion and Analysis of Financial Condition
              and
              Results of Operations.....................................    5
  Item 7A.  Quantitative and Qualitative Disclosures of 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

PART III
  Item 10.  Directors and Executive Officers of the Registrant..........   12
  Item 11.  Executive Compensation......................................   13
  Item 12.  Security Ownership of Certain Beneficial Owners and
              Management................................................   14
  Item 13.  Certain Relationships and Related Transactions..............   14

PART IV
  Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
              8-K.......................................................   15
</TABLE>

                                        1
<PAGE>   3

                                     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 four 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 $78.5 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 8, 2000, the expiration date of the Liquidating Trust was
extended from December 6, 2000 to December 6, 2002 (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

                                        2
<PAGE>   4

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.

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

     Not Applicable.

                                        3
<PAGE>   5

                                    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, 1999:
  First quarter (ended March 31, 1999)......................  $ 2 1/4     $ 2 1/16
  Second quarter (ended June 30, 1999)......................  $ 2 7/8     $ 2 5/32
  Third quarter (ended September 30, 1999)..................  $ 2 7/16    $ 2 1/4
  Fourth quarter (ended December 31, 1999)..................  $ 2 7/16    $ 2 5/16

Year Ended December 31, 2000:
  First quarter (ended March 31, 2000)......................  $ 3         $ 1 1/8
  Second quarter (ended June 30, 2000)......................  $ 1 1/4     $ 1 1/8
  Third quarter (ended September 30, 2000)..................  $ 1 5/16    $ 1 3/16
  Fourth quarter (ended December 31, 2000)..................  $ 1 1/2     $  15/16

Year Ending December 31, 2001:
  First quarter (through March 27, 2001)....................  $  31/32     $ 25/32
</TABLE>

     As of March 27, 2001, the most recent practicable date prior to the
printing of this report, there were approximately 2,774 holders of record of
units of beneficial interest of the Liquidating Trust. On February 11, 2000, the
Liquidating Trust distributed to its unit holders a total of $78,525,357 in cash
and its remaining 1,688,576 shares of Toys Common Stock, or $1.50 in cash and
approximately 0.03225536 of a share of Toys Common Stock for each unit held of
record at the close of business on January 31, 2000. On December 21, 2000, the
Liquidating Trust distributed to its unit holders a total of $39,262,679 in
cash, or $0.75 in cash for each unit of beneficial interest held of record at
the close of business on December 11, 2000. 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.

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, 2000, 1999, 1998 and 1997 and
the period ended December 31, 1996. A liquidation basis of accounting was
implemented for all periods presented.

                                        4
<PAGE>   6

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,             PERIOD ENDED
                                      -------------------------------------------   DECEMBER 31,
                                      2000(1)    1999(1)     1998(1)     1997(1)      1996(1)
                                      -------    --------    --------    --------   ------------
                                         (IN THOUSANDS, EXCEPT PER SHARE OR PER UNIT AMOUNTS)
<S>                                   <C>        <C>         <C>         <C>        <C>
Corporate overhead benefit
  (expense).........................  $ 6,262    $ (2,259)   $ (3,710)   $(24,717)    $(30,304)
Income tax refund...................                   --          --       4,066           --
Investment income...................    7,033       6,703       7,165       8,164        6,467
Net realized and unrealized gain
  (loss) on investments.............   (4,327)     (2,215)    (31,367)      1,783       44,572
                                      -------    --------    --------    --------     --------
Income (loss) before income tax
  benefit...........................    8,968       2,229     (27,912)    (10,704)      20,735
                                      -------    --------    --------    --------     --------
Net income (loss)...................    8,968       2,229     (27,912)    (10,704)      20,735
                                      =======    ========    ========    ========     ========
Income (loss) per unit:
Net income (loss)...................  $  0.17    $   0.04    $  (0.53)   $  (0.20)    $   0.40
                                      =======    ========    ========    ========     ========
Weighted average number of units....   52,350      52,350      52,350      52,350       52,350
                                      =======    ========    ========    ========     ========
Total assets........................  $86,344    $223,966    $225,524    $263,585     $275,707
                                      =======    ========    ========    ========     ========
</TABLE>

---------------
(1) Corporate overhead charges during the years ended December 31, 2000,
    December 31, 1999, December 31, 1998 and December 31, 1997 and the period
    ended December 31, 1996 relate primarily to accruals for costs and expenses
    related to Petrie Retail's bankruptcy. 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, on December 21, 2000, the
    Liquidating Trust received $765,000 as partial payment of the Liquidating
    Trust's claim against the Petrie Retail bankruptcy estate. During the year
    ended December 31, 1999, corporate overhead included $2.0 million relating
    to an accrual in respect of the settlement of the Aventura Malls Venture
    action against the Liquidating Trust, which amount was reduced by
    approximately $800,000 following the settlement and release of claims
    asserted by certain other landlords. During the year ended December 31,
    1999, corporate overhead also included professional fees and approximately
    $898,000 in income related to refunds received for retrospective insurance
    premiums, taxes paid on behalf of Petrie Retail and bankruptcy settlement
    payments. During the year ended December 31, 1998, the Liquidating Trust's
    total accrual for lease liabilities was reduced by approximately $2.0
    million following the settlement and release of claims asserted by
    landlords, which reduction was offset by $2.3 million in accruals relating
    to other liabilities relating to Petrie Retail's bankruptcy. For the year
    ended December 31, 1997 and the period ended December 31, 1996, corporate
    overhead includes $18 million and $22 million, respectively, relating to the
    liability of the Liquidating Trust, as successor to Petrie, as a guarantor
    of certain leases for which Petrie Retail or one of its affiliates has
    assumed liability and $3 million and $4 million, respectively, relating to
    certain other liabilities related to Petrie Retail's bankruptcy. Corporate
    overhead also consists of other 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.

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

                                        5
<PAGE>   7

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 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, and the results of operations of Petrie
are presented in the financial statements of the Liquidating Trust. Beginning
with the period ended December 31, 1996, the Liquidating Trust adopted the
calendar year as its fiscal year.

RESULTS OF OPERATIONS

  Year Ended December 31, 2000 Compared to the Year Ended December 31, 1999

     The Liquidating Trust's net income for the year ended December 31, 2000 was
$8,968,000, as compared to net income of $2,229,000 for the year ended December
31, 1999.

     In applying a liquidation basis of accounting, the Liquidating Trust gave
effect in its results of operations to fluctuations in the market price of the
Toys Common Stock held by it during the year ended December 31, 1999. During the
year ended December 31, 2000, the Liquidating Trust distributed to its unit
holders all of its remaining 1,688,506 shares of Toys Common Stock.

     The Liquidating Trust recorded a net realized loss of $4,327,000 for the
year ended December 31, 2000 in connection with the February 11, 2000
distribution referred to above, as compared to a net realized gain of $1,530,000
and an unrealized loss of $3,745,000 on the Toys Common Stock for the year ended
December 31, 1999. The $1,530,000 realized gain for the year ended December 31,
1999 resulted from sales by the Liquidating Trust at various times between April
28, 1999 and May 7, 1999 of an aggregate of 367,000 shares of Toys Common Stock
for approximately $8.5 million and the delivery by the Liquidating Trust on
November 29, 1999 of 2,000,000 shares of Toys Common Stock to CIBC in exchange
for a cash payment of approximately $61.4 million.

     For the year ended December 31, 2000, the Liquidating Trust realized a
benefit in corporate overhead of $6,262,000, as compared to an expense of
$2,259,000 for the year ended December 31, 1999. 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, 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 (the "Multiemployer Plan"). Accordingly,
the Liquidating Trust reversed a $3 million accrual related to this contingent
liability. Additionally, on December 21, 2000, the Liquidating Trust received
$765,000 as partial payment of the Liquidating Trust's claim against the Petrie
Retail bankruptcy estate. During the year ended December 31, 1999, corporate
overhead included $2.0 million relating to an accrual in respect of the
settlement of the Aventura Malls Venture action against the Liquidating Trust,
which amount was reduced by approximately $800,000 following the settlement and
release of claims asserted by certain other landlords.

     During the year ended December 31, 2000, the Liquidating Trust earned
$7,033,000 in investment income, as compared to $6,703,000 earned during the
year ended December 31, 1999. The increase in investment income earned during
the year ended December 31, 2000 is primarily due to higher prevailing interest
rates.

  Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998

     The Liquidating Trust's net income for the year ended December 31, 1999 was
$2,229,000, as compared to a net loss of $27,912,000 for the year ended December
31, 1998.

                                        6
<PAGE>   8

     In applying a liquidation basis of accounting, the Liquidating Trust gave
effect in its results of operations to fluctuations in the market price of the
Toys Common Stock held by it during the years ended December 31, 1999 and
December 31, 1998. The market price per share of Toys Common Stock fluctuated
during the year ended December 31, 1999 as follows:

<TABLE>
<CAPTION>
                                                              CLOSING
DATE                                                           PRICE
----                                                          -------
<S>                                                           <C>
December 31, 1998...........................................    $16 15/16
March 31, 1999..............................................     18 13/16
June 30, 1999...............................................     20 11/16
September 30, 1999..........................................     15
December 31, 1999...........................................     14 5/16
</TABLE>

     The Liquidating Trust recorded a net realized gain of $1,530,000 and an
unrealized loss of $3,745,000 on the Toys Common Stock for the year ended
December 31, 1999, as compared to an unrealized loss of $31,228,000 for the year
ended December 31, 1998. In addition, at various times between April 28, 1999
and May 7, 1999, the Liquidating Trust sold an aggregate of 367,000 shares of
Toys Common Stock for approximately $8.5 million and on November 29, 1999
delivered 2,000,000 shares of Toys Common Stock to CIBC in exchange for a cash
payment of approximately $61.4 million. For the year ended December 31, 1999,
the Liquidating Trust realized a gain of $1,530,000 with respect to such sales.

     For the year ended December 31, 1999, the Liquidating Trust incurred
corporate overhead of $2,259,000 as compared to $3,710,000 for the year ended
December 31, 1998. 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. During
the year ended December 31, 1999, corporate overhead included lower professional
fees and approximately $898,000 in income related to refunds received for
retrospective insurance premiums, taxes paid on behalf of Petrie Retail and
bankruptcy settlement payments. During the year ended December 31, 1999,
corporate overhead included $2.0 million relating to an accrual in respect of
the settlement of the Aventura Malls Venture action, which amount was reduced by
approximately $800,000 following the settlement and release of claims asserted
by certain other landlords.

     During the year ended December 31, 1999, the Liquidating Trust earned
$6,703,000 in investment income, as compared to $7,165,000 earned during the
year ended December 31, 1998. The decrease in investment income earned during
the year ended December 31, 1999 was primarily due to lower prevailing interest
rates.

LIQUIDITY AND CAPITAL RESOURCES

  General

     The assets of the Liquidating Trust are subject to the terms of a letter
agreement dated as of January 24, 1995 (the "Side Letter Agreement"), pursuant
to which Petrie agreed with Toys "R" Us that Petrie would retain, either
individually or in combination, (i) cash in an amount of at least $177.5 million
(the "Reserved Amount") or (ii) shares of Toys Common Stock having a market
value (using the per share price on January 20, 1995) of at least twice the
Reserved Amount, to secure the payment of Petrie's contingent liabilities. In
connection with the Liquidating Trust's distributions of $78,525,357 in cash and
1,688,576 shares of Toys Common Stock on February 11, 2000 and $39,262,679 in
cash on December 21, 2000, the Liquidating Trust provided Toys "R" Us with prior
notice of such distributions and Toys "R" Us agreed that it did not object to
such distributions. Pursuant to the terms of the Side Letter Agreement, the
Liquidating Trust is required to provide similar notice to Toys "R" Us prior to
making any additional distributions.

     As of March 27, 2001, the Liquidating Trust had approximately $86 million
in cash, cash equivalents and investments in U.S. Treasury obligations. The
Liquidating Trust believes that it has sufficient liquid funds

                                        7
<PAGE>   9

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).

     On November 8, 2000, the expiration date of the Liquidating Trust was
extended from December 6, 2000 to December 6, 2002 (subject to further extension
by the Liquidating Trustees).

  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. At December 31, 2000 and
December 31, 1999, the Liquidating Trust had accrued approximately $27 million
and $36 million, respectively, for contingent liabilities. 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
                                        8
<PAGE>   10

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 Multiemployer Plan
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. As of March 27, 2001, the
Liquidating Trust's remaining claim against the Distribution Company was
$14,535,000. There can be no assurance as to the timing of the payment 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 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 $0.2 million 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. In addition, an affiliate of the Liquidating Trust's real estate
advisor has assumed Petrie Retail's former headquarters lease at 150 Meadowlands
Parkway in Secaucus, New Jersey, which lease is guaranteed by the Liquidating
Trust. The Liquidating Trust's real estate advisor has reached a settlement with
the landlord and given back part of the former headquarters space and has sublet
most of the remainder of such space in an effort to mitigate the Liquidating
Trust's liability under this lease, although no assurance can be given that the
subtenant will continue to pay rent through the remaining term of the
headquarters lease.

     After taking into account settlements and releases obtained from landlords,
the Liquidating Trust, as successor to Petrie, remains the guarantor of 143 of
the retail leases and the headquarters lease described above. 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, would be approximately $37 million (including potential
exposure related to the exercise of lease renewal options described below). Such
exposure includes (i) approximately $25 million in potential liability related
to 64 of the rejected store leases described above, which amount is included in
the Liquidating Trust's accrued expenses and other liabilities at December 31,
2000, and (ii) approximately $12 million in potential liability related to 26 of
the store leases which were either assigned to third party retailers or are
still held by the successor of Petrie Retail, the headquarters lease (which now
accounts for less than $1 million in potential liability), and 53 of the leases
which have expired or were terminated by mutual landlord and tenant consent

                                        9
<PAGE>   11

described above. Of the $12 million in potential liability related to the
assigned leases, the leases that are still held by the successor of Petrie
Retail and the headquarters lease, approximately $3 million is due in 2001 and
approximately $9 million is due thereafter. The exposure related to assigned
leases or leases still held by the successor to Petrie Retail includes potential
liability related to lease extension options that may be exercised following the
assignment of leases to third party retailers.

     The Liquidating Trust's lease exposure calculations 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.  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
total cost of these settlements to the Liquidating Trust was approximately $3.2
million, of which approximately $340,000 (relating to certain unfunded pension
obligations) remained unpaid and was included in the Liquidating Trust's accrued
expenses and other liabilities at December 31, 2000.

     Multiemployer Plan.  As previously disclosed, effective January 31, 1995,
Petrie Retail withdrew from the Multiemployer Plan. Due to the Multiemployer
Plan's underfunded status, Petrie Retail and its affiliates incurred withdrawal
liability under the Employee Retirement Income Security Act of 1974, as amended.
By letter dated May 30, 1996, the Multiemployer Plan initially assessed
withdrawal liability against Petrie Retail in the amount of approximately $9.4
million plus interest. In addition, the Multiemployer Plan initially assessed
liability against Petrie Retail of approximately $2 million attributable to the
Multiemployer Plan's failure to meet certain Internal Revenue Code minimum
funding standards, which amount was payable on August 1, 1996. In December 1998,
the Multiemployer Plan also submitted amended proofs of claim indicating that,
among other entities, PS Stores and Petrie Retail were indebted to the
Multiemployer Plan in the aggregate amount of approximately $17.3 million,
consisting of withdrawal liability of $4.7 million, funding deficiencies of $1.4
million and an additional $11.2 million as a result of a mass withdrawal by
contributing employers from the Multiemployer Plan. By order of the Bankruptcy
Court dated October 25, 2000, as amended by order dated November 15, 2000, the
Multiemployer Plan's claim was allowed in the amount of $12,969,102. To the
knowledge of the Liquidating Trust, Petrie Retail has paid the Multiemployer
Plan approximately $648,455 with respect to such liabilities. Prior to entering
into the stipulation of settlement referred to under "-- Petrie Retail's
Bankruptcy" above, pursuant to the Retail Operations Stock Purchase Agreement,
Petrie Retail and its affiliates were responsible for payment of the first $10
million in withdrawal and related liabilities and were entitled to be reimbursed
by the Liquidating Trust, as successor to Petrie, for 75% of the next $50
million paid by Petrie Retail and its affiliates in respect of such liabilities.
Pursuant to the stipulation of settlement, the Liquidating Trust was released
from its contractual liability with respect to the Multiemployer Plan.
Accordingly, the Liquidating Trust has reversed its accrual of $3 million
relating to the contingent contractual liability associated with the
Multiemployer Plan.

     On or about September 25, 1998, the Internal Revenue Service issued an
examination report asserting that "Petrie Stores, Inc." was liable for excise
taxes and penalties of approximately $192,000 relating to the Multiemployer
Plan's funding deficiencies for the three plan years ended January 31, 1993,
1994 and 1995. On

                                        10
<PAGE>   12

January 24, 2000, the Liquidating Trust paid the Internal Revenue Service
approximately $59,000 in full settlement of the alleged liability.

     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.

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

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

     (6) 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, 2000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See pages F-1 through F-12 annexed hereto.

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

     None.

                                        11
<PAGE>   13

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

LIQUIDATING TRUSTEES AND EXECUTIVE OFFICERS

     The following table shows, as of March 27, 2001, 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................  54         1995         Manager and Chief Executive
                                                             Officer; Liquidating Trustee
H. Bartlett Brown..................  65         1995         Assistant Manager and Chief
                                                             Financial Officer
Joseph H. Flom.....................  77         1995         Liquidating Trustee
Bernard Petrie.....................  75         1995         Liquidating Trustee
Laurence A. Tisch..................  78         1995         Liquidating Trustee
Raymond S. Troubh..................  74         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 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 and the Estate of Milton Petrie, 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.

     Laurence A. Tisch became a Liquidating Trustee in December 1995. Since
January 1999, Mr. Tisch has been the Co-Chairman of the Board of Loews
Corporation, a diversified holding company. From October 1994 to January 1999,
Mr. Tisch was the Co-Chairman and Co-Chief Executive Officer of Loews
Corporation. From May 1960 to October 1994, Mr. Tisch was the Chairman of the
Board and Chief Executive Officer of Loews Corporation. Since March 1990, he has
also been the Chief Executive Officer and a director of CNA Financial Corp., an
insurance and financial services company and a publicly-held subsidiary of Loews
Corporation. From January 1987 to November 1995, Mr. Tisch was Chairman of the
Board, President and Chief Executive Officer of CBS Inc., a television and radio
network. Mr. Tisch is a director of Loews Corporation; a director of Automatic
Data Processing, Inc., a provider of payroll and other data processing services;
a director of Bulova Corporation, a watch manufacturer and a publicly-held
subsidiary of Loews Corporation; a director of Federated Department Stores,
Inc., an operator of department stores; a trustee of

                                        12
<PAGE>   14

the New York Public Library; a trustee of the Metropolitan Museum of Art; and a
director of United Jewish Appeal.

     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
ARIAD Pharmaceuticals, Inc., a pharmaceutical company; Diamond Offshore
Drilling, Inc., an offshore drilling company; Health Net, Inc., a healthcare
company; General American Investors Company, an investment and advisory company;
Gentiva Health Services, Inc., a healthcare company; Starwood Hotels & Resorts,
a hotel company; WHX Corporation, a holding company; and Triarc Companies, Inc.,
a diversified holding company. Mr. Troubh also serves as trustee of the MicroCap
Liquidating Trust, a liquidating trust that holds the assets of The MicroCap
Fund, Inc., an investment company, and Corporate Renaissance Group Liquidating
Trust, a liquidating trust that holds the assets of Corporate Renaissance Group,
Inc., an investment company.

MEETINGS AND STANDING COMMITTEES

     The Liquidating Trustees met three times during the year ended December 31,
2000. During such period, the Liquidating Trustees had no standing committees.

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
                                                -------------------------------       ALL OTHER
NAME AND PRINCIPAL POSITION                     YEAR ENDED     SALARY     BONUS    COMPENSATION(1)
---------------------------                     ----------    --------    -----    ---------------
<S>                                             <C>           <C>         <C>      <C>
Stephanie R. Joseph...........................   12/31/00     $130,000     --          $45,000
  Manager, Chief Executive Officer and           12/31/99     $130,000     --          $45,000
  Liquidating Trustee                            12/31/98     $130,000     --          $45,000
</TABLE>

---------------
(1) Ms. Joseph receives $45,000 per year for her service as a Liquidating
    Trustee.

COMPENSATION OF LIQUIDATING TRUSTEES

     Liquidating Trustees are 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 are each compensated $45,000 per fiscal
year for their service as Liquidating Trustees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     During the year ended December 31, 2000, 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,
2000, no executive officer of the Liquidating Trust served as a 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.

                                        13
<PAGE>   15

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

UNITS OF BENEFICIAL INTEREST

     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 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        PERCENT OF
                                                                     UNITS OF           OUTSTANDING
                                                               BENEFICIAL INTEREST      BENEFICIAL
NAME OF BENEFICIAL OWNER                                        BENEFICIALLY OWNED       INTERESTS
------------------------                                      ----------------------    -----------
<S>                                                           <C>                       <C>
The Estate of Milton Petrie(1)..............................        28,111,274             53.7%
  Four Times Square
  New York, New York 10036-6522
HBK Investments L.P.(2).....................................         9,484,800             18.1%
HBK Finance L.P.
  777 Main Street, Suite 2750
  Fort Worth, Texas 76102
T. Rowe Price Associates, Inc.(3)...........................         4,748,700              9.0%
  100 E. Pratt Street
  Baltimore, Maryland 21202
H. Bartlett Brown...........................................                --               --
Joseph H. Flom(1)...........................................                --               --
Stephanie R. Joseph.........................................                --               --
Bernard Petrie(1)...........................................            34,500                *
Laurence A. Tisch(1)........................................             1,000                *
Raymond S. Troubh...........................................                --               --
All managers and Liquidating Trustees as a group (6
  individuals, including those named above).................            35,500                *
</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
    Estate of Milton Petrie (the "Estate") with the Securities and Exchange
    Commission on January 31, 1996. Mr. Flom, Hilda K. Gerstein, Jerome A.
    Manning, Bernard Petrie, Carroll Petrie, Dorothy Stern Ross, Mr. Tisch and
    David Zack serve as the executors of the Estate. The executors of the Estate
    share equally the power to dispose of, and to vote, the units of beneficial
    interest held by the Estate. Messrs. Flom, Petrie and Tisch disclaim
    beneficial ownership of the units of beneficial interest held by the Estate.

(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 2, 2000.

(3) Based on information contained in Amendment No. 4 to the Statement on
    Schedule 13G filed by T. Rowe Price Associates, Inc. ("Price Associates")
    with the Securities and Exchange Commission on February 12, 2001. 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.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to the
Liquidating Trust and the Estate of Milton Petrie, which owns approximately
53.7% of the Liquidating Trust's outstanding units of

                                        14
<PAGE>   16

beneficial interest, and has provided services to each during the year ended
December 31, 2000. Joseph H. Flom, a Liquidating Trustee and an executor of the
Estate of Milton Petrie, is a partner in Skadden, Arps, Slate, Meagher & Flom
LLP.

     The Liquidating Trust maintains directors' and officers' liability
insurance provided by Continental Casualty Company, an affiliate of CNA
Financial Corp. Laurence A. Tisch, a Liquidating Trustee and an executor of the
Estate of Milton Petrie, is Chairman of the Board of CNA Financial Corp.

     Messrs. Flom, Petrie and Tisch are executors of the Estate of Milton Petrie
and are entitled to executors' commissions. Mr. Petrie is also a beneficiary of
the Estate of Milton Petrie.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)(1), (2)  LIST OF FINANCIAL STATEMENTS.

     See Index to Financial Statements at page F-1.

(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
      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 period 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).
</TABLE>

                                        15
<PAGE>   17
<TABLE>
<S>   <C>
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).
</TABLE>

(b) Reports on Form 8-K.

     Current Report on Form 8-K filed on November 13, 2000, reporting the
distribution of $39,262,679 in cash to the holders of units of beneficial
interest of the Liquidating Trust on December 21, 2000.

(c) See Item 14(a)(3) above. The Liquidating Trust will furnish to any holder of
    units of beneficial interest of the Liquidating Trust, upon written request,
    any exhibit listed in response to Item 14(a)(3) upon payment by such holder
    of the Liquidating Trust's reasonable expenses in furnishing any such
    exhibit.

(d) See Item 14(a)(2) above.

                                        16
<PAGE>   18

                                   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: April 2, 2001

     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.

Dated: April 2, 2001

                                          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/ LAURENCE A. TISCH
                                            ------------------------------------
                                                     LAURENCE A. TISCH
                                                          TRUSTEE

                                          By:     /s/ RAYMOND S. TROUBH
                                            ------------------------------------
                                                     RAYMOND S. TROUBH
                                                          TRUSTEE

                                        17
<PAGE>   19

                        PETRIE STORES LIQUIDATING TRUST

                         INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
  Report of Independent Auditors............................  F-2
  Statements of Net Assets in Liquidation -- December 31,
     2000 and December 31, 1999.............................  F-3
  Statements of Changes in Net Assets in Liquidation -- For
     the years ended December 31, 2000, 1999 and 1998.......  F-4
  Notes to Financial Statements.............................  F-5
</TABLE>

                                       F-1
<PAGE>   20

                         REPORT OF INDEPENDENT AUDITORS

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, 2000 and December 31, 1999, and the
related statements of changes in net assets in liquidation for each of the three
years in the period ended December 31, 2000. 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 auditing standards generally
accepted in the 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, 2000 and December 31, 1999 and the changes in
net assets in liquidation for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

                                          ERNST & YOUNG LLP

MetroPark, New Jersey
March 9, 2001

                                       F-2
<PAGE>   21

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                    STATEMENTS OF NET ASSETS IN LIQUIDATION
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  2000            1999
                                                              ------------    ------------
<S>                                                           <C>             <C>
ASSETS
Cash and cash equivalents...................................    $   513         $    280
U.S. Treasury Obligations...................................     85,831          194,048
U.S. Treasury Obligations held in escrow....................         --            5,470
Investments in common stock (including 1,493,450 shares of
  Toys "R" Us common stock at December 31, 1999 held in
  escrow)...................................................         --           24,168
                                                                -------         --------
          Total assets......................................     86,344          223,966

LIABILITIES
Accrued expenses and other liabilities......................     28,063           37,024
Commitments and contingencies
                                                                -------         --------
Net assets in liquidation...................................    $58,281         $186,942
                                                                =======         ========
</TABLE>

                            See accompanying notes.

                                       F-3
<PAGE>   22

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

               STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                    (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
                                                         YEAR ENDED      YEAR ENDED      YEAR ENDED
                                                        DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                            2000            1999            1998
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Net assets in liquidation at beginning of year........   $ 186,942        $184,713        $212,625
                                                         ---------        --------        --------
Investment income.....................................       7,033           6,703           7,165
Corporate overhead benefit (expense)..................       6,262          (2,259)         (3,710)
Net realized and unrealized loss on investments.......      (4,327)         (2,215)        (31,367)
                                                         ---------        --------        --------
Net income (loss) for the year........................       8,968           2,229         (27,912)
                                                         ---------        --------        --------
Liquidating distributions (consisting of cash and
  1,688,576 shares of Toys "R" Us common stock valued
  at $11.75 per share)................................    (137,629)             --              --
                                                         ---------        --------        --------
Net assets in liquidation at end of year..............   $  58,281        $186,942        $184,713
                                                         =========        ========        ========
Net income (loss) per unit............................   $    0.17        $   0.04        $   (.53)
                                                         =========        ========        ========
Weighted average number of units......................      52,350          52,350          52,350
                                                         =========        ========        ========
</TABLE>

                            See accompanying notes.
                                       F-4
<PAGE>   23

                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2000

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 2) 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 status of which is presently
unclear (Note 5), as well as the terms of a letter agreement with Toys "R" Us
(Note 2) pursuant to which the Liquidating Trust is required to provide notice
to Toys "R" Us prior to making any future liquidating distributions.

     Since the Succession Date, Petrie has been preparing for its dissolution.
On November 6, 1996, Petrie filed Articles of Dissolution with the Secretary of
State of the State of New York. Effective February 5, 1997, Petrie was
dissolved.

     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. The statements of net assets
in liquidation at December 31, 2000 and December 31, 1999 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>   24
                        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 generally
accepted accounting principles 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.

2. INVESTMENTS IN COMMON STOCK

     The Liquidating Trust's investments in common stock at December 31, 1999
consisted of 1,688,576 shares of Toys "R" Us, which operates a chain of
specialty retail stores principally engaged in the sale of toys and children's
clothing in the United States and abroad. At December 31, 1999, the 1,688,576
shares are carried at market value. At December 31, 2000, the Liquidating Trust
did not hold any shares of Toys "R" Us.

     On January 24, 1995, pursuant to the terms of an Acquisition Agreement
dated as of April 20, 1994, and amended as of May 10, 1994 (the "Toys
Acquisition Agreement"), between Petrie and Toys "R" Us, Petrie exchanged (the
"Exchange") with Toys "R" Us all of its shares of Toys Common Stock (39,853,403
shares), plus $165 million in cash, for 42,076,420 shares of Toys Common Stock
(approximately 15.0% of the outstanding Toys Common Stock at January 28, 1995).

     Simultaneously with the closing of the Exchange, Petrie placed 3,493,450
shares of Toys Common Stock into an escrow account (the "Escrow Account")
pursuant to the terms of an escrow agreement, dated as of January 24, 1995,
between Petrie and Custodial Trust Company, as Escrow Agent. The Escrow Account
terminated in accordance with its terms on January 24, 2000.

     The assets of the Liquidating Trust are subject to the terms of a letter
agreement, dated as of January 24, 1995, pursuant to which Petrie agreed with
Toys "R" Us that Petrie would retain, either individually or in combination, (i)
cash in an amount of at least $177.5 million (the "Reserved Amount") or (ii)
shares of Toys Common Stock having a market value (using the per share price on
January 20, 1995) of at least twice the Reserved Amount, to secure the payment
of Petrie's contingent liabilities (Note 4). In connection with the Liquidating
Trust's distributions of $78,525,357 in cash and 1,688,576 shares of Toys Common
Stock on February 11, 2000 and $39,262,679 in cash on December 21, 2000, the
Liquidating Trust provided Toys "R" Us with prior notice of such distributions
and Toys "R" Us agreed that it did not object to such distributions. Pursuant to
the terms of the letter agreement, the Liquidating Trust is required to provide
similar notice to Toys "R" Us prior to making any additional distributions.

     Petrie had also placed 3,200,082 shares of Toys Common Stock in a
collateral account (the "Collateral Account") pursuant to the terms of an
Amended and Restated Cash Collateral and Pledge Agreement, dated as of December
9, 1994 and amended as of January 24, 1995, among Petrie, PS Stores Acquisition
Corp. ("PS Stores"), certain subsidiaries of PS Stores, and Custodial Trust
Company, as Collateral Agent (the

                                       F-6
<PAGE>   25
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

"Amended and Restated Cash Collateral Agreement"). On December 19, 1995, the
Amended and Restated Cash Collateral Agreement was further amended and restated
and, pursuant thereto, the 3,200,082 shares of Toys Common Stock held in the
Collateral Account were released to Petrie in exchange for Petrie's deposit of
$67.5 million in U.S. Treasury obligations in the Collateral Account. In
connection with the settlement of a dispute with the Internal Revenue Service
(the "IRS"), approximately $32 million in U.S. Treasury obligations held in the
Collateral Account were transferred to the Liquidating Trust on May 20, 1997.
Pursuant to stipulations approved by the bankruptcy court in Petrie Retail
Inc.'s ("Petrie Retail") bankruptcy case (discussed below), the remaining
amounts held in the Collateral Account have been released and transferred to the
Liquidating Trust.

     At various times during the period ended January 22, 1996, Petrie sold an
aggregate of 5,610,700 shares of Toys Common Stock for approximately $126.9
million in proceeds. Between January 23, 1997 and February 5, 1997, the
Liquidating Trust sold an aggregate of 1,000,000 shares of Toys Common Stock for
approximately $25.5 million in proceeds. During 1999, in addition to the
2,000,000 shares of Toys Common Stock delivered to CIBC in exchange for a cash
payment of approximately $61.4 million as discussed above, the Liquidating Trust
sold an aggregate of 367,000 shares of Toys Common Stock for approximately $8.5
million in proceeds.

     In addition, Petrie and the Liquidating Trust have made liquidating
distributions of shares of Toys Common Stock held by them to shareholders of
Petrie and unit holders of the Liquidating Trust, respectively (Note 3).

     In November 1994, Petrie received a favorable private letter ruling from
the IRS to the effect that the Exchange and the subsequent distribution of Toys
Common Stock to Petrie's shareholders would qualify as a tax-free reorganization
under the Internal Revenue Code of 1986, as amended. The ruling further provided
that Petrie would not recognize any gain on these transactions.

3. LIQUIDATING DISTRIBUTIONS

     In accordance with the Plan of Liquidation, Petrie made an initial
liquidating distribution on March 24, 1995 of 26,173,718 shares of Toys Common
Stock (market value on March 24, 1995 of approximately $644.5 million). Petrie
subsequently distributed 1,391 shares of Toys Common Stock to certain former
shareholders of Winkelman Stores Incorporated (a former subsidiary of Petrie) in
respect of their interests in the March 24, 1995 distribution.

     On August 15, 1995, Petrie made a liquidating distribution of 5,235,035
shares of Toys Common Stock (market value on August 15, 1995 of approximately
$139.4 million).

     On February 11, 2000, the Liquidating Trust distributed a total of
$78,525,357 in cash and 1,688,576 shares of Toys "R" Us common stock with a fair
market value of $19,840,768.

     On December 21, 2000, the Liquidating Trust distributed to its unit holders
a total of $39,262,679 in cash. In the distribution, unit holders received $0.75
in cash for each unit of beneficial interest held at record at the close of
business on December 11, 2000.

4. INCOME TAXES

     As a result of the Succession, Petrie ceased to be a taxable entity.
Subsequent to January 22, 1996, the Liquidating Trust, as successor to Petrie,
is a complete pass-through entity for federal income taxes and, accordingly, is
not itself subject to federal income tax.

                                       F-7
<PAGE>   26
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. 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 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. At December 31, 2000 and
December 31, 1999, the Liquidating Trust had accrued approximately $27 million
and $36 million, respectively, for contingent liabilities. 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

                                       F-8
<PAGE>   27
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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 Multiemployer Plan 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. As of March 27, 2001, the Liquidating Trust's remaining
claim against the Distribution Company was $14,535,000. There can be no
assurance as to the timing of the payment 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 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 $0.2 million 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. In addition, an affiliate of the Liquidating Trust's real estate
advisor has assumed Petrie Retail's former headquarters lease at 150 Meadowlands
Parkway in Secaucus, New Jersey, which lease is guaranteed by the Liquidating
Trust. The Liquidating Trust's real estate advisor has reached a settlement with
the landlord and given back part of the former headquarters space and has sublet
most of the remainder of such space in an effort to mitigate the Liquidating
Trust's liability under this lease, although no assurance can be given that the
subtenant will continue to pay rent through the remaining term of the
headquarters lease.

     After taking into account settlements and releases obtained from landlords,
the Liquidating Trust, as successor to Petrie, remains the guarantor of 143 of
the retail leases and the headquarters lease described above. 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, would be approximately $37 million (including potential
exposure related to the exercise of lease renewal options described below). Such
exposure includes (i) approximately $25 million in potential liability related
to 64 of the rejected store leases described above, which amount is included in
the Liquidating Trust's accrued expenses and other liabilities at December 31,
2000, and (ii) approximately $12 million in potential liability related to 26 of
the store leases which were either assigned to third party retailers or are
still held by the successor of Petrie Retail, the headquarters lease (which now
accounts for less than $1 million in potential

                                       F-9
<PAGE>   28
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

liability), and 53 of the leases which have expired or were terminated by mutual
landlord and tenant consent described above. Of the $12 million in potential
liability related to the assigned leases, the leases that are still held by the
successor of Petrie Retail and the headquarters lease, approximately $3 million
is due in 2001 and approximately $9 million is due thereafter. The exposure
related to assigned leases or leases still held by the successor to Petrie
Retail includes potential liability related to lease extension options that may
be exercised following the assignment of leases to third party retailers.

     The Liquidating Trust's lease exposure calculations 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.  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
total cost of these settlements to the Liquidating Trust was approximately $3.2
million, of which approximately $340,000 (relating to certain unfunded pension
obligations) remained unpaid and was included in the Liquidating Trust's accrued
expenses and other liabilities at December 31, 2000.

     Multiemployer Plan.  As previously disclosed, effective January 31, 1995,
Petrie Retail withdrew from the Multiemployer Plan. Due to the Multiemployer
Plan's underfunded status, Petrie Retail and its affiliates incurred withdrawal
liability under the Employee Retirement Income Security Act of 1974, as amended.
By letter dated May 30, 1996, the Multiemployer Plan initially assessed
withdrawal liability against Petrie Retail in the amount of approximately $9.4
million plus interest. In addition, the Multiemployer Plan initially assessed
liability against Petrie Retail of approximately $2 million attributable to the
Multiemployer Plan's failure to meet certain Internal Revenue Code minimum
funding standards, which amount was payable on August 1, 1996. In December 1998,
the Multiemployer Plan also submitted amended proofs of claim indicating that,
among other entities, PS Stores and Petrie Retail were indebted to the
Multiemployer Plan in the aggregate amount of approximately $17.3 million,
consisting of withdrawal liability of $4.7 million, funding deficiencies of $1.4
million and an additional $11.2 million as a result of a mass withdrawal by
contributing employers from the Multiemployer Plan. By order of the Bankruptcy
Court dated October 25, 2000, as amended by order dated November 15, 2000, the
Multiemployer Plan's claim was allowed in the amount of $12,969,102. To the
knowledge of the Liquidating Trust, Petrie Retail has paid the Multiemployer
Plan approximately $648,455 with respect to such liabilities. Prior to entering
into the stipulation of settlement referred to under "-- Petrie Retail's
Bankruptcy" above, pursuant to the Retail Operations Stock Purchase Agreement,
Petrie Retail and its affiliates were responsible for payment of the first $10
million in withdrawal and related liabilities and were entitled to be reimbursed
by the Liquidating Trust, as successor to Petrie, for 75% of the next $50
million paid by Petrie Retail and its affiliates in respect of such liabilities.
Pursuant to the stipulation of settlement, the Liquidating Trust was released
from its contractual liability with respect to the

                                       F-10
<PAGE>   29
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Multiemployer Plan. Accordingly, the Liquidating Trust has reversed its accrual
of $3 million relating to the contingent contractual liability associated with
the Multiemployer Plan.

     On or about September 25, 1998, the Internal Revenue Service issued an
examination report asserting that "Petrie Stores, Inc." was liable for excise
taxes and penalties of approximately $192,000 relating to the Multiemployer
Plan's funding deficiencies for the three plan years ended January 31, 1993,
1994 and 1995. On January 24, 2000, the Liquidating Trust paid the Internal
Revenue Service approximately $59,000 in full settlement of the alleged
liability.

     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.

6. QUARTERLY FINANCIAL DATA (UNAUDITED)

     Summarized quarterly financial data for the years ended December 31, 2000
and December 31, 1999 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, 2000:
Net income (loss)...............................  $(3,005)(1)  $1,453(2)  $ 4,473(3)   $ 6,047(4)
                                                  =======      ======     =======      =======
Net income (loss) per unit......................  $ (0.06)     $ 0.03     $  0.09      $  0.12
                                                  =======      ======     =======      =======
Year ended December 31, 1999:
Net income (loss)...............................  $ 4,963(5)   $6,768(6)  $(7,913)(7)  $(1,589)(8)
                                                  =======      ======     =======      =======
Net income (loss) per unit......................  $  0.09      $ 0.13     $ (0.15)     $ (0.03)
                                                  =======      ======     =======      =======
</TABLE>

---------------
(1) The first quarter of the year ended December 31, 2000 includes a realized
    loss of $4,327,000 resulting from the distribution of 1,688,576 shares of
    Toys Common Stock on February 11, 2000.

(2) The second quarter of the year ended December 31, 2000 includes investment
    income of $1,628,000 offset by corporate overhead of $175,000.

(3) The third quarter of the year ended December 31, 2000 includes a reversal of
    the Liquidating Trust's accrual of $3 million following a stipulation of
    settlement between the Distribution Company and the Liquidating Trust, as
    approved by the Bankruptcy Court, under which the Liquidating Trust was
    released from its contractual liability with respect to the Multiemployer
    Plan.

(4) The fourth quarter of the year ended December 31, 2000 includes a reduction
    in the Liquidating Trust's accrual for lease liabilities of $3,800,000
    following the settlement and release of claims asserted by certain landlords
    and the receipt of $765,000 in respect of claims against the Petrie Retail
    bankruptcy estate.

(5) The first quarter of the year ended December 31, 1999 includes an unrealized
    gain related to an increase in the market value of Toys Common Stock of
    $3,854,000 and a reduction in the Liquidating Trust's accrual for lease
    liabilities of $400,000 following the settlement and release of claims
    asserted by certain landlords.

(6) The second quarter of the year ended December 31, 1999 includes an
    unrealized gain related to an increase in the market value of Toys Common
    Stock of $4,738,000, realized gains of $1,572,000 related to sales of Toys
    Common Stock, a reduction in the Liquidating Trust's accrual for lease
    liabilities of $200,000 following the settlement and release of claims
    asserted by certain landlords and $720,000 in

                                       F-11
<PAGE>   30
                        PETRIE STORES LIQUIDATING TRUST
                    (SUCCESSOR TO PETRIE STORES CORPORATION)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

    income related to refunds received for retrospective insurance premiums and
    taxes paid on behalf of Petrie Retail.

(7) The third quarter of the year ended December 31, 1999 includes an unrealized
    loss related to a decrease in the market value of Toys Common Stock of
    $9,604,000 partially offset by a reduction in the Liquidating Trust's
    accrual for lease liabilities of $200,000 following the settlement and
    release of claims asserted by certain landlords and the receipt of $178,000
    from PS Stores pursuant to a bankruptcy settlement in respect of the
    Liquidating Trust's claims against PS Stores.

(8) The fourth quarter of the year ended December 31, 1999 includes an
    unrealized loss of $1,161,000 related to a decrease in the market value of
    Toys Common Stock, a realized loss of $42,000 in connection with delivering
    2,000,000 shares of Toys Common Stock and the accrual of an additional $2
    million in respect of the settlement of the Aventura Malls Venture
    litigation.

                                       F-12