<Page>

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

                                   FORM 10-K/A

         /X/ AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended February 2, 2002
                                       OR
       / / AMENDMENT TO TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

           For the Transition Period from____________ to _____________

                          Commission file number 0-8858

                            THE PENN TRAFFIC COMPANY
             (Exact name of registrant as specified in its charter)

                 DELAWARE                              25-0716800
         (State of incorporation)           (IRS Employer Identification No.)

 1200 STATE FAIR BLVD., SYRACUSE, NEW YORK             13221-4737
 (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (315) 453-7284

<Table>
<S>                                                          <C>
Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.01 par value
                                                             Warrants to purchase Common Stock
</Table>

          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 ninety (90) days.

                                 YES  X    NO
                                     ---     ---

          Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of 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. / /

          Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                                 YES  X   NO
                                     ---     ---

          The aggregate market value of voting stock held by non-affiliates of
the registrant was $112,353,908 as of April 26, 2002.

  COMMON STOCK, PAR VALUE $.01 PER SHARE: 20,058,264 SHARES OUTSTANDING AS OF
                                 APRIL 26, 2002

<Page>

                                 FORM 10-K INDEX

<Table>
<Caption>
                                                                                         PAGE
<S>                                                                                        <C>
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PART I.
-----------------------------------------------------------------------------------------------

Item   1.    Business                                                                       5

Item   2.    Properties                                                                    17

Item   3.    Legal Proceedings                                                             17

Item   4.    Submission of Matters to a Vote of Security Holders                           17

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PART II.
-----------------------------------------------------------------------------------------------

Item   5.    Market for Registrant's Common Equity and Related Stockholder Matters         18

Item   6.    Selected Financial Data                                                       18

Item   7.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                                     25

Item   7A.   Quantitative and Qualitative Disclosures About Market Risk                    46

Item   8.    Financial Statements and Supplementary Data                                   47

Item   9.    Changes in and Disagreements with Accountants on Accounting                   89
             and Financial Disclosure

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PART III.
-----------------------------------------------------------------------------------------------

Item  10.    Directors and Executive Officers of Registrant                                90

Item  11.    Executive Compensation                                                        90

Item  12.    Security Ownership of Certain Beneficial Owners and Management                90

Item  13.    Certain Relationships and Related Transactions                                90

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PART IV.
-----------------------------------------------------------------------------------------------

Item  14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K               91
</Table>

<Page>

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

          Certain statements included in this Form 10-K/A, including without
limitation, statements included in Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations," which are not
statements of historical fact, are intended to be, and are hereby identified
as, "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended. Without limiting the foregoing,
the words "anticipate," "believe," "estimate," "expect," "intend," "plan,"
"project" and other similar expressions are intended to identify
forward-looking statements. Penn Traffic (the "Company") cautions readers
that forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievement expressed or implied by such
forward-looking statements. Such factors include, among other things, the
success or failure of the Company in implementing its current business and
operational strategies; general economic and business conditions;
competition; availability, location and terms of sites for store development;
the successful implementation of the Company's capital expenditure program
(including store remodeling and investments in the Company's technology
infrastructure including point-of-sale systems); labor relations; labor and
employee benefit costs including increases in health care and pension costs;
the impact of the Company's loyalty card program on its results of
operations; the impact of Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets" on the Company's financial statements
and financial results (as discussed in Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Impact of New
Accounting Standards"); availability and terms of and access to capital; the
Company's liquidity and other financial considerations; the ability of the
Company to successfully negotiate modifications or amendments to its Credit
Facility or negotiate any new credit facility; the ability of the Company to
repurchase its common stock in open market purchases and the prices at which
it repurchases its common stock; restrictions on the Company's ability to
repurchase its shares under its debt instruments; the outcome of internal and
external investigations into the false accounting entries at the Company's
Penny Curtiss bakery manufacturing subsidiary and the costs of such
investigation, and the outcome of pending or yet-to-be instituted legal
proceedings. Penn Traffic cautions that the foregoing list of important
factors is not exhaustive.

                                      - 3 -
<Page>

PART I

          In August 2002, Penn Traffic announced that it would restate its
financial results after discovering that an employee of its Penny Curtiss
bakery manufacturing subsidiary had made false accounting entries which
primarily involved the overstatement of inventory over a period of
approximately three and one-quarter years. Based on the preliminary findings of
an internal review, the Company's Audit Committee engaged independent legal
counsel to conduct an independent investigation, who in turn engaged KPMG LLP
to assist in this investigation, which is substantially complete. The Company
has concluded that the false accounting entries were limited to its Penny
Curtiss bakery manufacturing subsidiary. The effect of the correction of the
misstatements was to increase previously reported net loss by $3.0 million,
$2.4 million, and $1.1 million and net loss per share - diluted by $0.15,
$0.12, and $0.05 for the fiscal years ended February 2, 2002 and February 3,
2001 and the 31-week period ended January 29, 2000, respectively. In
addition, the restatement reduced operating income for the 21-week period
ended June 26, 1999 by $1.1 million; this amount was offset in the Company's
Consolidated Statement of Operations by an adjustment associated with the
Company's adoption of fresh-start reporting. Consolidated financial
statements for the fiscal years ended February 2, 2002 and February 3, 2001,
the 31-week period ended January 29, 2000, and the 21-week period ended June
26, 1999 and notes thereto included in this amended Annual Report on Form
10-K have been restated to include the effects of the correction of these
misstatements and the reclassification of all amounts outstanding under the
Credit Facility as Current maturities of long-term debt (see "Notes to
Consolidated Financial Statements - Note 12" included in Part II, Item 8).

          This amendment to the Company's Annual Report on Form 10-K for the
fiscal year ended February 2, 2002 amends and restates those items of the
Form 10-K originally filed on May 3, 2002 (the "Original Filing") which have
been affected by the restatement. In order to preserve the nature and
character of the disclosures set forth in such items as originally filed, no
attempt has been made in this amendment to update such disclosures. Except as
required to reflect the effects of the restatement and the reclassification
described above, all information contained in this amendment is stated as the
date of the Original Filing. For additional information regarding the
restatement, see "Notes to Consolidated Financial Statements - Note 1"
included in Part II, Item 8.

                                      - 4 -
<Page>


ITEM 1. BUSINESS

GENERAL

          Penn Traffic is one of the leading food retailers in the eastern
United States. The Company operates 216 supermarkets in Ohio, West Virginia,
Pennsylvania, upstate New York, Vermont and New Hampshire under the "Big Bear"
and "Big Bear Plus" (68 stores), "Bi-Lo" (42 stores), "P&C" (72 stores) and
"Quality" (34 stores) trade names. Penn Traffic also operates a wholesale food
distribution business serving 85 licensed franchises and 67 independent
operators. Revenues for the 52-week period ended February 2, 2002 were
approximately $2.4 billion.

          The Company operates supermarkets in larger metropolitan areas such as
Columbus, Ohio, and Syracuse and Buffalo, New York as well as a number of
smaller communities throughout the Company's six-state trade area. Penn
Traffic's stores are clustered geographically within these markets providing
economies of scale in advertising, distribution and operations management.

          Penn Traffic's stores generally have long-standing brand equity and
leading market positions. More than 75% of Penn Traffic's retail revenues are
derived in markets where the Company believes that it has the number one or two
market position.

          The Company's supermarkets, which average approximately 41,000 square
feet, are conveniently located and generally modern. Penn Traffic tailors the
size and product assortment of each store to local demographics.

          Since the completion of the Company's financial restructuring in June
1999, the Company has made significant investments in its store base and
infrastructure. In the 2 1/2 year period between August 1999 and February 2002
the Company invested approximately $135 million in its store base and
infrastructure. This program has resulted in the upgrading or replacement of 80
stores representing approximately 43% of the Company's total retail square
footage.

          On March 1, 1999 (the "Petition Date"), Penn Traffic and certain of
its subsidiaries filed petitions for relief (the "Bankruptcy Cases") under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). The Bankruptcy
Cases were commenced to implement a prenegotiated financial restructuring of the
Company. On May 27, 1999, the Bankruptcy Court confirmed the Company's Chapter
11 plan of reorganization (the "Plan") and on June 29, 1999 (the "Effective
Date"), the Plan became effective in accordance with its terms. See
"Reorganization" and Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

                                      - 5 -
<Page>

BUSINESS STRATEGY

          Since the second half of 1998, Penn Traffic has been implementing a
business strategy designed to generate sales and operating income growth in an
evolving competitive environment. This strategy builds on the Company's
objective of operating conveniently located modern supermarkets with a strong
emphasis on quality perishables and customer service. The major components of
the Company's strategy are to:

          -   Pursue a strong capital investment program

          -   Enhance the Company's merchandising

          -   Improve store operations

          -   Reduce and contain costs.

          The following is a description of each major component of the
Company's business strategy:

          1.  PURSUE A STRONG CAPITAL INVESTMENT PROGRAM

          The Company believes that its stores are conveniently located and
generally modern. Nevertheless, management believes that Penn Traffic has a
significant number of opportunities to invest in the Company's core markets
where it already has strong market positions, and thereby increase sales and
operating income or, in some circumstances, mitigate the potential adverse
effect of new competition. Additionally, the Company believes that it has
opportunities to build new stores in communities contiguous to existing markets.

          As noted above, over the 2 1/2-year period since the completion of
Penn Traffic's financial restructuring, the Company has invested approximately
$135 million to upgrade its store base and make improvements to its
distribution, manufacturing and technology infrastructure. This program has
resulted in the upgrading or replacement of 80 of its 218 stores, representing
approximately 43% of the Company's total retail square footage.

          Now that these significant enhancements have been made to the
Company's store base, the Company's emphasis will shift toward growing its
business through the construction of new or replacement stores. During the
fiscal year ending February 1, 2003, Penn Traffic expects to invest
approximately $65 million in its store base, distribution system, bakery and
technology infrastructure. As part of this program, the Company plans to open
two new stores in "fill-in" locations within its core markets, replace four
stores, expand one store and complete approximately 13 store remodels.

                                      - 6 -
<Page>

          In addition to these investments in Penn Traffic's store base, the
Company is investing in technology to run its business more efficiently and
effectively. During the next two to three years, Penn Traffic expects to invest
$25-30 million to replace the vast majority of its point-of-sale (POS) systems
with a new system. The Company expects the new POS system will enhance customer
service, increase labor productivity, improve shrink control, generate important
data on consumer behavior and enable Penn Traffic to implement a greater variety
of merchandising programs.

          2.  ENHANCE THE COMPANY'S MERCHANDISING

          Penn Traffic has implemented or plans to implement programs designed
to (1) refine the assortment and enhance the quality and presentation of
products offered in each of its stores, (2) improve the return from promotional
expenditures and (3) introduce products and services to address the evolving
lifestyles of the Company's customers. Key components of these programs include:

               a.   Loyalty card marketing

          In September 2000, Penn Traffic launched the "Wild Card" loyalty card
program in its Big Bear stores. During September 2001, the Company introduced
the loyalty card program in its other markets. The Company has issued more than
two million Wild Cards to its customers.

          The Company believes that the Wild Card increases customer loyalty and
sales. In addition, by targeting more of the Company's promotions on its best
customers, Penn Traffic believes that the loyalty card program enables the
Company to more efficiently promote its offerings, thereby improving its gross
profit.

               b.   Enhanced perishable departments

          Between 1999 and 2001, Penn Traffic introduced enhanced perishable
departments under the following names: "Gold Label" meat, "Garden Fresh"
produce, "Bakery Fresh" bakery and "Fresh N' Ready" deli. The Company plans to
continue to enhance presentation, quality and variety in its perishable
departments.

               c.   Category management

          During 2001, Penn Traffic continued the rollout of a category
management program designed to establish more efficient product assortment,
analyze individual product movement and evaluate the impact of promotional
decisions. With this process, category managers develop category business plans
that improve assortment and pricing decisions. By the end of 2001, Penn Traffic
had developed category plans for products constituting the majority of the
Company's total retail sales of grocery, dairy and frozen food products.

                                      - 7 -
<Page>

               d.   Private label offerings

          Since 1999, Penn Traffic has been implementing a comprehensive
marketing plan to increase sales of the Company's private label products. These
products offer consumers a level of quality generally comparable to the national
brand at a lower price to consumers and higher gross margins for the Company. As
a result of this marketing program, the Company has achieved a significant
increase in the percentage of the Company's sales from private label products
over each of the last two years. The Company believes that there is an
opportunity to further increase sales of private label products.

               e.   New products and services

          Penn Traffic will continue to introduce new merchandising concepts
into its stores to respond to evolving customer lifestyles. For example, to
provide more of a one-stop shopping experience for today's busy customers, Penn
Traffic has been adding more in-store pharmacies and health and wellness
departments to its stores. The pharmacy and health and beauty care business is
an important and growing part of the Company's business. Penn Traffic currently
operates 88 in-store pharmacies and plans to open seven additional pharmacies in
its supermarkets during 2002.

          3.  IMPROVE STORE OPERATIONS

          Management believes that efficient store level execution of the
Company's operating standards and merchandising programs is a critical factor in
achieving future sales and profit improvements. The Company is continuing to
focus on the consistent delivery of high quality products and excellent customer
service to the consumer in a pleasant shopping environment.

          4.  REDUCE AND CONTAIN COSTS

          Penn Traffic has been working to reduce costs throughout the Company's
operations, while maintaining the Company's quality and service goals. For
example, over the past three years, the Company has made significant progress in
reducing nonperishable shrink expense. One of the Company's major initiatives
for 2002 is the reduction of inventory shrink in its perishable departments. In
addition, the Company has been implementing a number of initiatives to reduce
distribution costs, including the completion of a warehouse consolidation
project in 2000 and the recent implementation of a new logistics system to
improve truck routing and trailer capacity utilization.

          The Company has begun to develop plans for a number of other cost
reduction and cost containment programs. These include work simplification
initiatives, the rollout of a labor scheduling system in all of the Company's
stores and the use of electronic commerce to reduce the cost of certain
products.

                                      - 8 -
<Page>

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

          The Company's businesses are classified by management into two primary
industry segments: Retail Food Business and Wholesale Food Distribution Business
(both described below). Financial information about the Company's industry
segments for the three years ended February 2, 2002 is found in Note 17 to the
Consolidated Financial Statements.

RETAIL FOOD BUSINESS

          Penn Traffic is one of the leading supermarket retailers in its
operating areas, which include Ohio, West Virginia, Pennsylvania, upstate New
York, Vermont and New Hampshire. The Company operates in communities with
diverse economies and demographics.

          Penn Traffic's stores are conveniently located in close proximity to
the Company's customers. Most of the Company's stores are located in shopping
centers. The Company believes that its store base is generally modern and
provides a pleasant shopping experience for Penn Traffic customers.

          Penn Traffic's supermarkets offer a broad selection of grocery, meat,
poultry, seafood, dairy, fresh produce, delicatessen, bakery and frozen food
products. The stores also offer nonfood products and services such as health and
beauty care products, housewares, general merchandise, and in many cases,
pharmacies, floral items and banking services. In general, Penn Traffic's larger
stores carry broader selections of merchandise and feature a larger variety of
service departments than its other stores.

          Penn Traffic's store sizes and formats vary widely, depending upon the
demographic conditions in each location. For example, "conventional" store
formats are generally more appropriate in areas of low population density;
larger populations are better served by full-service supermarkets of up to
75,000 square feet, which offer an increased variety of merchandise and numerous
expanded service departments such as bakeries, delicatessens, floral departments
and fresh seafood departments.

          Penn Traffic's 13 Big Bear Plus stores range in size from 70,000 to
140,000 square feet. These full-service supermarkets carry an expanded variety
of nonfood merchandise. During 1999, Penn Traffic developed a new format for
these stores to refine the scope of this nonfood merchandise to a smaller number
of key growth categories with a greater depth of variety in each category. This
process was completed in 2001.

                                      - 9 -
<Page>

          Between the middle of 1998 and May 1999, Penn Traffic implemented a
store rationalization program (the "Store Rationalization Program") to divest
itself of certain marketing areas, principally in northeastern Pennsylvania,
where performance and market position were the weakest relative to Penn
Traffic's other retail stores, and to close other underperforming stores. In
total, Penn Traffic sold 21 stores and closed 29 stores. The sale of the 21
stores generated net cash proceeds of approximately $40 million.

          Penn Traffic owns and operates Penny Curtiss, a bakery processing
plant in Syracuse, New York. Penny Curtiss manufactures and distributes fresh
and frozen bakery products to Penn Traffic's stores and third parties, including
customers of Penn Traffic's wholesale food distribution business.

                                     - 10 -
<Page>

Selected statistics on Penn Traffic's retail food stores are presented below(1):

<Table>
<Caption>
                                                  Fiscal Year Ended
--------------------------------------------------------------------------------------------------------------------
                                                      February 3,       January 29,       January 30,     January 31,
                                    February 2,         2001              2000              1999             1998
                                      2002          (53 weeks)(2)          (3)               (3)              (3)
--------------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>               <C>              <C>              <C>
Average annual
   revenues per store               $ 9,554,000      $ 9,563,000       $ 9,574,000      $ 9,138,000      $ 9,340,000

Total store area
   in square feet                     9,020,822        9,134,778         8,910,898        9,796,604       10,787,686

Total store
   selling area in
   square feet                        6,538,587        6,621,450         6,455,352        7,086,099        7,812,114

Average total
   square feet per
   store                                 41,380           41,522            42,433           42,046           40,862

Average square
   feet of selling
   area per store                        29,994           30,097            30,740           30,412           29,591

Annual revenues per
   square foot of
   selling area                     $       318      $       315       $       315      $       306      $       317

Number of stores:

   Remodels/expansions
     (over $100,000)                         29               39                16                5                4
   New stores opened                          0                0                 1                1                1
   Stores acquired                            1               11                 2                0                1
   Stores closed/sold                         3                1                26               32                3

Size of stores (total store area):
   Up to 19,999
     square feet                             33               34                28               29               36
   20,000 - 29,999
     square feet                             36               36                36               42               50
   30,000 - 44,999
     square feet                             75               75                72               81               92
   45,000 - 60,000
     square feet                             46               46                45               50               55
   Greater than
     60,000 square
     feet                                    28               29                29               31               31

Total stores open
   at fiscal year-end                       218              220               210              233              264
</Table>

   (1)    Statistics for all years reflect the Company's implementation of EITF
          Issue Number 00-14 "Accounting for Certain Sales Incentives," as
          codified by EITF Issue Number 01-9, "Accounting for Consideration
          Given by a Vendor to a Customer" ("EITF 00-14").

   (2)    Average annual revenues per store and annual revenues per square foot
          of selling area are calculated on a 52-week basis. Data for stores
          acquired during the fiscal year ended February 3, 2001, includes 10
          stores in Vermont and New Hampshire formerly leased to another
          supermarket company which the Company commenced operating in August
          2000 (see "New England Stores").

   (3)    Includes revenues and square footage amounts from stores disposed of
          as part of the Store Rationalization Program.

                                     - 11 -
<Page>

WHOLESALE FOOD DISTRIBUTION BUSINESS

          Penn Traffic supplies 152 independently operated supermarkets with a
wide variety of food and non-food products from its distribution centers in New
York and Pennsylvania. These customers of the Company's wholesale food
distribution business are primarily located in upstate New York and western
Pennsylvania.

          As part of Penn Traffic's wholesale food distribution business, the
Company licenses, royalty-free, the use of its "Riverside," "Bi-Lo" and "Big M"
names to 85 of these independently owned supermarkets that are required to
maintain certain quality and other standards. The majority of these independent
stores use Penn Traffic as their primary wholesaler and also receive
advertising, accounting, merchandising and retail counseling services from Penn
Traffic. In addition, Penn Traffic receives rent from 44 of the licensed
independent operators which lease or sublease their supermarkets from Penn
Traffic. The Company also acts as a food distributor to 67 other independent
supermarkets. In addition to contributing to the Company's operating income, the
Company's wholesale food distribution business enables the Company to spread
fixed and semi-fixed procurement and distribution costs over additional
revenues.

PURCHASING AND DISTRIBUTION

          Penn Traffic is a large-volume purchaser of products. Penn Traffic's
purchases are generally of sufficient volume to qualify for minimum price
brackets for most items. Penn Traffic purchases brand name grocery merchandise
directly from national manufacturers. The Company also purchases private label
products and certain other food products from TOPCO Associates, Inc., a national
products purchasing cooperative comprising 54 regional supermarket chains and
other food distributors. For the fiscal year ended February 2, 2002, purchases
from TOPCO Associates accounted for approximately 21% of Penn Traffic product
purchases.

          Penn Traffic's primary New York distribution facility is a
company-owned 514,000 square foot dry grocery facility in Syracuse, New York.
The Company also owns a 241,000 square foot distribution center for perishable
products in Syracuse and a 274,000 square foot distribution center for general
merchandise and health and beauty care items in Jamestown, New York.

          The Company's primary Ohio distribution center is a leased 492,000
square foot dry grocery facility in Columbus, Ohio. Penn Traffic also owns a
208,000 square foot distribution facility for perishable products in Columbus
and leases a 233,000 square foot warehouse in Columbus for distribution of
certain general merchandise.

          Penn Traffic's primary Pennsylvania distribution facility is a
company-owned 390,000 square foot dry grocery facility in DuBois, Pennsylvania.
Penn Traffic also owns a 195,000 square foot distribution center for perishable
products in DuBois.

                                     - 12 -
<Page>

          Approximately two-thirds of the merchandise offered in Penn Traffic's
retail stores is distributed from its warehouses by its fleet of tractors,
refrigerated trailers and dry trailers. Merchandise not delivered from Penn
Traffic's warehouses is delivered directly to the stores by manufacturers,
distributors, vendor drivers and sales representatives for such products as
beverages, snack foods and bakery items.

COMPETITION

          The food retailing business is highly competitive and may be affected
by general economic conditions. The number of competitors and the degree of
competition encountered by Penn Traffic's supermarkets vary by location. Penn
Traffic competes with several multi-regional, regional and local supermarket
chains, convenience stores, stores owned and operated and otherwise affiliated
with large food wholesalers, unaffiliated independent food stores, warehouse
clubs, discount drug store chains, discount general merchandise chains,
"supercenters" (combination supermarket and general merchandise stores) and
other retailers. Many of these competitors are significantly larger than Penn
Traffic, have vastly greater resources and purchasing power than Penn Traffic,
in some cases can obtain more favorable terms from landlords, are better
capitalized than Penn Traffic and do not have employees affiliated with unions.

EMPLOYEES

          Labor costs and their impact on product prices are important
competitive factors in the supermarket industry. As of February 2, 2002, Penn
Traffic had approximately 15,900 hourly employees and 1,400 salaried employees.

          Approximately 53% of Penn Traffic's hourly employees belong to the
United Food and Commercial Workers Union. An additional 6% of Penn Traffic's
hourly employees (principally employed in the distribution function and in the
Company's bakery plant) belong to a total of four other unions.

GOVERNMENT REGULATION

          Penn Traffic's food and drug business requires it to hold various
licenses and to register certain of its facilities with state and federal
health, drug and alcoholic beverage regulatory agencies. By virtue of these
licenses and registration requirements, Penn Traffic is obligated to observe
certain rules and regulations; a violation of such rules and regulations could
result in a suspension or revocation of licenses or registrations. Most of Penn
Traffic's licenses require periodic renewals. Penn Traffic has experienced no
material difficulties with respect to obtaining, retaining or renewing its
licenses and registrations.

                                     - 13 -
<Page>

SEASONALITY, CUSTOMERS AND SUPPLIERS

          The supermarket business of Penn Traffic is generally not seasonal in
nature. During the past three fiscal years, no single customer or group of
customers under common control accounted for 10% or more of Penn Traffic's
consolidated revenues. Groceries, general merchandise and raw materials are
available from many different sources. During the past three fiscal years, no
single supplier accounted for 10% or more of Penn Traffic's cost of sales except
TOPCO Associates, Inc., which accounted for approximately 21%, 19% and 21% of
product purchases in the fiscal years ended February 2, 2002, February 3, 2001
and January 29, 2000, respectively.

HISTORY

          Penn Traffic is the successor to a retail business which dates back to
1854. In August 1988, Penn Traffic acquired P&C Food Markets, Inc. ("P&C"),
which operated a retail and wholesale food distribution business in a contiguous
market to the east of Penn Traffic's historical marketplace. In April 1993, P&C
was merged into the Company.

          In April 1989, Penn Traffic acquired Big Bear Stores Company ("Big
Bear"), a leading food retailer in Ohio and northern West Virginia. In April
1993, Big Bear was merged into the Company.

          In January 1998, Penn Traffic sold Sani-Dairy, its former dairy
manufacturing operation. Concurrent with the completion of the transaction, the
Company entered into a 10-year supply agreement with the acquirer for the
purchase of products that were supplied by Sani-Diary and two other dairies.

          Between the middle of 1998 and May 1999, Penn Traffic implemented the
Store Rationalization Program which involved the sale or closure of 50 stores
(see "Retail Food Business").

          As described above, on the Petition Date, Penn Traffic and certain of
its subsidiaries commenced the Bankruptcy Cases in the Bankruptcy Court to
implement a prenegotiated financial restructuring of the Company. On June 29,
1999, the Plan became effective in accordance with its terms.

                                     - 14 -
<Page>

NEW ENGLAND STORES

          In July 1990, the Company entered into a 10-year operating agreement
(the "New England Operating Agreement") with The Grand Union Company ("Grand
Union") pursuant to which Grand Union acquired the right to operate 13 stores in
Vermont and New Hampshire under the "Grand Union" trade name until July 31,
2000. Prior to July 1990, these stores had been operated by Penn Traffic under
the Company's "P&C" trade name.

          Grand Union had the right to extend the term of the New England
Operating Agreement for an additional five years after the 10-year term, at set
operating fees. Penn Traffic had also granted Grand Union the option to purchase
such stores based on a formula set forth in the New England Operating Agreement.
As Grand Union did not exercise either of these options, by August 1, 2000, the
Company regained operating control of the 10 stores that had been subject to the
New England Operating Agreement that were still operating. Nine of these stores
were opened for business on various dates during August 2000.

          The Revenues account of the Company's Consolidated Statement of
Operations for the 53-week period ended February 3, 2001 and the 52-week period
ended January 29, 2000 includes income from the New England Operating Agreement
of approximately $5.7 million and $12.5 million, respectively. See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."

REORGANIZATION

          As described above, on the Petition Date, Penn Traffic and certain of
its subsidiaries commenced the Bankruptcy Cases in the Bankruptcy Court to
implement a prenegotiated financial restructuring of the Company. On June 29,
1999 the Plan became effective in accordance with its terms.

          Consummation of the Plan has resulted in (1) the former $732.2 million
principal amount of the Company's senior notes being exchanged for $100 million
of senior notes and 19,000,000 shares of newly issued common stock (the "Common
Stock"), (2) the former $400 million principal amount of senior subordinated
notes being exchanged for 1,000,000 shares of Common Stock and six-year warrants
to purchase 1,000,000 shares of Common Stock having an exercise price of $18.30
per share, (3) holders of Penn Traffic's formerly issued common stock receiving
one share of Common Stock for each 100 shares of common stock held immediately
prior to the Petition Date, for a total of 106,955 new shares and (4) the
cancellation of all outstanding options and warrants to purchase shares of the
Company's former common stock. The Plan also provides for the issuance to
officers and key employees of options to purchase up to 2,297,000 shares of
Common Stock. The Company's Common Stock and warrants to purchase common stock
are currently trading on the Nasdaq National Market under the symbols "PNFT" and
"PNFTW," respectively.

                                     - 15 -
<Page>

          The Plan also provided for payment in full of all of the Company's
obligations to its other creditors.

          On the Effective Date, in connection with the consummation of the
Plan, the Company entered into a new $320 million secured credit facility (the
"Credit Facility"). The Credit Facility includes (1) a $205 million revolving
credit facility and (2) a $115 million term loan. The lenders under the Credit
Facility have a first priority perfected security interest in substantially all
of the Company's assets. Proceeds from the Credit Facility were used to satisfy
the Company's obligations under its debtor-in-possession financing and pay
certain costs of the reorganization process and are available to satisfy the
Company's ongoing working capital and capital expenditure requirements. See Item
7 - "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."

                                     - 16 -
<Page>

ITEM 2. PROPERTIES

          Penn Traffic follows the general industry practice of leasing the
majority of its retail supermarket locations. Penn Traffic presently owns 25 and
leases 191 of the supermarkets that it operates. The leased supermarkets are
held under leases expiring from 2002 to 2024, excluding option periods. Penn
Traffic owns or leases 44 supermarkets which are leased or subleased to
independent operators.

          Penn Traffic owns five shopping centers that contain company-owned or
licensed supermarkets. Penn Traffic also owns distribution centers in Syracuse
and Jamestown, New York; Columbus, Ohio; and DuBois, Pennsylvania; and a bakery
plant in Syracuse, New York. Penn Traffic owns a fleet of trucks and trailers,
fixtures and equipment utilized in its business and certain miscellaneous real
estate.

          Also see Item 1 - "Business - Retail Food Business" and "Business -
Purchasing and Distribution" for additional information concerning the Company's
properties.


ITEM 3. LEGAL PROCEEDINGS

          The Company and its subsidiaries are involved in several lawsuits,
claims and inquiries, most of which are routine to the nature of the business.
Estimates of future liability are based on an evaluation of currently available
facts regarding each matter. Liabilities are recorded when it is probable that
costs will be incurred and can be reasonably estimated.

          Based on management's evaluation, the resolution of these matters is
not expected to materially affect the financial position, results of operations
or liquidity of the Company.

          Also see Item 1 - "Business - Reorganization" for a description of the
consummation of the Plan.

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

          No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year ended February 2, 2002.

                                     - 17 -
<Page>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          Since September 15, 1999, Penn Traffic's Common Stock and warrants
have been listed on the Nasdaq National Market under the symbols "PNFT" and
"PNFTW," respectively. Shares of Common Stock were held by approximately 2,196
stockholders and 98 warrant holders, respectively, of record on February 2,
2002.

          Common stock information is provided on Pages 97 and 99 of this Form
10-K/A.


ITEM 6. SELECTED FINANCIAL DATA

CONSOLIDATED FIVE-YEAR FINANCIAL SUMMARY

          Set forth below is selected historical consolidated financial data of
Penn Traffic for the five fiscal years ended February 2, 2002. As a result of
the consummation of the Plan, Penn Traffic adopted "fresh-start reporting" as of
June 26, 1999. The accounting periods ended on or prior to June 26, 1999, have
been designated "Predecessor Company" and the periods subsequent to June 26,
1999, have been designated "Successor Company."

          In accordance with the implementation of fresh-start reporting, the
Company's assets, liabilities and stockholders' (deficit) equity have been
revalued as of June 26, 1999. In addition, as a result of the consummation of
the Plan, the amount of the Company's indebtedness has been substantially
reduced. Accordingly, the financial statements of the Company for periods after
June 26, 1999 are not comparable to the Company's financial statements for
periods ended on or prior to such date.

          The selected historical consolidated financial data for the 52-week
period ended February 2, 2002, the 53-week period ended February 3, 2001, the
31-week period ended January 29, 2000, the 21-week period ended June 26, 1999,
and the 52-week periods ended January 30, 1999 and January 31, 1998 are derived
from the consolidated financial statements of Penn Traffic which have been
audited by PricewaterhouseCoopers LLP, independent accountants and reflect the
restatements to the Company's previously reported consolidated financial
statements (see Note 1 to the Consolidated Financial Statements). The
consolidated financial statements of Penn Traffic have been reclassified to
reflect the implementation of EITF Issue Number 00-14 "Accounting for Certain
Sales Incentives," as codified by EITF Issue Number 01-9, "Accounting for
Consideration Given by a Vendor to a Customer" ("EITF 00-14") and certain other
income statement reclassifications the Company made during the third quarter of
the fiscal year ended February 2, 2002 (see footnote 1 on page 20). In addition,
the selected historical consolidated financial data should be read in
conjunction with the Penn Traffic consolidated financial statements and related
notes included elsewhere herein.

                                     - 18 -
<Page>

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                                SUCCESSOR COMPANY
                                                                       ------------------------------------
                                                                           RESTATED            RESTATED
                                                                           52 WEEKS            53 WEEKS
                                                                             ENDED               ENDED
(IN THOUSANDS OF DOLLARS,                                                 FEBRUARY 2,         FEBRUARY 3,
   EXCEPT PER SHARE DATA)                                                    2002                2001
                                                                       ----------------    ----------------
<S>                                                                     <C>                 <C>
REVENUES(1)                                                             $    2,403,547      $    2,412,106

COSTS AND OPERATING EXPENSES:
   Cost of sales(1)                                                          1,756,111           1,766,768
   Selling and administrative expenses(1)                                      590,603             590,048
   Amortization of excess reorganization value                                 109,810             111,928
   Unusual items(2)                                                                                 (1,741)
                                                                        --------------      --------------

OPERATING LOSS                                                                 (52,977)            (54,897)
   Interest expense                                                             36,100              39,164
                                                                        --------------      --------------

LOSS BEFORE INCOME TAXES                                                       (89,077)            (94,061)
   Provision for income taxes(3)                                                 9,678               8,279
                                                                        --------------      --------------

NET LOSS                                                                $      (98,755)     $     (102,340)
                                                                        ==============      ==============

NET LOSS PER SHARE (BASIC AND DILUTED)                                  $        (4.92)     $        (5.09)
                                                                        ==============      ==============
</Table>

No dividends on common stock have been paid during the past five fiscal years.

<Table>
<S>                                                                     <C>                 <C>
BALANCE SHEET DATA:

Total assets                                                            $      806,368      $      904,842
Total debt (including capital leases)                                          328,116             324,448
Stockholders' equity                                                           138,624             259,733

OTHER DATA:

EBITDA(4)                                                               $       99,407      $       98,679
Depreciation and amortization                                                   41,926              41,870
LIFO provision                                                                     648               1,519
Capital expenditures, including capital leases and acquisitions                 48,008              57,982
Cash interest expense                                                           35,223              38,275
</Table>

                                     - 19 -
<Page>

FOOTNOTES:

(1)  The Company's Consolidated Statement of Operations for the 52-week period
     ended February 2, 2002 ("Fiscal 2002") and the 53-week period ended
     February 3, 2001 ("Fiscal 2001") reflect the Company's implementation of
     EITF 00-14 in the 13-week period ended November 3, 2001. EITF 00-14
     addresses the recognition, measurement and income statement classification
     of certain sales incentives offered by companies in the form of discounts,
     coupons or rebates. In connection with the implementation of this new
     accounting pronouncement, Penn Traffic has made certain reclassifications
     between "Revenues" and "Costs and Operating Expenses" in the Company's
     Consolidated Statement of Operations for all periods in the Consolidated
     Five-Year Financial Summary. These reclassifications result in an equal
     decrease to the Company's reported Revenues and Costs and Operating
     Expenses for these periods.

     In addition, in Fiscal 2002, the Company made certain other
     reclassifications of expenses in the Company's Consolidated Statement of
     Operations between "Cost of sales" and "Selling and administrative
     expenses" for all periods in the Consolidated Five-Year Financial Summary.
     The implementation of EITF 00-14 and these other reclassifications did not
     have any effect on Penn Traffic's reported Operating Income (Loss), EBITDA
     or Net Income (Loss).

(2)  During Fiscal 2001, the Company recorded an unusual item (income) of $3.0
     million associated with a reduction in the estimate of the remaining
     liability associated with the Store Rationalization Program and an unusual
     item (expense) of $1.3 million related to the implementation of a warehouse
     consolidation project.

(3)  The tax provisions for Fiscal 2002 and Fiscal 2001 are not recorded at
     statutory rates due to differences between income calculations for
     financial reporting and tax reporting purposes that result primarily from
     nondeductible amortization of excess reorganization value.

(4)  "EBITDA" is earnings before interest, taxes, depreciation, amortization,
     amortization of excess reorganization value, LIFO provision and unusual
     items. EBITDA should not be interpreted as a measure of operating results,
     cash flow provided by operating activities or liquidity, or as an
     alternative to any generally accepted accounting principle measure of
     performance. The Company reports EBITDA because it is a widely used
     financial measure of the potential capacity of a company to incur and
     service debt. Penn Traffic's reported EBITDA may not be comparable to
     similarly titled measures used by other companies.

                                     - 20 -
<Page>

                CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

<Table>
<Caption>
                                                        SUCCESSOR
                                                         COMPANY                  PREDECESSOR COMPANY
                                                     --------------- ---------------------------------------------
                                                         RESTATED       RESTATED
                                                         31 WEEKS       21 WEEKS        52 WEEKS        52 WEEKS
                                                          ENDED          ENDED            ENDED           ENDED
(IN THOUSANDS OF DOLLARS,                               JANUARY 29,     JUNE 26,       JANUARY 30,     JANUARY 31,
   EXCEPT PER SHARE DATA)                                  2000           1999            1999            1998
                                                     --------------- --------------- --------------- -------------
<S>                                                    <C>             <C>             <C>             <C>
REVENUES(1)                                            $  1,420,986    $  969,034      $2,701,470      $2,875,118

COSTS AND OPERATING EXPENSES:
   Cost of sales(1)(2)                                    1,036,877       720,041       2,020,305       2,116,834
   Selling and administrative expenses(1)(3)                345,148       251,018         669,239         691,797
   Restructuring charges(3)                                                                                10,704
   Gain on sale of Sani-Dairy(4)                                                                          (24,218)
   Amortization of excess reorganization value               65,452
   Unusual items(2)(5)                                        7,408        (4,631)         61,355
   Write-down of long-lived assets(6)                                                     143,842          26,982
                                                       ------------    ----------      ----------      ----------

OPERATING (LOSS) INCOME                                     (33,899)        2,606        (193,271)         53,019
   Interest expense(7)                                       22,923        21,794         147,737         149,981
   Reorganization items(8)                                                165,974
                                                       ------------    ----------      ----------      ----------

LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS            (56,822)     (185,162)       (341,008)        (96,962)
   Provision (benefit) for income taxes(9)                    4,387            60         (23,914)        (35,836)
                                                       ------------    ----------      ----------      ----------

LOSS BEFORE EXTRAORDINARY ITEMS                             (61,209)     (185,222)       (317,094)        (61,126)
   Extraordinary items(10)                                               (654,928)
                                                       ------------    ----------      ----------      ----------

NET (LOSS) INCOME                                      $    (61,209)   $  469,706      $ (317,094)     $  (61,126)
                                                       ============    ==========      ==========      ==========

NET LOSS PER SHARE (BASIC AND DILUTED)                 $      (3.04)
                                                       ============
</Table>

No dividends on common stock have been paid during the past five fiscal years.
Per share data is not presented for the period ended on or prior to June 26,
1999, because of the general lack of comparability as a result of the revised
capital structure of the Company.

<Table>
<S>                                                    <C>             <C>             <C>             <C>
BALANCE SHEET DATA:
Total assets                                           $  1,019,638                    $1,228,061      $1,563,586
Total debt (including capital leases)                       320,174                     1,377,358       1,373,607
Stockholders' equity (deficit)                              362,448                      (469,706)       (159,809)

OTHER DATA:
EBITDA(11)                                             $     66,029    $   28,716      $   99,450      $  165,283
Depreciation and amortization                                26,176        25,832          77,179          88,966
LIFO provision                                                  892         1,009           2,376           2,343
Capital expenditures, including capital
   leases and acquisitions                                   31,468         6,279          14,368          22,272
Cash interest expense                                        22,405        20,393         143,411         145,177
</Table>

                                     - 21 -
<Page>

FOOTNOTES:

(1)  The Company's Consolidated Statement of Operations for the 31-week period
     ended January 29, 2000, the 21-week period ended June 26, 1999 and the
     52-week periods ended January 30, 1999 and January 31, 1998 reflect the
     Company's implementation of EITF 00-14 in the 13-week period ended November
     3, 2001 and certain other reclassifications of expenses between "Cost of
     sales" and "Selling and administrative expenses."

(2)  During the 21-week period ended June 26, 1999, the Company recorded a
     special charge of $3.9 million associated with the repositioning of its 15
     Big Bear Plus stores. This charge, which consists of estimated inventory
     markdowns for discontinued product lines, is included in cost of sales.

     During the 52-week period ended January 30, 1999 ("Fiscal 1999"), the
     Company recorded a special charge of $68.2 million related to the Store
     Rationalization Program ($60.2 million of this charge is included in the
     unusual item account; $8.0 million of this charge, representing inventory
     markdowns, is included in cost of sales). The unusual item account for
     Fiscal 1999 also includes $1.1 million of professional fees and other
     miscellaneous costs associated with the Company's financial restructuring.

(3)  For the 52-week period ended January 31, 1998 ("Fiscal 1998"), the Company
     recorded special charges totaling $18.2 million ($10.7 million, net of
     tax). These special charges consist of (1) $12.6 million associated with a
     management reorganization and related corporate actions ($10.7 million of
     this charge is included in restructuring charges and $1.9 million is
     included in selling and administrative expenses) and (2) $5.6 million
     associated with the retention of certain corporate executives, which is
     included in selling and administrative expenses.

(4)  During Fiscal 1998, the Company recorded a gain totaling $24.2 million
     ($14.3 million, net of tax) related to the sale of Sani-Dairy, the
     Company's dairy manufacturing operation.

(5)  During the 31-week period ended January 29, 2000, the Company recorded
     unusual items (expense) of $5.5 million associated with the restructuring
     of certain executive compensation agreements and $1.9 million associated
     with an early retirement program for certain eligible employees. During the
     21-week period ended June 26, 1999, the Company recorded an unusual item
     (income) of $4.6 million related to the Store Rationalization Program.

                                     - 22 -
<Page>

(6)  The Company periodically reviews the recorded value of its long-lived
     assets to determine if the future cash flows to be derived from these
     properties will be sufficient to recover the remaining recorded asset
     values. During Fiscal 1999, the Company recorded noncash charges of (1)
     $52.3 million primarily related to the write-down of the recorded asset
     values of 14 of the Company's stores (including allocable goodwill) to
     estimated realizable value and (2) $91.5 million to write down the carrying
     amounts (including allocable goodwill) of property held for sale in
     connection with the Store Rationalization Program to estimated realizable
     value.

     During Fiscal 1998, the Company recorded a noncash charge of $27.0 million
     primarily related to the write-down of the recorded asset values of 12 of
     the Company's stores (including allocable goodwill), as well as
     miscellaneous real estate, to estimated realizable values.

(7)  As a result of the Company's Chapter 11 filing on the Petition Date, no
     principal or interest payments were made on or after the Petition Date on
     the Company's formerly outstanding senior and senior subordinated notes.
     Accordingly, no interest expense for these obligations has been accrued on
     or after the Petition Date. Had such interest been accrued, interest
     expense for the 21-week period ended June 26, 1999 would have been
     approximately $58.8 million.

(8)  The reorganization items for the 21-week period ended June 26, 1999 include
     (a) adjustments associated with the implementation of fresh-start
     reporting, (b) professional fees associated with the implementation of the
     Plan, (c) the write-off of unamortized deferred financing fees for the
     Company's former notes and (d) a gain related to the difference between the
     estimated allowed claims for rejected leases and the liabilities previously
     recorded for such leases.

(9)  The tax provision for the 31-week period ended January 29, 2000 is not
     recorded at statutory rates due to differences between income calculations
     for financial reporting and tax reporting purposes that result primarily
     from the nondeductible amortization of excess reorganization value. The tax
     provision for the 21-week period ended June 26, 1999, is not recorded at
     statutory rates due to the recording of a valuation allowance for all
     income tax benefits generated. A valuation allowance is required when it is
     more likely than not that the recorded value of a deferred tax asset will
     not be realized.

(10) The extraordinary items for the 21-week period ended June 26, 1999 include
     (a) a gain on debt discharge recorded in connection with the consummation
     of the Plan and (b) the write-off of unamortized deferred financing fees
     associated with the repayment of the Company's pre-petition revolving
     credit facility.

                                     - 23 -
<Page>

(11) "EBITDA" is earnings before interest, taxes, depreciation, amortization,
     amortization of excess reorganization value, LIFO provision, special
     charges, unusual items, write-down of long-lived assets, reorganization
     items and extraordinary items. EBITDA should not be interpreted as a
     measure of operating results, cash flow provided by operating activities or
     liquidity, or as an alternative to any generally accepted accounting
     principle measure of performance. The Company reports EBITDA because it is
     a widely used financial measure of the potential capacity of a company to
     incur and service debt. Penn Traffic's reported EBITDA may not be
     comparable to similarly titled measures used by other companies.

                                     - 24 -
<Page>

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

          The Management's Discussion and Analysis of Financial Condition and
Results of Operations presented below reflects the impact of the restatements
to the Company's previously reported Consolidated Financial Statements for
the fiscal years ended February 2, 2002 and February 3, 2001, the 31-week
period ended January 29, 2000 and the 21-week period ended June 26, 1999. The
Company restated financial results for these periods after discovering in
August 2002 that an employee of its Penny Curtiss bakery manufacturing
subsidiary had made false accounting entries which primarily involved the
overstatement of inventory.

          The effect of the correction of the misstatements was to increase
previously reported net loss by $3.0 million, $2.4 million, and $1.1 million
and net loss per share - diluted by $0.15, $0.12, and $0.05 for the fiscal
years ended February 2, 2002 and February 3, 2001 and the 31-week period
ended January 29, 2000, respectively. In addition, the restatement reduced
operating income for the 21-week period ended June 26, 1999 by $1.1 million;
this amount was offset in the Company's Consolidated Statement of Operations
by an adjustment associated with the Company's adoption of fresh-start
reporting. The financial statement line items which were restated are
Revenues, Cost of sales, Selling and administrative expenses, Amortization of
excess reorganization value, Provision for income taxes, Inventories, Prepaid
expenses and other current assets, Excess reorganization value, Trade
accounts and drafts payable, Taxes payable and deferred taxes and Retained
deficit.


                                     - 25 -
<Page>

          Certain statements included in this Part II, Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere in this Form 10-K/A which are not statements of historical fact are
intended to be, and are hereby identified as, "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
as amended. Without limiting the foregoing, the words "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "project" and other
similar expressions are intended to identify forward-looking statements. Penn
Traffic ("the Company") cautions readers that forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievement
expressed or implied by such forward-looking statements. Such factors
include, among other things, the success or failure of the Company in
implementing its current business and operational strategies; general
economic and business conditions; competition; availability, location and
terms of sites for store development; the successful implementation of the
Company's capital expenditure program (including store remodeling and
investments in the Company's technology infrastructure including
point-of-sale systems); labor relations; labor and employee benefit costs
including increases in health care and pension costs; the impact of the
Company's loyalty card program on its results of operations; the impact of
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" on the Company's financial statements and financial
results (as discussed in "Impact of New Accounting Standards" below);
availability and terms of and access to capital; the Company's liquidity and
other financial considerations; the ability of the Company to repurchase its
common stock in open market purchases and the prices at which it repurchases
its common stock; restrictions on the Company's ability to repurchase its
shares under its debt instruments; the outcome of internal and external
investigations into the previously mentioned false accounting entries at the
Company's bakery manufacturing subsidiary, and the outcome of pending or
yet-to-be instituted legal proceedings. Penn Traffic cautions that the
foregoing list of important factors is not exhaustive.

                                     - 26 -
<Page>

OVERVIEW

          As discussed in Note 2 to the accompanying Consolidated Financial
Statements, the Company emerged from its Chapter 11 proceedings on the Effective
Date. For financial reporting purposes, the Company accounted for the
consummation of the Plan as of June 26, 1999. In accordance with the American
Institute of Certified Public Accountant's Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"), the Company has applied fresh-start reporting as of June 26, 1999,
which has resulted in significant changes to the valuation of certain of the
Company's assets and liabilities, and to its stockholders' equity. In connection
with the adoption of fresh-start reporting, a new entity has been deemed to be
created for financial reporting purposes. The periods ended on or prior to June
26, 1999 have been designated "Predecessor Company" and the periods subsequent
to June 26, 1999 have been designated "Successor Company." For purposes of the
discussion of Results of Operations for the 52-week period ended January 29,
2000 ("Fiscal 2000"), the results of the 21-week period ended June 26, 1999
(Predecessor Company) and the 31-week period ended January 29, 2000 (Successor
Company) have been combined since separate discussions of these periods are not
meaningful in terms of their operating results or comparisons to the prior year.

                                     - 27 -
<Page>

RESULTS OF OPERATIONS

          FISCAL YEAR ENDED FEBRUARY 2, 2002 ("FISCAL 2002") COMPARED TO FISCAL
YEAR ENDED FEBRUARY 3, 2001 ("FISCAL 2001")

          FISCAL 2002 WAS A 52-WEEK YEAR AND FISCAL 2001 WAS A 53-WEEK YEAR.

          The following table sets forth certain Statement of Operations
components expressed as percentages of revenues for Fiscal 2002 and Fiscal 2001:

<Table>
<Caption>
                                                                        RESTATED
                                                                      FISCAL YEAR
                                                            2002                      2001
                                                      -----------------         ----------------
<S>                                                        <C>                       <C>
Revenues                                                   100.0%                    100.0%

Gross profit (1)                                            26.9                      26.8

Adjusted gross profit (2)                                   27.0                      26.6

Selling and administrative expenses                         24.6                      24.5

Adjusted selling and administrative expenses (3)            24.5                      24.5

Amortization of excess reorganization value                  4.6                       4.6

Unusual items                                                                         (0.1)

Operating loss                                              (2.2)                     (2.3)

Adjusted operating income (4)                                2.5                       2.1

Interest expense                                             1.5                       1.6

Adjusted interest expense                                    1.5                       1.6

Net loss                                                    (4.1)                     (4.2)

Adjusted net income (5)                                      0.5                       0.2
</Table>

----------
See notes below

                                     - 28 -
<Page>

(1)  Revenues less cost of sales.

(2)  "Adjusted gross profit as a percentage of revenues" for Fiscal 2002 is (a)
     gross profit excluding loyalty card startup costs of $0.4 million divided
     by (b) revenues. "Adjusted gross profit as a percentage of revenues" for
     Fiscal 2001 is (a) gross profit excluding the estimated effect of the
     additional week in Fiscal 2001 of $12.7 million, income associated with the
     Company's prior lease of 10 stores in New England to another supermarket
     chain which expired in August 2000 (the "New England Lease") of $5.7
     million, loyalty card startup costs of $0.4 million and startup costs and
     operating losses associated with the commencement of the Company's New
     England stores of $0.6 million divided by (b) revenues excluding the
     estimated effect of the additional week of $46.6 million and revenues of
     $5.7 million associated with the New England Lease ("Adjusted Fiscal 2001
     Revenues").

(3)  "Adjusted selling and administrative expenses as a percentage of revenues"
     for Fiscal 2002 is (a) selling and administrative expenses excluding
     loyalty card startup costs of $2.0 million divided by (b) revenues.
     "Adjusted selling and administrative expenses as a percentage of revenues"
     for Fiscal 2001 is (a) selling and administrative expenses excluding the
     estimated impact of the additional week of $9.7 million, loyalty card
     startup costs of $1.1 million and startup costs and operating losses
     associated with the commencement of operation of the Company's New England
     stores of $0.5 million divided by (b) Adjusted Fiscal 2001 Revenues.

(4)  "Adjusted operating income as a percentage of revenues" for Fiscal 2002 is
     (a) operating loss excluding loyalty card startup costs of $2.4 million and
     amortization of excess reorganization value of $109.8 million ("Adjusted
     operating income" for Fiscal 2002) divided by (b) revenues. "Adjusted
     operating income as a percentage of revenues" for Fiscal 2001 is (a)
     operating loss excluding the estimated effect of the additional week of
     $3.0 million, income associated with the New England Lease of $5.7 million,
     loyalty card startup costs of $1.5 million, startup costs and operating
     losses associated with the commencement of operation of the Company's New
     England stores of $1.1 million, an unusual item (income) of $1.7 million
     and amortization of excess reorganization value of $111.9 million
     ("Adjusted operating income" for Fiscal 2001) divided by (b) Adjusted
     Fiscal 2001 Revenues.

(5)  "Adjusted net income as a percentage of revenues" for Fiscal 2002 is net
     loss excluding loyalty card startup costs of $1.4 million (after tax) and
     amortization of excess reorganization value of $109.8 million ("Adjusted
     net income" for Fiscal 2002) divided by (b) revenues. "Adjusted net income
     as a percentage of revenues" for Fiscal 2001 is (a) net loss excluding the
     estimated effect of the additional week of $1.3 million (after tax), New
     England Lease income of $3.4 million (after tax), loyalty card startup
     costs of $0.9 million (after tax), startup costs and operating losses
     associated with the commencement of operation of the Company's New England
     stores of $0.6 million (after tax), an unusual item (income) of $1.0
     million (after tax) and amortization of excess reorganization value of
     $111.9 million ("Adjusted net income" for Fiscal 2001) divided by (b)
     Adjusted Fiscal 2001 Revenues.

                                     - 29 -
<Page>

REVENUES

          Revenues for Fiscal 2002 decreased 0.4% to $2.404 billion from $2.412
billion in Fiscal 2001. The decrease in revenues for Fiscal 2002 is attributable
to the fact that Fiscal 2002 was a 52-week fiscal year and Fiscal 2001 was a
53-week fiscal year.

          Revenues of $2.404 billion in Fiscal 2002 increased 1.9% over Adjusted
Fiscal 2001 Revenues of $2.360 billion (which exclude the estimated effect of
the additional week and revenues associated with the New England Lease). This
increase in revenues was primarily due to an increase in same store sales and
the Company's operation of 10 New England stores for a full year in Fiscal 2002
compared to a partial year in Fiscal 2001 (see "Liquidity and Capital Resources"
below).

          Same store sales for Fiscal 2002 increased 0.8% from the comparable
prior year period. Wholesale food distribution revenues were $274.8 million in
Fiscal 2002 compared to $272.5 million, excluding the estimated effect of the
additional week, in Fiscal 2001.

GROSS PROFIT; ADJUSTED GROSS PROFIT

          Gross profit for Fiscal 2002 was 26.9% of revenues compared to 26.8%
of revenues in Fiscal 2001. Adjusted gross profit for Fiscal 2002 was 27.0% of
revenues compared to 26.6% of revenues in Fiscal 2001. The increase in adjusted
gross profit as a percentage of revenues in Fiscal 2002 was primarily due to an
increase in private label sales, the Company's ability to more efficiently
promote its offerings with the Company's new loyalty card, a reduction in
inventory shrink expense and a reduction in the LIFO provision from the prior
year. These improvements in adjusted gross profit were partially offset by an
increase in promotional spending during Fiscal 2002 to drive sales.

SELLING AND ADMINISTRATIVE EXPENSES; ADJUSTED SELLING AND ADMINISTRATIVE
EXPENSES

          Selling and administrative expenses for Fiscal 2002 were 24.6% of
revenues compared to 24.5% of revenues in Fiscal 2001. Adjusted selling and
administrative expenses were 24.5% of revenues in Fiscal 2002 and Fiscal 2001.
The benefits of the Company's cost reduction programs for adjusted selling and
administrative expenses were offset by cost increases in labor and utilities.

                                     - 30 -
<Page>

DEPRECIATION AND AMORTIZATION

          Depreciation and amortization expense was $41.9 million or 1.7% of
revenues in Fiscal 2002 and $41.9 million or 1.8% of revenues (excluding the
effect of the extra week) in Fiscal 2001.

          Amortization of excess reorganization value for Fiscal 2002 was $109.8
million and $111.9 million in Fiscal 2001. The excess reorganization value asset
of $329.4 million, which was established in June 1999 in connection with the
implementation of fresh-start reporting, is being amortized on a straight-line
basis over a three-year period. The Company will not amortize the excess
reorganization value asset after Fiscal 2002 in accordance with a new accounting
standard (see "Impact of New Accounting Standards" below).

UNUSUAL ITEMS

          During Fiscal 2001, the Company recorded unusual items of (1) $3.0
million (income) associated with a reduction in the estimate of the remaining
liability associated with the Company's store rationalization program (the
"Store Rationalization Program") and (2) $1.3 million (expense), related to the
implementation of a warehouse consolidation project (see Note 5 to the
Consolidated Financial Statements).

OPERATING LOSS; ADJUSTED OPERATING INCOME

          Operating loss for Fiscal 2002 was $53.0 million or 2.2% of revenues
compared to an operating loss of $54.9 million or 2.3% of revenues for Fiscal
2001. The Company had an operating loss for Fiscal 2002 and Fiscal 2001 due to
noncash charges for amortization of excess reorganization value of $109.8
million and $111.9 million, respectively. As described above, the Company will
not amortize excess reorganization value after Fiscal 2002 (see "Impact of New
Accounting Standards" below).

          Adjusted operating income for Fiscal 2002 was $59.2 million or 2.5% of
revenues compared to $49.1 million or 2.1% of revenues for Fiscal 2001. The
increase in adjusted operating income as a percentage of revenues in Fiscal 2002
was due to an increase in adjusted gross profit as a percentage of revenues.

INTEREST EXPENSE; ADJUSTED INTEREST EXPENSE

          Interest expense for Fiscal 2002 was $36.1 million compared to $39.2
million in Fiscal 2001. Adjusted interest expense for Fiscal 2002 of $36.1
million compared to $38.4 million, excluding the effect of the extra week, in
Fiscal 2001. The decrease in interest expense in Fiscal 2002 is due to a
decrease in the interest rates on the Company's variable rate debt from the
prior year.

                                     - 31 -
<Page>

INCOME TAXES

          Income tax provision was $9.7 million for Fiscal 2002 compared to $8.3
million in Fiscal 2001.

          The effective tax rates for Fiscal 2002 and Fiscal 2001 vary from
statutory rates due to differences between income for financial reporting and
tax reporting purposes that result primarily from the nondeductible amortization
of excess reorganization value.

NET LOSS; ADJUSTED NET INCOME

          Net loss for Fiscal 2002 was $98.8 million compared to a net loss
$102.3 million for Fiscal 2001. Adjusted net income was $12.5 million for Fiscal
2002 compared to $5.3 million for Fiscal 2001.

                                     - 32 -
<Page>

          FISCAL YEAR ENDED FEBRUARY 3, 2001 ("FISCAL 2001") COMPARED TO FISCAL
YEAR ENDED JANUARY 29, 2000 ("FISCAL 2000")

          FISCAL 2001 WAS A 53-WEEK YEAR AND FISCAL 2000 WAS A 52-WEEK YEAR.

          The following table sets forth certain Statement of Operations
components expressed as percentages of revenues for Fiscal 2001 and Fiscal 2000:

<Table>
<Caption>
                                                                        RESTATED
                                                                       FISCAL YEAR
                                                             2001                     2000
                                                      -------------------       ------------------
<S>                                                         <C>                       <C>
Revenues                                                    100.0%                    100.0%

Gross profit (1)                                             26.8                      26.5

Adjusted gross profit (2)                                    26.6                      26.3

Selling and administrative expenses                          24.5                      24.9

Adjusted selling and administrative expenses (3)             24.5                      25.1

Amortization of excess reorganization value                   4.6                       2.7

Unusual items                                                (0.1)                      0.1

Operating loss                                               (2.3)                     (1.3)

Adjusted operating income (4)                                 2.1                       1.2

Interest expense                                              1.6                       1.9

Adjusted interest expense                                     1.6                       1.9

Reorganization items                                                                    6.9

Net (loss) income                                            (4.2)                     17.1

Adjusted net income (loss) (5)                                0.2                      (0.9)
</Table>

----------
See notes below

                                     - 33 -
<Page>

(1)  Revenues less cost of sales.

(2)  "Adjusted gross profit as a percentage of revenues" for Fiscal 2001 is (a)
     gross profit excluding the estimated effect of the additional week of $12.7
     million, income associated with the Company's New England Lease of $5.7
     million, loyalty card startup costs of $0.4 million and startup costs and
     operating losses associated with the commencement of the Company's New
     England stores of $0.6 million divided by (b) Adjusted Fiscal 2001
     Revenues. "Adjusted gross profit as a percentage of revenues" for Fiscal
     2000 is (a) gross profit excluding New England Lease income of $12.5
     million and a special charge of $3.9 million divided by (b) revenues
     excluding New England Lease income of $12.5 million ("Adjusted Fiscal 2000
     Revenues").

(3)  "Adjusted selling and administrative expenses as a percentage of revenues"
     for Fiscal 2001 is (a) selling and administrative expenses excluding the
     estimated impact of the additional week of $9.7 million, loyalty card
     startup costs of $1.1 million and startup costs and operating losses
     associated with the commencement of operation of the Company's New England
     stores of $0.5 million divided by (b) Adjusted Fiscal 2001 Revenues.
     "Adjusted selling and administrative expenses as a percentage of revenues"
     for Fiscal 2000 is (a) selling and administrative expenses divided by (b)
     Adjusted Fiscal 2000 Revenues.

(4)  "Adjusted operating income as a percentage of revenues" for Fiscal 2001 is
     (a) operating loss excluding the estimated impact of the additional week of
     $3.0 million, income associated with the New England Lease of $5.7 million,
     loyalty card startup costs of $1.5 million, startup costs and operating
     losses associated with the commencement of operation of the Company's New
     England stores of $1.1 million, an unusual item (income) of $1.7 million,
     and amortization of excess reorganization value of $111.9 million
     ("Adjusted operating income" for Fiscal 2001) divided by (b) Adjusted
     Fiscal 2001 Revenues. "Adjusted operating income as a percentage of
     revenues" for Fiscal 2000 is (a) operating loss excluding income associated
     with the New England Lease of $12.5 million, a special charge of $3.9
     million, an unusual item (expense) of $2.8 million and amortization of
     excess reorganization value of $65.5 million ("Adjusted operating income"
     for Fiscal 2000) divided by (b) Adjusted Fiscal 2000 Revenues.

(5)  "Adjusted net income as a percentage of revenues" for Fiscal 2001 is (a)
     net loss excluding the estimated impact of the additional week of $1.3
     million (after tax), New England Lease income of $3.4 million (after tax),
     loyalty card startup costs of $0.9 million (after tax), startup costs and
     operating losses associated with the commencement of operation of the
     Company's New England stores of $0.6 million (after tax), an unusual item
     (income) of $1.0 million (after tax) and amortization of excess
     reorganization value of $111.9 million ("Adjusted net income" for Fiscal
     2001) divided by (b) Adjusted Fiscal 2001 Revenues. "Adjusted net loss as a
     percentage of revenues" for Fiscal 2000 is (a) net income excluding income
     associated with the New England Lease of $9.4 million (after tax), unusual
     items (expense) of $0.1 million (after tax), special charge of $3.9 million
     (after tax), amortization of excess reorganization value of $65.5 million,
     reorganization items (expense) of $166.0 million and extraordinary items
     (income) of $654.9 million ("Adjusted net income" for Fiscal 2000") divided
     by (b) Adjusted Fiscal 2000 Revenues.

                                     - 34 -
<Page>

REVENUES

          Revenues for Fiscal 2001 increased 0.9% to $2.412 billion from $2.390
billion in Fiscal 2000. The increase in revenues for Fiscal 2001 was primarily
attributable to (1) an increase in same store sales, (2) the commencement of the
Company's operation of 10 New England stores formerly leased to another
supermarket chain (see "Liquidity and Capital Resources" below) and (3) the fact
that Fiscal 2001 was a 53-week fiscal year and Fiscal 2000 was a 52-week fiscal
year. These increases in revenues were partially offset by (1) a reduction in
the number of stores the Company operated during Fiscal 2001 as compared to
Fiscal 2000, resulting from the Company's decision to close or sell certain
stores as part of the Company's Store Rationalization Program (during the fiscal
year ended January 29, 2000, Penn Traffic sold or closed 21 stores in connection
with this program; 19 of these stores were sold or closed in the 13-week period
ended May 1, 1999) and (2) a decline in wholesale food distribution revenues. On
a 52-week basis, revenues for Fiscal 2001 were approximately $2.360 billion.

          Same store sales for Fiscal 2001 increased 0.2% from the comparable
prior year period. Wholesale food distribution revenues, excluding the effect of
the additional week in Fiscal 2001, were $272.5 million in Fiscal 2001 compared
to $286.1 million in Fiscal 2000. The decrease in wholesale food distribution
revenues in Fiscal 2001 is a result of a reduction in the average number of
customers and the average shipments per customer.

GROSS PROFIT; ADJUSTED GROSS PROFIT

          Gross profit for Fiscal 2001 was 26.8% of revenues compared to 26.5%
of revenues in Fiscal 2000. Adjusted gross profit for Fiscal 2001 was 26.6% of
revenues compared to 26.3% of revenues in Fiscal 2000. The increase in adjusted
gross profit as a percentage of revenues in Fiscal 2001 was primarily a result
of (1) an increase in allowance income from the Company's vendors, (2) a
reduction in inventory shrink expense and (3) a reduction in depreciation and
amortization expense (as described below). These increases in adjusted gross
profit were partially offset by an increase in promotional spending, as a
percentage of revenues, to drive sales and launch a number of remodeled stores.

SELLING AND ADMINISTRATIVE EXPENSES; ADJUSTED SELLING AND ADMINISTRATIVE
EXPENSES

          Selling and administrative expenses for Fiscal 2001 were 24.5% of
revenues compared to 24.9% of revenues in Fiscal 2000. Adjusted selling and
administrative expenses for Fiscal 2001 were 24.5% of revenues compared to 25.1%
of revenues for Fiscal 2000. The decrease in adjusted selling and administrative
expense as a percentage of revenues in Fiscal 2001 was primarily a result of (1)
the Company's cost reduction initiatives, (2) a reduction in bad debt expense
and (3) reductions in depreciation expense and goodwill amortization (as
described below).

                                     - 35 -
<Page>

DEPRECIATION AND AMORTIZATION

          Depreciation and amortization expense was $41.9 million or 1.7% of
revenues in Fiscal 2001 and $52.0 million or 2.2% of revenues in Fiscal 2000.
Depreciation and amortization expense decreased in Fiscal 2001 primarily due to
(1) a reduction in the carrying value of property, plant and equipment
associated with the implementation of fresh-start reporting (see Note 3 to the
Consolidated Financial Statements) and (2) the elimination of goodwill
associated with the implementation of fresh-start reporting.

          Amortization of excess reorganization value for Fiscal 2001 was $111.9
million and $65.5 million in Fiscal 2000. The excess reorganization value asset
of $329.4 million, which was established in June 1999 in connection with the
implementation of fresh-start reporting, is being amortized on a straight-line
basis over a three-year period. The Company will not amortize the excess
reorganization value asset after Fiscal 2002 in accordance with a new accounting
standard (see "Impact of New Accounting Standards" below).

UNUSUAL ITEMS

          During Fiscal 2001, the Company recorded unusual items of (1) $3.0
million (income) associated with a reduction in the estimate of the remaining
liability associated with the Store Rationalization Program and (2) $1.3 million
(expense) related to the implementation of a warehouse consolidation project.

          During Fiscal 2000, the Company recorded unusual items of (1) $5.5
million (expense) associated with the restructuring of certain executive
compensation agreements, (2) $1.9 million (expense) associated with an early
retirement program for certain eligible employees and (3) $4.6 million (income)
related to the Store Rationalization Program (see Note 5 to the Consolidated
Financial Statements).

OPERATING LOSS; ADJUSTED OPERATING INCOME

          Operating loss for Fiscal 2001 was $54.9 million or 2.3% of revenues
compared to an operating loss of $31.3 million or 1.3% of revenues for Fiscal
2000. The Company had an operating loss for Fiscal 2001 and Fiscal 2000 due to
noncash charges for amortization of excess reorganization value of $111.9
million and $65.5 million, respectively. As described above, the Company will
not amortize excess reorganization value after Fiscal 2002.

          Adjusted operating income for Fiscal 2001 was $49.1 million or 2.1% of
revenues compared to $28.3 million or 1.2% of revenues for Fiscal 2000. The
increase in adjusted operating income as a percentage of revenues in Fiscal 2001
was due to an increase in adjusted gross profit as a percentage of revenues and
a decrease in adjusted selling and administrative expenses as a percentage of
revenues.

                                     - 36 -
<Page>

INTEREST EXPENSE; ADJUSTED INTEREST EXPENSE

          Interest expense for Fiscal 2001 was $39.2 million compared to $44.7
million in Fiscal 2000. Adjusted interest expense for Fiscal 2001 (excluding the
effect of the additional week) was $38.4 million compared to $44.7 million in
Fiscal 2000. As discussed in Note 6 to the Consolidated Financial Statements,
the Company discontinued the accrual of interest on the Company's former senior
and senior subordinated notes on March 1, 1999.

REORGANIZATION ITEMS

          During Fiscal 2000, the Company recorded reorganization items
(expense) of $166.0 million (see Note 7 to the Consolidated Financial
Statements).

INCOME TAXES

          Income tax provision was $8.3 million for Fiscal 2001 compared to $4.4
million in Fiscal 2000.

          The effective tax rates for Fiscal 2001 and the 31-week period ended
January 29, 2000 vary from statutory rates due to differences between income for
financial reporting and tax reporting purposes that result primarily from the
nondeductible amortization of excess reorganization value. The effective tax
rate for the 21-week period ended June 26, 1999, varies from statutory rates due
to the recording of a valuation allowance for all income tax benefits generated.
A valuation allowance is required when it is more likely than not that the
recorded value of a deferred tax asset will not be realized (see Note 8 to the
Consolidated Financial Statements).

          At January 30, 1999, the Company had approximately $300 million of
federal net operating loss carryforwards as well as certain state net operating
loss carryforwards and various tax credits. On January 30, 2000, all such net
operating loss and tax credit carryforwards were eliminated due to the
implementation of the Plan. In addition, as a result of the implementation of
the Plan, on January 30, 2000 the Company lost the majority of the tax basis of
its long-lived assets (which was approximately $350 million as of January 29,
2000), significantly reducing the amount of tax depreciation and amortization
that the Company will be able to utilize on its tax returns starting in Fiscal
2001.

EXTRAORDINARY ITEM

          During Fiscal 2000, the Company recorded an extraordinary gain of
$654.9 million associated with the Company's financial restructuring (see Note 9
to the Consolidated Financial Statements).

                                     - 37 -
<Page>

NET (LOSS) INCOME; ADJUSTED NET INCOME (LOSS)

          Net loss for Fiscal 2001 was $102.3 million compared to a net income
of $408.5 million for Fiscal 2000. Adjusted net income was $5.3 million for
Fiscal 2001 compared to a net loss of $20.5 million for Fiscal 2000.

CRITICAL ACCOUNTING POLICIES

          Critical accounting policies are those accounting policies that are
very important to the portrayal of the Company's financial condition and results
which require management's most difficult, subjective or complex judgments,
often as a result of the need to make estimates about the effect of matters that
are inherently uncertain. The Company believes the following to be critical and
could result in materially different amounts being reported under different
conditions or using different assumptions:

RESERVE FOR STORE CLOSURES For closed stores and stores which the Company has
decided to close, the Company records a liability for the estimated future cash
flows (including future lease commitments, net of estimated cost recoveries) and
miscellaneous closing costs. Future cash flows are estimated based on the
Company's knowledge of the market in which the stores closed or to be closed are
located. These estimates of future cash flows could be affected by changes in
real estate markets and other economic conditions.

IMPAIRMENT OF LONG-LIVED ASSETS At each fiscal year end, the Company reviews its
long-lived assets for impairment based on projected future undiscounted cash
flows attributable to such assets. In the event such cash flows are not expected
to be sufficient to recover the recorded value of the assets, such assets are
written down to their fair value. In projecting future cash flows, management
considers historical performance and assessments of the effect, among other
things, of projected changes in competition, maturation of new stores and store
remodels, merchandising and marketing strategies and general market conditions.
The determination of fair values is based upon management's knowledge of local
real estate markets and the value of equipment utilized in the supermarket
industry. No assurance can be given that the actual future cash flows will be
sufficient to recover the carrying value of long-lived assets.

LIABILITY FOR SELF-INSURANCE The Company is primarily self-insured for workers
compensation, general liability and certain group health and welfare costs.
Self-insurance liabilities are actuarially calculated based on claims filed and
an estimate of claims incurred but not yet reported. Projection of losses
concerning these liabilities is subject to a high degree of variability due to
factors such as claim settlement patterns, litigation trends, legal
interpretations and future levels of health care costs.

                                     - 38 -
<Page>

EMPLOYEE BENEFIT PLANS The actuarial determination of Penn Traffic's obligations
and expense for company sponsored pension benefits is dependent on the Company's
selection of assumptions including the discount rate, expected long-term rate of
return on plan assets and rates of compensation increase. Significant
differences between Penn Traffic's actual experience or significant changes in
our assumptions may materially affect our pension obligations and future
expense.

                                     - 39 -
<Page>

LIQUIDITY AND CAPITAL RESOURCES

          In connection with the completion of the Company's financial
restructuring in June 1999, the Company issued $100 million of 11% Senior Notes
due on June 29, 2009 (the "Senior Notes") and entered into a new $320 million
secured credit facility (the "Credit Facility"). Certain terms of the Senior
Notes and the Credit Facility are summarized below.

          The indenture for the Senior Notes contains certain negative covenants
that, among other things, restrict the Company's ability to incur additional
indebtedness, permit additional liens and make certain restricted payments.

          The Credit Facility includes (1) a $205 million revolving credit
facility (the "Revolving Credit Facility") and (2) a $115 million term loan (the
"Term Loan"). The lenders under the Credit Facility have a first priority
perfected security interest in substantially all of the Company's assets. The
Credit Facility contains a variety of operational and financial covenants
intended to restrict the Company's operations. These include, among other
things, restrictions on the Company's ability to incur debt and make capital
expenditures and restricted payments, as well as requirements that the Company
achieve required levels for Consolidated EBITDA, interest coverage, fixed charge
coverage and funded debt ratio (all as defined in the Credit Facility).

          As discussed below, the lenders under the Credit Facility have
waived and agreed to forbear until October 31, 2002 (or, if earlier, the date
on which certain other events specified in the Waiver and Forbearance
Agreement occur) from exercising any remedies as a result of an event of
default that arose due to the accounting restatement that resulted from the
false accounting entries at the Company's Penny Curtiss bakery manufacturing
subsidiary. Accordingly, notwithstanding the scheduled maturities of the
Revolving Credit Facility and Term Loan described below, in accordance with
generally accepted accounting principles, all amounts outstanding under the
Credit Facility ($140.4 million at February 2, 2002 and $130.5 million at
February 3, 2001) have been reclassified as Current maturities of long-term
debt.

          The Term Loan is scheduled to mature on June 30, 2006. Amounts of
the Term Loan maturing in future fiscal years are outlined in the following
table:

<Table>
<Caption>
               Fiscal Year Ending                       Amount Maturing
               ------------------                       ---------------
                                                   (In thousands of dollars)

               <S>                                      <C>
               February 1, 2003                         $       6,750
               January 31, 2004                                 9,750
               January 29, 2005                                12,750
               January 28, 2006                                 7,750
               February 3, 2007                                71,250
                                                        -------------

                                                        $     108,250
                                                        =============
</Table>

                                     - 40 -
<Page>

          Availability under the Revolving Credit Facility is calculated
based on a specified percentage of eligible inventory and accounts receivable
of the Company. The Revolving Credit Facility is scheduled to mature on June
30, 2005. As of February 2, 2002, there were approximately $32.1 million of
borrowings and $27.7 million of letters of credit outstanding under the
Revolving Credit Facility. Availability under the Revolving Credit Facility
was approximately $133 million as of February 2, 2002 after giving effect to
the restatement of the Company's financial statements (see Note 1).

          On August 14, 2002, the Company received a letter waiving certain
events of default that arose under the Credit Facility as a result of the
accounting restatement that resulted from the false accounting entries at the
Company's Penny Curtiss bakery manufacturing subsidiary (see Note 1). The
waiver letter also stated that the lenders under the Credit Facility would
forbear from taking any action under the Credit Facility as a result of such
defaults and permitted the Company to borrow, repay and reborrow under the
Credit Facility through August 30, 2002.

          On August 29, 2002, the Company received a further extension of the
waiver and forbearance from the lenders under the Credit Facility and entered
into a Waiver and Forbearance Agreement dated as of August 30, 2002. The
Waiver and Forbearance Agreement waives certain events of default that arose
under the Credit Facility as a result of the accounting restatement that
resulted from the false accounting entries at the Company's Penny Curtiss
bakery manufacturing subsidiary or could arise as a result of the Company's
noncompliance with certain financial covenants in the Credit Facility until
October 31, 2002 (or, if earlier, the date on which certain other events
specified in the Waiver and Forbearance Agreement occur). The Waiver and
Forbearance Agreement also provides that the lenders would forbear from
taking any action under the Credit Facility as a result of such defaults
and permitted the Company to borrow, repay and reborrow under the Credit
Facility through October 31, 2002.

          The Waiver and Forbearance Agreement will enable Penn Traffic to
assess whether any other modifications to the Credit Facility would be
required, including modifications to the existing financial covenants. Penn
Traffic anticipates that on or prior to October 31, 2002, it will enter into
a longer-term amendment to the Credit Facility with the lenders that will
enable Penn Traffic to continue to borrow, repay and reborrow under the
Revolving Credit Facility. In the event the Company was unable to negotiate
and enter into such a longer-term amendment on a satisfactory basis with the
lenders under the Credit Facility, the Company believes that it could
refinance the amounts outstanding under the Credit Facility with an alternate
lender. There can be no assurance however that the Company would be able to
complete any such financing on terms comparable to the terms of the Credit
Facility or otherwise acceptable to the Company. In addition, the revised
terms of the Credit Facility, as well as other factors, could impact the
ability of the Company to invest in new and existing stores and the Company's
infrastructure, which could adversely affect the Company's results of
operations.

          During April 2000, the Company entered into interest rate swap
agreements, which expire in five years, that effectively convert $50 million
of its variable rate borrowings into fixed rate obligations. Under the terms
of these agreements, the Company makes payments at a weighted average fixed
interest rate of 7.08% per annum and receives payments at variable interest
rates based on the London InterBank Offered Rate.

                                     - 41 -
<Page>

          During Fiscal 2002, the Company's internally generated funds from
operations, available cash resources and amounts available under the Revolving
Credit Facility provided sufficient liquidity to meet the Company's operating,
capital expenditure and debt service needs. During the 52-week period ending
February 1, 2003 ("Fiscal 2003"), the Company expects to utilize internally
generated funds from operations, amounts available under the Revolving Credit
Facility and new capital leases to satisfy its operating, capital expenditure
and debt service needs and fund any repurchase of shares of its common stock
under its announced stock repurchase program as described below.

          Cash flows used to meet the Company's operating requirements during
Fiscal 2002 are reported in the Consolidated Statement of Cash Flows. During
Fiscal 2002, the Company's net cash used in investing activities was $45.3
million. This amount was financed by net cash provided by operating activities,
net cash provided by financing activities and a reduction in cash and cash
equivalents of $39.1 million, $3.2 million and $3.0 million, respectively.

          As described above in Item 1 - "Business - New England Stores," in
July 1990, the Company entered into an agreement with another supermarket
company pursuant to which such company acquired the right to operate 13 stores
in Vermont and New Hampshire under its trade name until July 31, 2000 (the "New
England Operating Agreement"). Prior to July 1990, these stores had been
operated by Penn Traffic under the Company's "P&C" trade name. By August 1,
2000, the Company had regained operating control of the 10 stores that remained
in operation under the New England Operating Agreement. Nine of these stores
were opened for business in August 2000.

          The Revenues account of the Company's Consolidated Statement of
Operations includes income of approximately $5.7 million from the New England
Operating Agreement in Fiscal 2001 (which was recorded in the first half of the
fiscal year). In contrast, the Company incurred approximately $1 million of
operating losses in connection with the commencement of operation of these 10
stores in the second half of Fiscal 2001. While these stores contributed to the
Company's operating income in Fiscal 2002, Penn Traffic expects that the
operating income allocable to such stores in future periods will be
significantly less than the income received pursuant to the New England
Operating Agreement.

          The Company competes with several supermarket chains, independent
grocery stores, supercenters (combination supermarket and general merchandise
stores) and other retailers, many of which have greater resources than Penn
Traffic. The number of competitors and the degree of competition encountered by
the Company's supermarkets vary by location. Any significant change in the
number of the Company's competitors, the number or size of competitors' stores,
or in the pricing and promotion practices of the Company's competitors could
have an impact on the Company's results of operations.

                                     - 42 -
<Page>

          Penn Traffic expects that it will incur significant increases in
employee benefit costs in Fiscal 2003. These are comprised of (1) increases in
health care costs which the Company believes are, on a percentage basis,
generally consistent with overall increasing costs in the health care industry
and (2) an increase in pension expense that the Company will record in Fiscal
2003 as a result of the declining returns in the equity markets over the past
two years. Penn Traffic competes against some companies which do not provide the
same levels of employee benefits as the Company. It is not certain what portion
of these cost increases Penn Traffic will be able to offset through its cost
reduction programs, merchandising enhancements or market pricing adjustments.

          During Fiscal 2001, the Company commenced implementation of a loyalty
card program in its Big Bear stores in Ohio and West Virginia. Fiscal 2001
operating income was reduced by an estimated $1.5 million in connection with the
launch of this loyalty card program. Penn Traffic completed the chain-wide
implementation of this program by introducing the loyalty card in the Company's
remaining 150 stores in New York, Pennsylvania and New England in September
2001. The Company incurred approximately $2.4 million of startup costs to
complete the rollout of the loyalty card program.

          During Fiscal 2002, the Company invested approximately $48 million in
capital expenditures (including capital leases). The Company financed such
capital expenditures through cash generated from operations, new capital leases
and amounts available under the Revolving Credit Facility. During Fiscal 2003,
Penn Traffic expects to invest approximately $65 million (including capital
leases). Capital expenditures will be principally for new stores, store remodels
and investments in the Company's distribution system and technology
infrastructure (including new point-of-sale systems in several of the Company's
stores). The Company expects to finance such expenditures through cash generated
from operations, amounts available under the Revolving Credit Facility and new
capital leases.

          On June 29, 2000, the Company announced that its Board of Directors
has authorized the Company to repurchase up to an aggregate value of $10 million
of Penn Traffic's common stock from time to time in the open market or privately
negotiated transactions. The timing and amounts of purchases will be governed by
prevailing market conditions and other considerations. To date, the Company has
repurchased 53,000 shares of common stock at an average price of $7.08 per
share.

          During Fiscal 2002 and Fiscal 2001, the Company did not have any
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. In
addition, the Company does not engage in trading activities involving
non-exchange traded contracts. As such, the Company is not materially exposed to
any financing, liquidity, market or credit risk that could arise if the Company
had engaged in such relationships. Penn Traffic does not have relationships or
transactions with persons or entities that derive benefits from their
non-independent relationship with the Company or its related parties other than
what is disclosed in Note 15 to the Consolidated Financial Statements.

                                     - 43 -
<Page>

          The table below presents significant contractual cash obligations of
the Company at February 2, 2002:

<Table>
<Caption>
                                                                                                         TOTAL
   COMMITMENT EXPIRES                                                                                 CONTRACTUAL
       DURING THE                                         CAPITAL LEASE            OPERATING             CASH
   FISCAL YEAR ENDING                DEBT (1)           OBLIGATIONS (2)(3)         LEASES (3)         OBLIGATIONS
---------------------------   --------------------   ------------------------   ----------------   -----------------
                                                               (IN THOUSANDS OF DOLLARS)

   <S>                            <C>                  <C>                        <C>                <C>
   February 1, 2003               $     140,666        $       16,715             $     32,864       $     190,245
   January 31, 2004                         255                14,480                   31,019              45,754
   January 29, 2005                         222                13,629                   27,941              41,792
   January 28, 2006                         236                12,881                   25,979              39,096
   February 3, 2007                         242                12,854                   23,537              36,633
   Thereafter                           111,091                50,994                  149,623             311,708
</Table>

----------
   (1)    Balance for fiscal year ending February 1, 2003 reflects the
          reclassification of all amounts outstanding under the Credit
          Facility at February 2, 2002 ($140.4 million) as Current
          maturities of long-term debt (see Note 12 to the Consolidated
          Financial Statements). Debt maturing based on the scheduled
          maturities of the Credit Facility during the fiscal years ending
          February 1, 2003; January 31, 2004; January 29, 2005; January 28,
          2006; February 3, 2007 and thereafter are: $7.1 million;
          $10.0 million; $13.0 million; $40.1 million; $71.5 million; and
          $111.1 million, respectively.

   (2)    Includes amounts classified as imputed interest.

   (3)    See Note 11 to the Consolidated Financial Statements.

     The Company has also made certain contractual commitments that extend
beyond February 2, 2002 as shown below:

<Table>
<Caption>
   COMMITMENT EXPIRES             STAND-BY
       DURING THE                LETTERS OF            SURETY
   FISCAL YEAR ENDING             CREDIT (1)            BONDS (2)
-------------------------   -------------------   -----------------
                                   (IN THOUSANDS OF DOLLARS)

   <S>                         <C>                  <C>
   February 1, 2003            $      27,668        $       6,877
</Table>

----------
   (1)    Letters of credit are primarily associated with supporting workers
          compensation obligations and are renewable annually.

   (2)    The Company is required to maintain surety bonds for varying periods
          of up to three years from the date of issuance.

                                     - 44 -
<Page>

IMPACT OF NEW ACCOUNTING STANDARDS

          In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, "Business Combinations"
("SFAS 141") and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
SFAS 142 provides that intangible assets with finite useful lives be amortized,
and that goodwill and intangible assets with indefinite useful lives not be
amortized but tested at least annually for impairment.

          Penn Traffic will adopt SFAS 142 in the first quarter of Fiscal 2003
(the 52-week period ending February 1, 2003). The Company will not record any
amortization of excess reorganization value or goodwill in its Consolidated
Statement of Operations for periods after Fiscal 2002. Penn Traffic will test
the carrying value of the excess reorganization value and goodwill assets for
impairment in conjunction with the adoption of SFAS 142 and at least annually
thereafter. Excess reorganization value and goodwill were amortized at a rate of
approximately $110 million annually in Fiscal 2002, Fiscal 2001 and the 31-week
period ended January 29, 2000 and will have a carrying value of approximately
$51 million at the date of adoption of this standard. Other than the elimination
of the amortization of excess reorganization value and goodwill, the Company has
not yet determined the effect that adoption of SFAS 142 will have on its
financial statements.

          In October 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). This statement
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS 144 supercedes Statement of Financial Accounting
Standards No. 121, "Impairment of Long-Lived Assets to be Disposed Of," ("SFAS
121"). SFAS 144 applies to all long-lived assets (including discontinued
operations) and consequently amends Accounting Principle Board Opinion No. 30,
"Reporting Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." The Company will adopt SFAS 144 in the first quarter
of Fiscal 2003. The Company is currently evaluating the impact this
pronouncement will have on its financial statements.

                                     - 45 -
<Page>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          See information set forth above in Item 7 - "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources" and Note 12 to the Consolidated Financial Statements.

                                     - 46 -
<Page>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<Table>
<Caption>
Index to Consolidated Financial Statements                          Page
------------------------------------------                          ----

   <S>                                                               <C>
   Reports of Independent Accountants                                48


   Consolidated Financial Statements:

     Statement of Operations                                         50
     Balance Sheet                                                   51
     Statement of Stockholders' Equity (Deficit)                     53
     Statement of Cash Flows                                         54
     Notes to Consolidated Financial Statements                      56


   Financial Statement Schedule

     Schedule II -- Valuation and Qualifying Accounts                95

   Supplementary Data - Quarterly Financial Data (Unaudited)         96
</Table>

                                     - 47 -
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS
                                (POST-EMERGENCE)

To the Stockholders and the Board of Directors of The Penn Traffic Company:

In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material respects, the financial
position of The Penn Traffic Company and its subsidiaries at February 2, 2002
and February 3, 2001 and the results of their operations and their cash flows
for the years ended February 2, 2002, February 3, 2001 and the 31 weeks ended
January 29, 2000 in conformity with accounting principles generally accepted
in the United States of America. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 1, the Company has restated its consolidated financial
statements for the years ended February 2, 2000 and February 3, 2001 and the
31 weeks ended January 29, 2000.

As discussed in Note 2 to the Consolidated Financial Statements, on May 27, 1999
the United States Bankruptcy Court for the District of Delaware confirmed the
Company's Plan of Reorganization (the "Plan"). The Plan became effective on June
29, 1999 and the Company emerged from Chapter 11. In connection with its
emergence from Chapter 11, the Company adopted Fresh-Start Reporting as of June
26, 1999 as further described in Note 3 to the Consolidated Financial
Statements.


PricewaterhouseCoopers LLP

Syracuse, New York
March 15, 2002, except with respect to
  the information in Note 1 entitled Restatement
  as to which the date is September 13, 2002

                                     - 48 -
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS
                                 (PRE-EMERGENCE)


To the Stockholders and the Board of Directors of The Penn Traffic Company:

In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material respects the consolidated
statements of operations, stockholders' equity (deficit) and cash flows of
The Penn Traffic Company and its subsidiaries for the 21 weeks ended June 26,
1999, in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth herein when read in conjunction
with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with standards
generally accepted in the United States of America, which require that we
plan and perform an 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 significant estimates
made by management and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

As discussed in Note 1, the Company has restated its consolidated financial
statements for the 21 weeks ended June 26, 1999.


As discussed in Note 2 to the Consolidated Financial Statements, on May 27,
1999, the United States Bankruptcy Court for the District of Delaware confirmed
the Company's Plan of Reorganization (the "Plan"). The Plan became effective on
June 29, 1999 and the Company emerged from Chapter 11. In connection with its
emergence from Chapter 11, the Company adopted Fresh-Start Reporting as of June
26, 1999 as further described in Note 3 to the Consolidated Financial
Statements.


PricewaterhouseCoopers LLP

Syracuse, New York
March 10, 2000, except with respect to
  the information in Note 1 entitled Restatement
  as to which the date is September 13, 2002

                                     - 49 -
<Page>

                            THE PENN TRAFFIC COMPANY

                      CONSOLIDATED STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                                                                             PREDECESSOR
                                                                   SUCCESSOR COMPANY                           COMPANY
                                               ---------------------------------------------------------- -------------------
                                                   RESTATED            RESTATED            RESTATED            RESTATED
                                                   52 WEEKS            53 WEEKS            31 WEEKS            21 WEEKS
                                                     ENDED               ENDED              ENDED               ENDED
                                                  FEBRUARY 2,         FEBRUARY 3,        JANUARY 29,           JUNE 26,
                                                     2002                2001                2000                1999
                                               ------------------  ------------------ ------------------- -------------------
                                                               (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S>                                             <C>                 <C>                 <C>                 <C>
REVENUES                                        $     2,403,547     $     2,412,106     $    1,420,986      $      969,034

COST AND OPERATING EXPENSES:
   Cost of sales (Note 4)                             1,756,111           1,766,768          1,036,877             720,041
   Selling and administrative expenses                  590,603             590,048            345,148             251,018
   Amortization of excess
      reorganization value (Note 3)                     109,810             111,928             65,452
   Unusual items (Note 5)                                                    (1,741)             7,408              (4,631)
                                                ---------------     ---------------     --------------      ---------------

OPERATING (LOSS) INCOME                                 (52,977)            (54,897)           (33,899)              2,606
   Interest expense (Note 6)                             36,100              39,164             22,923              21,794
   Reorganization items (Note 7)                                                                                   165,974
                                                ---------------     ---------------     --------------      --------------

LOSS BEFORE INCOME TAXES AND
   EXTRAORDINARY ITEMS                                  (89,077)            (94,061)           (56,822)           (185,162)
   Provision for income taxes (Note 8)                    9,678               8,279              4,387                  60
                                                ---------------     ---------------     --------------      --------------

LOSS BEFORE EXTRAORDINARY ITEMS                         (98,755)           (102,340)           (61,209)           (185,222)
   Extraordinary items (Note 9)                                                                                   (654,928)
                                                ---------------     ---------------     --------------      --------------

NET (LOSS) INCOME                               $       (98,755)    $      (102,340)    $      (61,209)     $      469,706
                                                ===============     ===============     ==============      ==============

PER SHARE (BASIC AND DILUTED):

   Net loss (Note 10)                           $         (4.92)    $         (5.09)    $        (3.04)
                                                ===============     ===============     ==============
</Table>

The accompanying notes are an integral part of these statements. Per share data
is not presented for the period ended on June 26, 1999, because of the general
lack of comparability as a result of the revised capital structure of the
Company.

                                     - 50 -
<Page>

                            THE PENN TRAFFIC COMPANY

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                   RESTATED              RESTATED
                                                                  FEBRUARY 2,           FEBRUARY 3,
                                                                     2002                   2001
                                                                -----------------     ---------------
                                                                       (IN THOUSANDS OF DOLLARS)

<S>                                                              <C>                   <C>
                                     ASSETS

CURRENT ASSETS:
   Cash and short-term investments (Note 1)                      $      39,562         $      42,529
   Accounts and notes receivable (less allowance for
     doubtful accounts of $2,107 and $4,634, respectively)              49,710                46,113
   Inventories (Note 1)                                                274,845               266,570
   Prepaid expenses and other current assets                             9,506                 9,001
                                                                 -------------         -------------
                                                                       373,623               364,213
                                                                 -------------         -------------

CAPITAL LEASES (NOTES 1 AND 11):
   Capital leases                                                       59,920                60,405
   Less: Accumulated amortization                                      (15,173)               (9,593)
                                                                 -------------         -------------
                                                                        44,747                50,812
                                                                 -------------         -------------

FIXED ASSETS (NOTE 1):
   Land                                                                 40,113                39,733
   Buildings                                                            87,756                84,425
   Furniture and fixtures                                              161,862               138,572
   Vehicles                                                              4,943                 4,764
   Leasehold improvements                                               52,736                32,662
                                                                 -------------         -------------
                                                                       347,410               300,156
   Less: Accumulated depreciation                                      (73,974)              (44,649)
                                                                 -------------         -------------
                                                                       273,436               255,507
                                                                 -------------         -------------

OTHER ASSETS (NOTES 1 AND 3):
   Goodwill - net                                                        8,990                 9,197
   Beneficial leases - net                                              46,920                50,549
   Excess reorganization value - net                                    42,238               152,047
   Other assets - net                                                   16,414                22,517
                                                                 -------------         -------------

                                                                 $     806,368         $     904,842
                                                                 =============         =============
</Table>

        The accompanying notes are an integral part of these statements.

                                     - 51 -
<Page>

                            THE PENN TRAFFIC COMPANY

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                       RESTATED              RESTATED
                                                                      FEBRUARY 2,           FEBRUARY 3,
                                                                         2002                  2001
                                                                    ---------------       ---------------
                                                                           (IN THOUSANDS OF DOLLARS)

<S>                                                                  <C>                   <C>
              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of obligations under capital leases (Note 11)     $       8,329         $       7,878
   Current maturities of long-term debt (Note 12)                          140,666               130,812
   Trade accounts and drafts payable (Note 1)                              129,158               120,045
   Other accrued liabilities                                                77,590                76,858
   Accrued interest expense                                                  2,514                 3,478
   Taxes payable and deferred taxes                                         15,125                15,656
                                                                     -------------        --------------
                                                                           373,382               354,727
                                                                     -------------         -------------

NONCURRENT LIABILITIES:
   Obligations under capital leases (Note 11)                               67,075                73,396
   Long-term debt (Note 12)                                                112,046               112,362
   Deferred income taxes                                                    63,770                76,141
   Other noncurrent liabilities                                             51,471                28,483


STOCKHOLDERS' EQUITY (NOTE 14):
   Preferred stock - authorized 1,000,000 shares,
     $.01 par value; none issued
   Common stock - authorized 30,000,000 shares,
     $.01 par value; 20,056,264 shares and 20,054,022 shares
     issued and outstanding, respectively                                      201                   201
   Capital in excess of par value                                          416,597               416,207
   Stock warrants                                                            7,249                 7,249
   Retained deficit                                                       (262,304)             (163,549)
   Accumulated other comprehensive loss                                    (22,744)
   Treasury stock, at cost                                                    (375)                 (375)
                                                                     -------------         -------------
     TOTAL STOCKHOLDERS' EQUITY                                            138,624               259,733
                                                                     -------------         -------------

                                                                     $     806,368         $     904,842
                                                                     =============         =============
</Table>

        The accompanying notes are an integral part of these statements.

                                     - 52 -
<Page>

                            THE PENN TRAFFIC COMPANY

            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

<Table>
<Caption>
                                                                            Accumulated                                   Total
                                         Capital in                            Other                                   Stockholders'
                                Common   Excess of    Stock     Retained   Comprehensive    Unearned     Treasury         Equity
                                Stock    Par Value   Warrants   Deficit    (Loss) Income  Compensation     Stock        (Deficit)
                               -----------------------------------------------------------------------------------------------------
(In thousands of dollars)
<S>                            <C>        <C>        <C>       <C>          <C>             <C>          <C>            <C>
PREDECESSOR COMPANY:

JANUARY 30, 1999               $ 13,425   $ 179,882  $     0   $ (658,820)  $   (3,470)     $     (98)   $    (625)     $ (469,706)

Comprehensive income:
  Net income for the
   21-week period ended
   June 26, 1999                                                  469,706
Total comprehensive income                                                                                                 469,706

Adjustments to Stockholders'
  Equity in connection with
  reorganization
  (Notes 2 and 3)               (13,425)   (179,882)              189,114        3,470             98          625
Issuance of Common Stock
  and Stock Warrants in
  connection with
  reorganization
  (Notes 2 and 3)                   201     416,207    7,249                                                               423,657
------------------------------------------------------------------------------------------------------------------------------------
JUNE 26, 1999                       201     416,207    7,249            0            0              0            0         423,657
====================================================================================================================================

SUCCESSOR COMPANY:

Comprehensive loss:
  Net loss for the 31-week
   period ended
   January 29, 2000                                               (61,209)
Total comprehensive loss                                                                                                   (61,209)
------------------------------------------------------------------------------------------------------------------------------------
RESTATED JANUARY 29, 2000           201     416,207    7,249      (61,209)           0              0            0         362,448


Comprehensive loss:
  Net loss                                                       (102,340)
Total comprehensive loss                                                                                                  (102,340)

Purchase of treasury shares                                                                                   (375)           (375)
------------------------------------------------------------------------------------------------------------------------------------
RESTATED FEBRUARY 3, 2001           201     416,207    7,249     (163,549)           0              0         (375)        259,733


Comprehensive loss:
  Net loss                                                        (98,755)
  Minimum pension liability
   net of tax benefit of $13,935                                               (20,042)
  Cumulative effect of
   accounting change net of
   tax benefit of $1,244                                                        (1,790)
  Change in fair value of
   cash flow hedges net of
   tax benefit of $635                                                            (912)
Total comprehensive loss                                                                                                  (121,499)

Other                                           390                                                                            390
------------------------------------------------------------------------------------------------------------------------------------
RESTATED FEBRUARY 2, 2002      $    201   $ 416,597  $ 7,249   $ (262,304)  $  (22,744)     $       0    $    (375)     $  138,624
====================================================================================================================================
</Table>

        The accompanying notes are an integral part of these statements.

                                     - 53 -
<Page>

                            THE PENN TRAFFIC COMPANY

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                                                                PREDECESSOR
                                                                   SUCCESSOR COMPANY                              COMPANY
                                               ---------------------------------------------------------- -------------------
                                                     RESTATED              RESTATED           RESTATED            RESTATED
                                                     52 WEEKS              53 WEEKS           31 WEEKS            21 WEEKS
                                                       ENDED                 ENDED             ENDED               ENDED
                                                    FEBRUARY 2,           FEBRUARY 3,       JANUARY 29,           JUNE 26,
                                                       2002                  2001               2000                1999
                                               ------------------  ------------------ ------------------- -------------------
                                                                         (IN THOUSANDS OF DOLLARS)
<S>                                                <C>                 <C>                <C>                 <C>
OPERATING ACTIVITIES:
    Net (loss) income                              $    (98,755)       $   (102,340)      $    (61,209)       $    469,706
    Adjustments to reconcile net (loss)
      income to net cash provided by
      operating activities:
      Depreciation and amortization                      41,926              41,870             26,176              25,832
      Amortization of excess
        reorganization value                            109,810             111,928             65,452
      Gain on sold/closed stores                                                                                    (2,921)
      Reorganization Items:
        Gain from rejected leases                                                                                  (12,830)
        Write-off of unamortized
          deferred financing fees                                                                                   16,591
        Fresh-start adjustments                                                                                    150,104
      Extraordinary items                                                                                         (654,928)
      Adjustment of excess
        reorganization value                                                                    14,258
      Other - net                                           216                (238)              (941)                120
NET CHANGE IN ASSETS AND LIABILITIES:
    Accounts receivable and
      prepaid expenses                                   (4,102)              2,855              2,425              15,545
    Inventories                                          (8,275)                (41)           (10,101)             23,020
    Payables and accrued expenses                         4,697             (22,318)            (9,707)             16,727
    Deferred income taxes                                 2,795               8,420             (9,979)
    Other assets                                         (7,423)             (4,302)             2,403               1,464
    Other noncurrent liabilities                         (1,770)              1,317             (3,067)             (4,797)
                                                   ------------        ------------       ------------        ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                39,119              37,151             15,710              43,633
                                                   ------------        ------------       ------------        ------------
</Table>

                                     - 54 -
<Page>

                            THE PENN TRAFFIC COMPANY

                CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

<Table>
<Caption>
                                                                                                               PREDECESSOR
                                                                   SUCCESSOR COMPANY                             COMPANY
                                               ---------------------------------------------------------- -------------------
                                                     RESTATED            RESTATED            RESTATED            RESTATED
                                                     52 WEEKS            53 WEEKS            31 WEEKS            21 WEEKS
                                                       ENDED               ENDED              ENDED               ENDED
                                                    FEBRUARY 2,         FEBRUARY 3,        JANUARY 29,           JUNE 26,
                                                       2002                2001                2000                1999
                                               ------------------  ------------------ ------------------- -------------------
                                                                         (IN THOUSANDS OF DOLLARS)
<S>                                                <C>                 <C>                <C>                 <C>
INVESTING ACTIVITIES:
    Capital expenditures                                (45,672)            (57,982)           (31,468)             (6,279)
    Proceeds from sale of assets                            383               1,551              5,251              17,273
                                                   ------------        ------------       ------------        ------------

NET CASH (USED IN) PROVIDED BY
  INVESTING ACTIVITIES                                  (45,289)            (56,431)           (26,217)             10,994
                                                   ------------        ------------       ------------        ------------

FINANCING ACTIVITIES:
    Net increase (decrease) in
      drafts payable                                      1,877               5,321             (3,332)             (2,677)
    Borrowing of term loan                                                                                         115,000
    Borrowing of revolving debt                         194,800              95,900             33,100
    Repayment of revolving debt                        (180,200)            (78,400)           (33,100)
    Borrowing of former revolver debt                                                                               31,100
    Repayment of former revolver debt                                                                             (144,000)
    Borrowing of DIP revolver debt                                                                                 166,751
    Repayment of DIP revolver debt                                                                                (166,751)
    Payments to settle long-term debt                    (5,062)             (2,296)              (162)             (9,598)
    Reduction of capital lease
      obligations                                        (8,220)            (10,100)            (5,773)             (8,487)
    Payment of debt issuance costs                                                                                  (7,906)
    Purchase of treasury shares                                                (375)
    Exercise of stock options                                 8
                                                   ------------        ------------       ------------        ------------

NET CASH PROVIDED BY (USED IN)
  FINANCING ACTIVITIES                                    3,203              10,050             (9,267)            (26,568)
                                                   ------------        ------------       ------------        ------------

(DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                       (2,967)             (9,230)           (19,774)             28,059

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                    42,529              51,759             71,533              43,474
                                                   ------------        ------------       ------------        ------------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                    $     39,562        $     42,529       $     51,759        $     71,533
                                                   ============        ============       ============        ============
</Table>

        The accompanying notes are an integral part of these statements.

                                     - 55 -
<Page>

                            THE PENN TRAFFIC COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Penn Traffic Company ("Penn Traffic" or the "Company") is primarily engaged
in the retail food business and the wholesale food distribution business. As of
February 2, 2002 the Company operated 218 supermarkets in Ohio, West Virginia,
Pennsylvania, upstate New York, Vermont and New Hampshire, and supplied 88
franchise supermarkets and 68 independent wholesale accounts. The Company also
operated eight distribution centers and a bakery.

BASIS OF PRESENTATION All significant intercompany transactions and accounts
have been eliminated in consolidation.

Effective June 26, 1999, the Company adopted fresh-start reporting (see Notes 2
and 3).

Certain amounts for prior years have been reclassified to conform to the
presentation for the 52-week period ended February 2, 2002 (see "Recently Issued
Accounting Standards").

FISCAL YEAR The fiscal year of the Company ends on the Saturday nearest to
January 31.

CASH AND SHORT-TERM INVESTMENTS Short-term investments are classified as cash
and are stated at cost, which approximates market value. For the purpose of the
Consolidated Statement of Cash Flows, the Company considers all highly liquid
debt instruments with maturity of three months or less at the date of purchase
to be cash equivalents.

INVENTORIES Inventories are stated at the lower of cost or market using the
last-in, first-out ("LIFO") method of valuation for the vast majority of the
Company's inventories. If the first-in, first-out ("FIFO") method had been used
by the Company, inventories would have been $3.1 million and $2.4 million higher
than reported at February 2, 2002 and February 3, 2001, respectively.

                                     - 56 -
<Page>

FIXED ASSETS AND CAPITAL LEASES Major renewals and betterments are capitalized,
whereas maintenance and repairs are charged to operations as incurred. Interest
costs on major capital projects constructed for the Company's own use are
capitalized as part of the costs of the newly constructed facilities.
Depreciation and amortization for financial accounting purposes are provided on
the straight-line method. For income tax purposes, the Company principally uses
accelerated methods. For financial accounting purposes, depreciation and
amortization are provided over the following useful lives or lease term:

<Table>
          <S>                                            <C>
          Buildings                                      10 to 40 years
          Furniture and fixtures                          3 to 10 years
          Vehicles                                         3 to 8 years
          Leasehold improvements                         10 to 40 years
          Capital leases                                     lease term
</Table>

For the 52-week period ended February 2, 2002 ("Fiscal 2002"), the 52-week
period ended February 3, 2001 ("Fiscal 2001"), the 31-week period ended January
29, 2000 and the 21-week period ended June 26, 1999, depreciation expense was
$29.0 million, $28.0 million, $18.0 million and $17.4 million, respectively. For
Fiscal 2002, Fiscal 2001, the 31-week period ended January 29, 2000 and the
21-week period ended June 26, 1999, capital lease amortization expense was $6.6
million, $7.6 million, $5.1 million and $3.9 million, respectively.


INTANGIBLES The excess of the costs over the amounts attributed to the fair
value of net assets acquired ("Goodwill") is being amortized over 40 years using
the straight-line method. In accordance with the implementation of the Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"), the Company will no longer amortize goodwill or intangible assets
with indefinite lives after Fiscal 2002.

Beneficial leases (which were established upon the adoption of fresh-start
reporting) represent the present value of the difference between market value
rent and contract rent over the remaining term of a lease (see Note 3). Such
amounts are being amortized over the remaining lease term (ranging from four to
19 years from June 26, 1999) using the straight-line method.

Excess reorganization value (which was established upon the adoption of
fresh-start reporting) represents the total reorganization value in excess of
the aggregate fair value of the Company's tangible and identifiable intangible
assets less non-interest-bearing liabilities (see Note 3). This amount is being
amortized on a straight-line basis over a three-year period from June 26, 1999.
In accordance with SFAS 142, the Company will no longer amortize excess
reorganization value after Fiscal 2002.

For Fiscal 2002, Fiscal 2001, the 31-week period ended January 29, 2000 and the
21-week period ended June 26, 1999, amortization of intangibles was $116.1
million, $118.1 million, $69.1 million and $3.9 million, respectively.

                                     - 57 -
<Page>

OTHER ASSETS Other assets primarily consist of investments, notes receivable,
debt issuance costs and prepaid pension expense. The debt issuance costs are
being amortized primarily on a straight-line basis over the life of the related
debt.

IMPAIRMENT OF LONG-LIVED ASSETS Assets are generally evaluated on a
market-by-market basis in making a determination as to whether such assets are
impaired. At each fiscal year-end, the Company reviews its long-lived assets
(including goodwill) for impairment based on estimated future undiscounted cash
flows attributable to the assets. In the event such cash flows are not expected
to be sufficient to recover the recorded value of the assets, such assets are
written down to their fair values. The Company performed a comprehensive review
of its long-lived assets during Fiscal 2002, Fiscal 2001 and the 31-week period
ended January 29, 2000. Based on this review, no assets were deemed to be
impaired.

STORE PRE-OPENING COSTS Store pre-opening costs are charged to expense as
incurred.

ADVERTISING COSTS The Company's advertising costs are expensed as incurred and
included in Selling and administrative expenses in the Consolidated Statement of
Operations. Advertising expenses were $35.3 million in Fiscal 2002, $37.3
million in Fiscal 2001, $19.7 million for the 31-week period ended January 29,
2000 and $15.3 million for the 21-week period ended June 26, 1999.

INCOME TAXES Income taxes are provided based on the liability method of
accounting. Deferred income taxes are recorded to reflect the tax consequences
in future years of temporary differences between the tax basis of assets and
liabilities and their corresponding financial reporting amounts at each
year-end.

TRADE ACCOUNTS AND DRAFTS PAYABLE Trade accounts and drafts payable include
drafts payable of $35.6 million and $34.0 million at February 2, 2002 and
February 3, 2001, respectively.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

                                     - 58 -
<Page>

RECENTLY ISSUED ACCOUNTING STANDARDS Penn Traffic adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ("SFAS 133"), in the first quarter of Fiscal 2002. This statement
requires all derivative financial instruments to be carried on the balance sheet
at fair value, with changes in fair value recorded in comprehensive income
and/or net income, depending on the nature of the instrument. The Company
currently holds interest rate swap contracts for the purpose of hedging interest
rate risk associated with variable-rate debt (see Note 12). Upon the adoption of
SFAS 133, the Company recognized in accumulated other comprehensive income a
loss of $1.8 million (after tax) representing the cumulative effect of the
adoption of this new accounting standard.

          The Company's interest rate swap contracts have been designated as
cash flow hedges at the origination date and at February 2, 2002. Accordingly,
the change in the fair value of these contracts during Fiscal 2002 (a loss of
$0.9 million, after tax) has been recorded in accumulated other comprehensive
income.

          The Company's Consolidated Statement of Operations for Fiscal 2002
reflects the Company's implementation of EITF Issue Number 00-14, "Accounting
for Certain Sales Incentives" as codified by EITF Issue Number 01-9, "Accounting
for Consideration Given by Vendors to a Customer" ("EITF 00-14") in Fiscal 2002.
EITF 00-14 addresses the recognition, measurement and income statement
classification of certain sales incentives offered by companies in the form of
discounts, coupons or rebates. In connection with the implementation of this new
accounting pronouncement, Penn Traffic has made certain reclassifications
between "Revenues" and "Costs and Operating Expenses" in the Company's
Consolidated Statement of Operations for Fiscal 2002. These reclassifications
result in an equal decrease to the Company's reported Revenues and Costs and
Operating Expenses. Penn Traffic has also reclassified the Company's prior year
financial statements for comparability purposes.

          In addition, the Company made certain other reclassifications of
expenses in the Consolidated Statement of Operations between "Cost of sales" and
"Selling and administrative expenses" for Fiscal 2002, Fiscal 2001, the 31-week
period ended January 29, 2000 and the 21-week period ended June 26, 1999. After
such reclassifications, the "Cost of sales" caption includes cost of goods sold
including the cost of distributing such products to the Company's retail stores
and wholesale/franchise accounts. In contrast, in the Company's historic income
statement classifications, the Cost of sales caption also included buying and
occupancy costs. These costs are now included under the caption, "Selling and
administrative expenses." The Company believes that after these
reclassifications, Penn Traffic's income statement presentation is more
consistent with the majority of public companies in the supermarket industry
than its historic presentation. The implementation of EITF 00-14 and these other
reclassifications do not have any effect on Penn Traffic's reported Operating
(Loss) Income, EBITDA or Net (Loss) Income.

                                     - 59 -
<Page>

          In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, "Business Combinations"
("SFAS 141") and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
SFAS 142 provides that intangible assets with finite useful lives be amortized,
and that goodwill and intangible assets with indefinite useful lives not be
amortized but tested at least annually for impairment.

          Penn Traffic will adopt SFAS 142 in the first quarter of the 52-week
period ending February 1, 2003 ("Fiscal 2003"). The Company will not record any
amortization of excess reorganization value or goodwill in its Consolidated
Statement of Operations for periods after Fiscal 2002. Penn Traffic will test
the carrying value of the excess reorganization value and goodwill assets for
impairment in conjunction with the adoption of SFAS 142 and at least annually
thereafter. Excess reorganization value and goodwill were amortized at a rate of
approximately $110 million annually in Fiscal 2002, Fiscal 2001 and the 31-week
period ended January 29, 2000 and will have a carrying value of approximately
$51 million at the date of adoption of this standard. Other than the elimination
of the amortization of excess reorganization value and goodwill, the Company has
not yet determined the effect that adoption of SFAS 142 will have on its
financial statements.

          In October 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). This statement
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS 144 supercedes Statement of Financial Accounting
Standards No. 121, "Impairment of Long-Lived Assets to be Disposed Of," ("SFAS
121"). SFAS 144 applies to all long-lived assets (including discontinued
operations) and consequently amends Accounting Principle Board Opinion No. 30,
"Reporting Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." The Company will adopt SFAS 144 in the first quarter
of Fiscal 2003. The Company is currently evaluating the impact this
pronouncement will have on its financial statements.

                                     - 60 -
<Page>


RESTATEMENT The Company has restated its financial results after discovering
in August 2002 that an employee of its Penny Curtiss bakery manufacturing
subsidiary made false accounting entries which primarily involved the
overstatement of inventory over a period of three and one-quarter years.  The
effect of the correction of the misstatements was to increase previously
reported net loss by $3.0 million, $2.4 million, and $1.1 million and net
loss per share - diluted by $0.15, $0.12, and $0.05 for the fiscal years
ended February 2, 2002 and February 3, 2001 and the 31-week period ended
January 29, 2000, respectively.  In addition, the restatement reduced
operating income for the 21-week period ended June 26, 1999 by $1.1 million;
this amount was offset in the Company's Consolidated Statement of Operations
by an adjustment to Reorganization items associated with the Company's
adoption of fresh-start reporting on June 26, 1999.

          The effect of the correction of the misstatements on previously
reported EBITDA was a reduction of $4.2 million, $3.2 million, $1.3 million
and $1.1 million for the fiscal years ended February 2, 2002 and February 3,
2001, the 31-week period ended January 29, 2000 and the 21-week period ended
June 26, 1999.  EBITDA is earnings before interest, taxes, depreciation,
amortization, amortization of excess reorganization value, LIFO provision,
special charges, unusual items, write-down of long-lived assets,
reorganization items and extraordinary items.  EBITDA should not be
interpreted as a measure of operating results, cash flow provided by
operating activities or liquidity, or as an alternative to any generally
accepted accounting principle measure of performance.  The Company reports
EBITDA because it is a widely used financial measure of the potential
capacity of a company to incur and service debt.  Penn Traffic's reported
EBITDA may not be comparable to similarly titled measures used by other
companies.

          The restatement also includes the reclassification of $3.9 million,
$3.7 million, $2.4 million and $1.4 million of expenses for fiscal years
ended February 2, 2002 and February 3, 2001, the 31-week period ended January
29, 2000 and the 21-week period ended June 26, 1999, respectively, from
Selling and administrative expenses to Cost of Sales to more appropriately
reflect the classification of certain indirect manufacturing expenses
associated with the Penny Curtiss bakery manufacturing subsidiary.

          The financial statement line items which were restated are
Revenues, Cost of sales, Selling and administrative expenses, Amortization of
excess reorganization value, Provision for income taxes, Inventories, Prepaid
expenses and other current assets, Excess reorganization value, Trade
accounts and drafts payable, Taxes payable and deferred taxes, and Retained
deficit. The Consolidated Financial Statements for the fiscal years ended
February 2, 2002 and February 3, 2001, the 31-week period ended January 29,
2000, and the 21-week period ended June 26, 1999 and notes thereto included
in this Annual Report on Form 10-K/A have been restated to include the
effects of the correction of these misstatements and the reclassification of
all amounts outstanding under the Credit Facility as Current maturities of
long-term debt (see Note 12) as follows:

                                     - 61 -
<Page>

<Table>
<Caption>
                                                      52 WEEKS ENDED                       53 WEEKS ENDED
                                                     FEBRUARY 2, 2002                     FEBRUARY 3, 2001
                                            -----------------------------------  -----------------------------------
                                                   AS                                   AS
                                               PREVIOUSLY                           PREVIOUSLY
                                                REPORTED          RESTATED           REPORTED          RESTATED
                                            ----------------- -----------------  ----------------- -----------------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                           <C>               <C>                <C>               <C>
CONSOLIDATED STATEMENT OF
   OPERATIONS

Revenues                                      $  2,404,302      $  2,403,547       $  2,413,295      $  2,412,106

Cost of sales                                    1,748,710         1,756,111          1,761,043         1,766,768
Selling and administrative expenses                594,517           590,603            593,757           590,048
Amortization of excess
   reorganization value                            109,273           109,810            111,381           111,928
Unusual item                                                                             (1,741)           (1,741)
                                              ------------      ------------       ------------      ------------

Operating (loss)                                   (48,198)          (52,977)           (51,145)          (54,897)
Interest expense                                    36,100            36,100             39,164            39,164
                                              ------------      ------------       ------------      ------------

Loss before taxes                                  (84,298)          (89,077)           (90,309)          (94,061)
Provision for income taxes                          11,418             9,678              9,593             8,279
                                              ------------      ------------       ------------      ------------

Net loss                                      $    (95,716)     $    (98,755)      $    (99,902)     $   (102,340)
                                              ============      ============       ============      ============

Per share (Basic and Diluted)                 $      (4.77)     $      (4.92)      $      (4.97)     $      (5.09)
                                              ============      ============       ============      ============
</Table>

                                     - 62 -
<Page>

<Table>
<Caption>
                                                    SUCCESSOR COMPANY                   PREDECESSOR COMPANY
                                                      31 WEEKS ENDED                       21 WEEKS ENDED
                                                     JANUARY 29, 2000                      JUNE 26, 1999
                                            -----------------------------------  -----------------------------------
                                                   AS                                   AS
                                               PREVIOUSLY                           PREVIOUSLY
                                                REPORTED          RESTATED           REPORTED          RESTATED
                                            ----------------- -----------------  ----------------- -----------------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                           <C>               <C>                <C>               <C>
CONSOLIDATED STATEMENT OF
   OPERATIONS

Revenues                                      $  1,421,936      $  1,420,986       $    969,250      $    969,034

Cost of sales                                    1,034,049         1,036,877            717,843           720,041
Selling and administrative expenses                347,577           345,148            252,375           251,018
Amortization of excess
   reorganization value                             65,132            65,452
Unusual items                                        7,408             7,408             (4,631)           (4,631)
                                              ------------      ------------       ------------    ---------------

Operating (loss) income                            (32,230)          (33,899)             3,663             2,606
Interest expense                                    22,923            22,923             21,794            21,794
Reorganization items                                                                    167,031           165,974
                                              ------------      ------------       ------------      ------------

Loss before taxes                                  (55,153)          (56,822)          (185,162)         (185,162)
Provision for income taxes                           4,940             4,387                 60                60
                                              ------------      ------------       ------------      ------------

Loss before extraordinary items                    (60,093)          (61,209)          (185,222)         (185,222)

Extraordinary item                                                                     (654,928)         (654,928)
                                              ------------      ------------       ------------      ------------

Net (loss) income                             $    (60,093)     $    (61,209)      $    469,706      $    469,706
                                              ============      ============       ============      ============

Per share (Basic and Diluted)                 $      (2.99)     $      (3.04)
                                              ============      ============
</Table>

                                     - 63 -
<Page>

<Table>
<Caption>
                                                     FEBRUARY 2, 2002                     FEBRUARY 3, 2001
                                            -----------------------------------  -----------------------------------
                                                   AS                                   AS
                                               PREVIOUSLY                           PREVIOUSLY
                                                REPORTED          RESTATED           REPORTED          RESTATED
                                            ----------------- -----------------  ----------------- -----------------
                                                                        (IN THOUSANDS)
<S>                                           <C>               <C>                <C>               <C>
CONSOLIDATED BALANCE SHEET

Inventories                                   $    284,221      $    274,845       $    271,704      $    266,570
Prepaid expenses and other
   current assets                                    9,697             9,506              9,338             9,001
Total current assets                               383,190           373,623            369,684           364,213
Excess reorganization value                         42,032            42,238            151,304           152,047
Total assets                                       815,729           806,368            909,570           904,842

Trade accounts and drafts payable                  128,872           129,158            119,905           120,045
Taxes payable and deferred taxes                    18,179            15,125             16,971            15,656
Current maturities of long-term debt                 7,066           140,666              5,062           130,812
Total current liabilities                          242,550           373,382            230,151           354,727
Long-term debt                                     245,646           112,046            238,112           112,362
Retained deficit                                  (255,711)         (262,304)          (159,995)         (163,549)
Total stockholders' equity                         145,217           138,624            263,287           259,733
Total liabilities and
   stockholders' equity                            815,729           806,368            909,570           904,842

</Table>

                                     - 64 -
<Page>

NOTE 2 - REORGANIZATION:

          On March 1, 1999 (the "Petition Date"), the Company and certain of its
subsidiaries filed petitions for relief (the "Bankruptcy Cases") under Chapter
11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
On June 29, 1999 (the "Effective Date"), the Company's Chapter 11 plan of
reorganization (the "Plan") became effective in accordance with its terms.

          Consummation of the Plan has resulted in (1) the former $732.2 million
principal amount of the Company's senior notes being exchanged for $100 million
of new senior notes (the "Senior Notes") and 19,000,000 shares of newly issued
common stock (the "Common Stock"), (2) the former $400 million principal amount
of senior subordinated notes being exchanged for 1,000,000 shares of Common
Stock and six-year warrants to purchase 1,000,000 shares of Common Stock having
an exercise price of $18.30 per share, (3) holders of Penn Traffic's formerly
issued common stock receiving one share of Common Stock for each 100 shares of
common stock held immediately prior to the Petition Date, for a total of 106,955
new shares and (4) the cancellation of all outstanding options and warrants to
purchase shares of the Company's former common stock. The Plan also provides for
issuance to officers and key employees options to purchase up to 2,297,000
shares of Common Stock. The Company's Common Stock and warrants to purchase
common stock are currently trading on the Nasdaq National Market under the
symbols "PNFT" and "PNFTW," respectively.

          The Plan also provided for payment in full of all of the Company's
obligations to its other creditors.

          On the Effective Date, in connection with the consummation of the
Plan, the Company entered into a new $320 million secured credit facility (the
"Credit Facility"). The Credit Facility includes (1) a $205 million revolving
credit facility (the "Revolving Credit Facility") and (2) a $115 million term
loan (the "Term Loan"). The lenders under the Credit Facility have a first
priority perfected security interest in substantially all of the Company's
assets. Proceeds from the Credit Facility were used to satisfy the Company's
obligations under its debtor-in-possession financing (the "DIP Facility") and
pay certain costs of the reorganization process and are available to satisfy the
Company's ongoing working capital and capital expenditure requirements.

                                     - 65 -
<Page>

NOTE 3 - FRESH-START REPORTING:

          As of the Effective Date, the Company adopted fresh-start reporting
pursuant to the guidance provided by the American Institute of Certified Public
Accountant's Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). In connection with the
adoption of fresh-start reporting, a new entity has been created for financial
reporting purposes. The Effective Date is considered to be the close of business
on June 26, 1999, for financial reporting purposes. The period ended on June 26,
1999 has been designated "Predecessor Company" and the periods subsequent to
June 26, 1999, have been designated "Successor Company." As a result of the
implementation of fresh-start reporting, the financial statements of the Company
after the Effective Date are not comparable to the Company's financial
statements for prior periods. In accordance with fresh-start reporting, all
assets and liabilities were recorded at their respective fair values. The fair
value of the Company's long-lived assets was determined, in part, using
information provided by third-party appraisers.

          The reorganization value of the Company is reflected as the debt and
equity value of the new company, as of the Effective Date. To facilitate the
calculation of the reorganization value, the Company developed a set of
financial projections. Based on these financial projections, the reorganization
value was determined by the Company with the assistance of a financial advisor
using various valuation methods, including (1) a comparison of the Company and
its projected performance to how the market values comparable companies, (2) a
calculation of the present value of the free cash flows under the projections,
including an assumption for a terminal value and (3) negotiations with an
informal committee of the Company's noteholders. The estimated enterprise value
is highly dependent upon achieving the future financial results set forth in the
projections as well as the realization of certain other assumptions, which are
not guaranteed.

          The total reorganization value as of the Effective Date was
approximately $750 million, which was approximately $329.4 million in excess of
the aggregate fair value of the Company's tangible and identifiable intangible
assets less non-interest bearing liabilities. Such excess is classified as
"Excess reorganization value" in the accompanying Consolidated Balance Sheet.
This amount is being amortized on a straight-line basis over a three-year period
from June 26, 1999. In connection with the implementation of SFAS 142, the
Company will no longer amortize excess reorganization value after Fiscal 2002.

          The total outstanding indebtedness (including capital leases) as of
the Effective Date was approximately $326.3 million. The Stockholders' Equity on
the Effective Date of approximately $423.7 million was established by deducting
such total outstanding indebtedness of $326.3 million from the reorganization
value of $750 million. Stockholders' Equity includes $7.2 million representing
the fair value of the warrants to purchase shares of Common Stock distributed in
conjunction with the consummation of the Plan.

                                     - 66 -
<Page>

NOTE 4 - SPECIAL CHARGE:

          During the 21-week period ended June 26, 1999, the Company decided to
begin a process to refine the scope of the nonfood merchandise carried in its 15
Big Bear Plus combination stores to a smaller number of key growth categories
with a greater depth of variety in each category. Accordingly, during the
21-week period ended June 26, 1999, the Company recorded a special charge of
$3.9 million associated with this repositioning of these stores. This charge,
which consists of estimated inventory markdowns for discontinued product lines,
is included in cost of sales.

NOTE 5 - UNUSUAL ITEMS:

          During Fiscal 2001, the Company recorded (1) an unusual item (income)
of $3.0 million associated with a reduction in the estimate of a pension
withdrawal liability which had been included in a $68.2 million special charge
associated with the Store Rationalization Program, as described below, which the
Company had recorded in the fiscal year ended January 29, 1999 ("Fiscal 1999")
and (2) an unusual item (expense) of $1.3 million related to the implementation
of a warehouse consolidation project.

          During the 31-week period ended January 29, 2000, the Company recorded
unusual items of (1) $5.5 million (expense) associated with the restructuring of
certain executive compensation agreements and (2) $1.9 million (expense)
associated with an early retirement program for certain eligible employees.
During the 21-week period ended June 26, 1999, the Company recorded unusual
items (income) of $4.6 million related to (1) a reduction of closed store
reserves accrued in Fiscal 1999 in connection with the Store Rationalization
Program and (2) a gain on the disposition of certain assets sold in connection
with the Store Rationalization Program as described below.

          Between the middle of 1998 and May 1999, Penn Traffic implemented the
Store Rationalization Program ("Store Rationalization Program") to divest itself
of certain marketing areas and to close other underperforming stores. In
connection with the Store Rationalization Program, Penn Traffic sold 21 stores
and closed 29 stores. During Fiscal 1999, the Company recorded a special charge
of $68.2 million related to the Store Rationalization Program.

NOTE 6 - INTEREST EXPENSE:

          As a result of the Bankruptcy Cases, on and after the Petition Date no
principal or interest payments were made on the $1.132 billion of the Company's
former senior and senior subordinated notes. Accordingly, no interest expense
for these obligations has been accrued on or after the Petition Date. Had such
interest been accrued, interest expense for the 21-week period ended June 26,
1999 would have been approximately $58.8 million.

                                     - 67 -
<Page>

NOTE 7 - REORGANIZATION ITEMS:

          Reorganization items (expense) consist of the following items:

<Table>
<Caption>
                                                                                           PREDECESSOR
                                                                                             COMPANY
                                                                                      -----------------------
                                                                                          21 WEEKS ENDED
                                                                                          JUNE 26, 1999
                                                                                      -----------------------
                                                                                      (IN THOUSANDS OF DOLLARS)

           <S>                                                                             <C>
           Fresh-start adjustments                                                         $     150,104
           Gain from rejected leases                                                             (12,830)
           Write-off of unamortized
               deferred financing fees                                                            16,591
           Professional fees                                                                      12,109
                                                                                           -------------

                 Total Expense                                                             $     165,974
                                                                                           =============
</Table>

          The gain from rejected leases listed above is the difference between
the estimated allowed claims for rejected leases and liabilities previously
recorded for such leases. The professional fees listed above include accounting,
legal, consulting and other miscellaneous services associated with the
implementation of the Plan.

                                     - 68 -
<Page>

NOTE 8 - INCOME TAXES:

          The provision for income taxes was as follows:

<Table>
<Caption>
                                                                                                      PREDECESSOR
                                                                   SUCCESSOR COMPANY                    COMPANY
                                                    ------------------------------------------------ ---------------
                                                        52 WEEKS         53 WEEKS       31 WEEKS        21 WEEKS
                                                         ENDED            ENDED          ENDED           ENDED
                                                      FEBRUARY 2,      FEBRUARY 3,    JANUARY 29,       JUNE 26,
                                                          2002             2001           2000            1999
                                                    ----------------- -------------- --------------- ---------------
                                                                       (IN THOUSANDS OF DOLLARS)
<S>                                                   <C>               <C>            <C>             <C>
Current Tax Provision:
   Federal income                                     $       4,640     $     (731)    $      (44)     $
   State income                                               2,243            590             90              60
                                                      -------------     ----------     ----------      ----------
                                                              6,883           (141)            46              60
                                                      -------------     ----------     ----------      ----------
Deferred Tax Provision:
   Federal income                                             2,165          6,897          3,358
   State income                                                 630          1,523            983
                                                      -------------     ----------     ----------      ----------
                                                              2,795          8,420          4,341
                                                      -------------     ----------     ----------      ----------

Provision for income taxes                            $       9,678     $    8,279     $    4,387      $       60
                                                      =============     ==========     ==========      ==========
</Table>

          The differences between income taxes computed using the statutory
federal income tax rate and those shown in the Consolidated Statement of
Operations are summarized as follows:

<Table>
<Caption>
                                                                                                      PREDECESSOR
                                                                   SUCCESSOR COMPANY                    COMPANY
                                                    ------------------------------------------------ ---------------
                                                        52 WEEKS         53 WEEKS       31 WEEKS        21 WEEKS
                                                         ENDED            ENDED          ENDED            ENDED
                                                       FEBRUARY 2,      FEBRUARY 3,    JANUARY 29,      JUNE 26,
                                                          2002             2001           2000            1999
                                                    ----------------- -------------- --------------- ---------------
                                                                       (IN THOUSANDS OF DOLLARS)
<S>                                                   <C>               <C>            <C>             <C>
Federal (benefit) at statutory rates                  $     (31,177)    $  (32,921)    $  (19,888)     $  (64,807)
State income taxes net of federal
   income tax effect                                          1,868          1,373            697         (10,870)
Nondeductible amortization of excess
   reorganization value and goodwill                         38,433         39,175         22,908           1,303
Miscellaneous items                                             629            727            714
Tax credits                                                     (75)           (75)           (44)
Valuation allowance                                                                                        74,434
                                                      -------------     ----------     ----------      ----------

Provision for income taxes                            $       9,678     $    8,279     $    4,387      $       60
                                                      =============     ==========     ==========      ==========
</Table>

                                     - 69 -
<Page>

          Components of deferred income taxes at February 2, 2002, and February
3, 2001, were as follows:

<Table>
<Caption>
                                                                          FEBRUARY 2,              FEBRUARY 3,
                                                                             2002                     2001
                                                                       ----------------          ----------------
                                                                                (IN THOUSANDS OF DOLLARS)
<S>                                                                      <C>                       <C>
Deferred Tax Liabilities:
   Fixed assets                                                          $     68,261              $     68,797
   Inventory                                                                   28,057                    28,038
   Beneficial leases and goodwill                                              21,420                    21,776
   Pensions                                                                     4,474                     6,512
                                                                         ------------              ------------

                                                                         $    122,212              $    125,123
                                                                         ============              ============

Deferred Tax Assets:
   Nondeductible accruals                                                $     42,363              $     32,336
   Capital leases                                                              12,573                    12,493
   Tax credit carryforwards                                                       249                       286
                                                                         ------------              ------------

                                                                         $     55,185              $     45,115
                                                                         ============              ============

Net Deferred Tax Liability                                               $     67,027              $     80,008
                                                                         ============              ============
</Table>

          In Fiscal 2002, the Company recorded a provision for income taxes of
approximately $9.7 million. In addition, in Fiscal 2002 the Company recorded a
benefit for income taxes (1) approximately $13.9 million associated with the
recording of a minimum pension liability and the write-off of certain prepaid
pension assets and (2) approximately $1.9 million associated with the recording
of a liability equal to the fair value of the Company's interest rate swap
contracts.

          The Company recorded provisions for income taxes for Fiscal 2001 and
the 31-week period ended January 29, 2000 of approximately $8.3 million and $4.4
million, respectively. The Company recorded no income tax benefit relating to
the net operating loss generated during the 21-week period ended June 26, 1999,
as such loss was offset by a valuation allowance. A valuation allowance is
required when it is more likely than not that the recorded value of a deferred
tax asset will not be realized. Due to the operating loss carryforward described
below, the Company did not pay any income taxes for the 52-week period ended
January 29, 2000 (other than $0.2 million of franchise taxes).

                                     - 70 -
<Page>

          At January 30, 1999, the Company had approximately $300 million of
federal net operating loss carryforwards, certain state net operating loss
carryforwards and various tax credits. These amounts were available to reduce
taxes payable otherwise arising through January 29, 2000. On January 30, 2000,
all such net operating loss and tax credit carryforwards were eliminated due to
the implementation of the Plan. In addition, as a result of the implementation
of the Plan, on January 30, 2000, the Company lost the majority of the tax basis
of its long-lived assets (which was approximately $350 million as of January 29,
2000), significantly reducing the amount of tax depreciation and amortization
that the Company will be able to utilize on its tax returns starting in Fiscal
2001.

          The Company made cash payments of approximately $6.2 million and $0.5
million for income taxes in Fiscal 2002 and Fiscal 2001, respectively.

NOTE 9 - EXTRAORDINARY ITEMS:

          The extraordinary items recorded for the 21-week period ended June 26,
1999 includes the write-off of unamortized deferred financing fees associated
with the early retirement of the Company's revolving credit facility prior to
the Petition Date and the extraordinary gain on debt discharge recognized as a
result of the consummation of the Plan. No corresponding tax provision has been
recorded.

                                     - 71 -
<Page>

NOTE 10 - NET LOSS PER SHARE:

          Net loss per share is computed based on the requirements of Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
This standard requires presentation of basic earnings per share ("EPS") computed
based on the weighted average number of common shares outstanding for the
period, and diluted EPS, which gives effect to all potentially dilutive shares
outstanding (i.e., options and warrants) during the period. Income used in the
EPS calculation is net loss for Fiscal 2002, Fiscal 2001 and the 31-week period
ended January 29, 2000. Shares used in the calculation of basic and diluted EPS
were:

<Table>
<Caption>
                                                          52 WEEKS                53 WEEKS                31 WEEKS
                                                           ENDED                   ENDED                    ENDED
                                                        FEBRUARY 2,              FEBRUARY 3,             JANUARY 29,
                                                            2002                    2001                    2000
                                                     -------------------    -------------------    -------------------
                                                                              (IN THOUSANDS)
<S>                                                          <C>                    <C>                    <C>
Shares used in the calculation of
   Basic EPS (weighted average
   shares outstanding)                                       20,056                 20,084                 20,107

   Effect of potentially dilutive securities                      0                      0                      0
                                                        -----------            -----------            -----------

Share used in the calculation
   of Diluted EPS                                            20,056                 20,084                 20,107
                                                        ===========            ===========            ===========
</Table>

          The Fiscal 2002 calculation of diluted EPS excludes the effect of
incremental common stock equivalents aggregating 54,608 shares, since they would
have been antidilutive given the net loss for the year. In addition, the number
of shares used in the calculation of diluted EPS for Fiscal 2002 excludes
options and warrants for the purchase of 1,239,170 shares and 1,000,000 shares,
respectively, for which the exercise price was greater than the average market
price of common shares for the year.

          The Fiscal 2001 calculation of diluted EPS excludes the effect of
incremental common stock equivalents aggregating 1,677 shares, since they would
have been antidilutive given the net loss for the year. The number of shares
used in the calculation of diluted EPS for Fiscal 2001 also excludes additional
options for the purchase of 1,436,274 shares and warrants for the purchase of
1,000,000 shares, respectively, for which the exercise price was greater than
the average market price of common shares for the year.

          There were no incremental potentially dilutive securities for the
31-week period ended January 29, 2000, as the exercise price for options
1,459,500 shares and outstanding warrants 1,000,000 shares was greater than the
average market price of common shares for such period.

          Net loss per share data is not presented for the period ended June 26,
1999, because of the general lack of comparability as a result of the revised
capital structure of the Company.

                                     - 72 -
<Page>

NOTE 11 - LEASES:

          The Company principally operates in leased store facilities with terms
of up to 20 years with renewable options for additional periods. The Company
follows the provisions of Statement of Financial Accounting Standards No. 13,
"Accounting for Leases" ("SFAS 13"), in determining the criteria for capital
leases. Leases that do not meet such criteria are classified as operating leases
and related rentals are charged to expense in the year incurred. In addition to
minimum rentals, substantially all store leases provide for the Company to pay
real estate taxes and other expenses. The majority of store leases also provide
for the Company to pay contingent rentals based on a percentage of the store's
sales in excess of stipulated amounts.

          For Fiscal 2002, Fiscal 2001, the 31-week period ended January 29,
2000 and the 21-week period ended June 26, 1999, capital lease amortization
expense was $6.6 million, $7.6 million, $5.1 million and $3.9 million,
respectively. The following is an analysis of the leased property under capital
leases by major classes:

<Table>
<Caption>
                                                                             ASSET BALANCES AT:
                                                                    FEBRUARY 2,               FEBRUARY 3,
                                                                       2002                      2001
                                                                --------------------       -------------------
                                                                          (IN THOUSANDS OF DOLLARS)
<S>                                                                <C>                        <C>
Store facilities                                                   $    49,692                $    51,943
Warehousing and distribution                                             7,666                      8,033
Other                                                                    2,562                        429
                                                                   -----------                -----------

Total                                                              $    59,920                $    60,405
Less: Accumulated amortization                                         (15,173)                    (9,593)
                                                                   -----------                -----------

Capital lease assets, net                                          $    44,747                $    50,812
                                                                   ===========                ===========
</Table>

                                     - 73 -
<Page>

          The following is a summary by year of future minimum rental payments
for capitalized leases and for operating leases that have initial or remaining
noncancelable terms in excess of one year as of February 2, 2002:

<Table>
<Caption>
                                                               TOTAL              OPERATING            CAPITAL
                                                          -----------------    ----------------    -----------------
                                                                          (IN THOUSANDS OF DOLLARS)

<S>                                                          <C>                  <C>                 <C>
Fiscal Years Ending:
February 1, 2003                                             $    49,579          $    32,864         $    16,715
January 31, 2004                                                  45,499               31,019              14,480
January 29, 2005                                                  41,570               27,941              13,629
January 28, 2006                                                  38,860               25,979              12,881
February 3, 2007                                                  36,391               23,537              12,854
Later years                                                      200,617              149,623              50,994
                                                             -----------          -----------         -----------
Total minimum lease payments                                 $   412,516          $   290,963             121,553
                                                             ===========          ===========

Less: Estimated amount representing interest                                                              (46,149)
                                                                                                      -----------

Present value of net minimum capital
   lease payments                                                                                          75,404
Less: Current portion                                                                                      (8,329)
                                                                                                      -----------

Long-term obligations under capital leases                                                            $    67,075
                                                                                                      ===========
</Table>

          Future minimum rentals have not been reduced by minimum sublease
rental income of $12.3 million due in the future under noncancelable subleases.
During Fiscal 2002, the Company incurred new capital lease obligations of $2.3
million associated with leased equipment. The Company incurred no new capital
lease obligations during Fiscal 2001, the 31-week period ended January 29, 2000
and the 21-week period ended June 26, 1999.

          Minimum rental payments for operating leases were as follows:

<Table>
<Caption>
                                                                                                      PREDECESSOR
                                                                   SUCCESSOR COMPANY                    COMPANY
                                                    ------------------------------------------------ ---------------
                                                        52 WEEKS        53 WEEKS        31 WEEKS        21 WEEKS
                                                         ENDED           ENDED           ENDED           ENDED
                                                      FEBRUARY 2,     FEBRUARY 3,     JANUARY 29,       JUNE 26,
                                                          2002            2001            2000            1999
                                                    -------------------------------- --------------- ---------------
                                                                       (IN THOUSANDS OF DOLLARS)
<S>                                                   <C>              <C>             <C>             <C>
Minimum rentals                                       $      36,734    $   37,761      $   22,245      $   16,693
Contingent rentals                                              543           564             305             334
Less:  Sublease payments                                     (6,541)       (6,508)         (4,466)         (3,325)
                                                      -------------    ----------      ----------      ----------

Net rental payments                                   $      30,736    $   31,817      $   18,084      $   13,702
                                                      =============    ==========      ==========      ==========
</Table>

                                     - 74 -
<Page>

NOTE 12 - LONG-TERM DEBT:

          The long-term debt of Penn Traffic consisted of the obligations
described below as of the dates set forth:

<Table>
<Caption>
                                                                    FEBRUARY 2,               FEBRUARY 3,
                                                                       2002                      2001
                                                                --------------------       -------------------
                                                                          (IN THOUSANDS OF DOLLARS)
<S>                                                                <C>                        <C>
Secured Term Loan                                                  $     108,250              $     113,000
Secured Revolving Credit Facility                                         32,100                     17,500
Other Secured Debt                                                        12,362                     12,674
11% Senior Notes due June 29, 2009                                       100,000                    100,000
                                                                   -------------              -------------

Total Debt                                                         $     252,712              $     243,174
Less: Current maturities of long-term debt                              (140,666)                  (130,812)
                                                                   -------------              -------------

Total Long-Term Debt                                               $     112,046              $     112,362
                                                                   =============              =============
</Table>

          Amounts maturing during each of the next five fiscal years are:
$140.7 million (Fiscal 2003); $0.3 million (Fiscal 2004); $0.2 million
(Fiscal 2005); $0.2 million (Fiscal 2006), $0.2 million (Fiscal 2007) and
$111.1 million thereafter. Such amounts take into account the fact that all
amounts outstanding under the Credit Facility have been classified as Current
maturities of long-term debt as described below. Amounts maturing during each
of the next five fiscal years based on the scheduled maturities of the Credit
Facility are: $7.1 million (Fiscal 2003); $10.0 million (Fiscal 2004); $13.0
million (Fiscal 2005); $40.1 million (Fiscal 2006, including amounts
outstanding under the Revolving Credit Facility at February 2, 2002); $71.5
million (Fiscal 2007) and $111.1 million thereafter.

          The Company incurred interest expense of $36.1 million, $39.2 million,
$22.9 million and $21.8 million, including noncash amortization of deferred
financing costs of $0.9 million, $0.9 million, $0.5 million and $1.4 million for
Fiscal 2002, Fiscal 2001, the 31-week period ended January 29, 2000, and the
21-week period ended June 26, 1999, respectively. Interest paid was $36.2
million, $37.7 million, $21.0 million and $11.7 million for Fiscal 2002, Fiscal
2001, the 31-week period ended January 29, 2000, and the 21-week period ended
June 26, 1999, respectively.

          The estimated fair value of the Company's debt, including current
maturities, was approximately $245 million at February 2, 2002, $221 million at
February 3, 2001, and $215 million at January 29, 2000. The estimated fair value
of the Company's long-term debt has been determined by the Company using market
information provided by an investment banking firm as to the fair value of such
debt amounts. The estimated fair value of the Company's long-term debt does not
necessarily reflect the amount at which the debt could be settled.

                                     - 75 -
<Page>

          The 11% Senior Notes due June 29, 2009, do not contain any mandatory
redemption or sinking fund requirement provisions (other than pursuant to
certain customary exceptions including, without limitation, requiring the
Company to make an offer to repurchase the Senior Notes upon the occurrence of a
change of control), and are optionally redeemable at prices beginning at 106% of
par in 2004 and declining annually thereafter to par in 2008, and at 111% of par
under other specified circumstances. The indenture for the Senior Notes contains
certain negative covenants that, among other things, restrict the Company's
ability to incur additional indebtedness, permit additional liens and make
certain restricted payments.

          In June 1999 the Company entered into the Credit Facility. The Credit
Facility includes (1) the $205 million Revolving Credit Facility and (2) the
$115 million Term Loan. The lenders under the Credit Facility have a first
priority perfected security interest in substantially all of the Company's
assets. The Credit Facility contains a variety of operational and financial
covenants intended to restrict the Company's operations. These include, among
other things, restrictions on the Company's ability to incur debt, make capital
expenditures and make restricted payments as well as requirements that the
Company achieve required levels for Consolidated EBITDA, interest coverage,
fixed charge coverage and funded debt ratio (all as defined in the Credit
Facility).

          As discussed below, the lenders under the Credit Facility have
waived and agreed to forbear until October 31, 2002 (or, if earlier, the date
on which certain other events specified in the Waiver and Forbearance
Agreement occur) from exercising any remedies as a result of an event of
default that arose due to the accounting restatement that resulted from the
false accounting entries at the Company's Penny Curtiss bakery manufacturing
subsidiary. Accordingly, notwithstanding the scheduled maturities of the
Revolving Credit Facility and Term Loan described below, in accordance with
generally accepted accounting principles, all amounts outstanding under the
Credit Facility ($140.4 million at February 2, 2002 and $130.5 million at
February 3, 2001) have been reclassified as Current maturities of long-term
debt.

          The remaining outstanding balance of the Term Loan is scheduled to
mature on June 30, 2006. The Term Loan consists of a $40 million Tranche A
Term Loan ($34 million outstanding at February 2, 2002) and a $75 million
Tranche B Term Loan ($74.25 million outstanding at February 2, 2002). Amounts
of the Term Loan scheduled to mature in future fiscal years are outlined in
the following table:

<Table>
<Caption>
             Fiscal Year Ending                             Amount Maturing
             ------------------                             ---------------
                                                        (In thousands of dollars)
             <S>                                              <C>
             February 1, 2003                                 $       6,750
             January 31, 2004                                         9,750
             January 29, 2005                                        12,750
             January 28, 2006                                         7,750
             February 3, 2007                                        71,250
                                                              -------------

                                                              $     108,250
                                                              =============
</Table>

                                     - 76 -
<Page>

          Availability under the Revolving Credit Facility is calculated
based on a specified percentage of eligible inventory and accounts receivable
of the Company. The Revolving Credit Facility will mature on June 30, 2005.
As of February 2, 2002, there were approximately $32.1 million of borrowings
and $27.7 million of letters of credit outstanding under the Revolving Credit
Facility. Availability under the Revolving Credit Facility was approximately
$133 million as of February 2, 2002 after giving effect to the restatement of
the Company's financial statements (see Note 1).

          On August 14, 2002, the Company received a letter waiving certain
events of default that arose under the Credit Facility as a result of the
accounting restatement that resulted from the false accounting entries at the
Company's Penny Curtiss bakery manufacturing subsidiary (see Note 1). The
waiver letter also stated that the lenders under the Credit Facility would
forbear from taking any action under the Credit Facility as a result of such
defaults and permitted the Company to borrow, repay and reborrow under the
Credit Facility through August 30, 2002.

          On August 29, 2002, the Company received a further extension of the
waiver and forbearance from the lenders under the Credit Facility and entered
into a Waiver and Forbearance Agreement dated as of August 30, 2002. The
Waiver and Forbearance Agreement waives certain events of default that arose
under the Credit Facility as a result of the accounting restatement that
resulted from the false accounting entries at the Company's Penny Curtiss
bakery manufacturing subsidiary or could arise as a result of the Company's
noncompliance with certain financial covenants in the Credit Facility until
October 31, 2002 (or, if earlier, the date on which certain other events
specified in the Waiver and Forbearance Agreement occur). The Waiver and
Forbearance Agreement also provides that the lenders would forbear from
taking any action under the Credit Facility as a result of such defaults
and permitted the Company to borrow, repay and reborrow under the Credit
Facility through October 31, 2002.

          The Waiver and Forbearance Agreement will enable Penn Traffic to
assess whether any other modifications to the Credit Facility would be
required, including modifications to the existing financial covenants. Penn
Traffic anticipates that on or prior to October 31, 2002, it will enter into
a longer-term amendment to the Credit Facility with the lenders that will
enable Penn Traffic to continue to borrow, repay and reborrow under the
Revolving Credit Facility. In the event the Company was unable to negotiate
and enter into such a longer-term amendment on a satisfactory basis with the
lenders under the Credit Facility, the Company believes that it could
refinance the amounts outstanding under the Credit Facility with an alternate
lender. There can be no assurance, however, that the Company would be able to
complete any such financing on terms comparable to the terms of the Credit
Facility or otherwise acceptable to the Company.


                                       - 77 -
<PAGE>

          The interest rate on borrowings under the Credit Facility is
determined, at the Company's option, as a spread over the London InterBank
Offered Rate ("LIBOR") or the prime rate (as defined). The spreads used in such
calculations are adjusted on a quarterly basis depending upon the ratio of the
Company's total debt (including capital leases) plus outstanding letters of
credit to Consolidated EBITDA. The spread over LIBOR or prime utilized in such
calculation for each component of the Credit Facility is between the amounts
shown below:


<Table>
<Caption>
                                                    LIBOR-BASED                     PRIME-BASED
                                                    BORROWINGS                      BORROWINGS
                                             --------------------------      --------------------------
<S>                                             <C>                              <C>
Revolving Credit                                1.875% - 2.750%                  0.875% - 1.750%

Term Loan A                                     1.875% - 2.750%                  0.875% - 1.750%

Term Loan B                                     2.750% - 3.000%                  1.750% - 2.000%
</Table>

          The Company currently holds interest rate swap contracts with a
notional value of $50 million, which expire in April 2005, for the purpose of
hedging interest rate risk associated with variable rate debt. Under the terms
of these agreements, the Company makes payments at a weighted average fixed
interest rate of 7.08% per annum and receives payments at variable interest
rates based on LIBOR.

          The weighted average interest rate on borrowings under the Credit
Facility (including the effect of the interest rate swap contracts described
above) was 6.0% and 9.2% at February 2, 2002 and February 3, 2001, respectively.

                                     - 78 -

<Page>

NOTE 13 - EMPLOYEE BENEFIT PLANS:

          The majority of the Company's employees are covered by either defined
benefit plans or defined contribution plans.

          The following sets forth the net pension expense (income) recognized
for the defined benefit pension plans, as well as the benefit obligations,
assets and the funded status of the Company's defined benefit pension plans:

<Table>
<Caption>
                                                                                                      PREDECESSOR
                                                                   SUCCESSOR COMPANY                    COMPANY
                                                    ------------------------------------------------ ---------------
                                                         52 WEEKS       53 WEEKS        31 WEEKS        21 WEEKS
                                                          ENDED          ENDED           ENDED           ENDED
                                                       FEBRUARY 2,     FEBRUARY 3,     JANUARY 29,      JUNE 26,
                                                          2002            2001            2000            1999
                                                    -------------------------------- --------------- ---------------
                                                                       (IN THOUSANDS OF DOLLARS)
<S>                                                   <C>              <C>             <C>             <C>
Service cost                                          $       3,951    $    4,142      $    3,171      $    2,230
Interest cost                                                13,781        13,578           7,608           5,385
Expected return on plan assets                              (20,097)      (20,113)        (12,139)         (8,714)
Net amortization                                                (62)         (232)            (46)            484
                                                      -------------    ----------      ----------      ----------
Net pension income                                    $      (2,427)   $   (2,625)     $   (1,406)     $     (615)
                                                      =============    ==========      ==========      ==========

<Caption>
                                                                               PENSION BENEFITS
                                                                      FEBRUARY 2,            FEBRUARY 3,
                                                                         2002                   2001
                                                                   -----------------     -----------------
                                                                          (IN THOUSANDS OF DOLLARS)
<S>                                                                   <C>                     <C>
Change in benefit obligation:
Benefit obligation at beginning of year                               $    192,794            $  175,843
Service cost                                                                 3,951                 4,142
Interest cost                                                               13,781                13,578
Settlement of obligations                                                   (7,959)
Amendment                                                                      438
Actuarial loss                                                              11,596                11,131
Benefits paid                                                              (12,808)              (11,900)
                                                                      ------------            ----------
Benefit obligation at end of year                                     $    201,793            $  192,794
                                                                      ============            ==========

Change in plan assets:
Fair value of plan assets at beginning of year                        $    195,387            $  201,553
Actual (loss) return on plan assets                                         (5,442)                3,279
Settlement of obligations                                                   (7,122)
Company contributions                                                        5,829                 2,455
Benefits paid                                                              (12,808)              (11,900)
                                                                      ------------            ----------
Fair value of plan assets at end of year                              $    175,844            $  195,387
                                                                      ============            ==========

Funded status of the plans                                            $    (25,949)           $    2,593
Unrecognized actuarial loss                                                 50,158                13,289
Unrecognized prior service cost                                                438
                                                                      ------------            ----------
Net amount recognized                                                 $     24,647            $   15,882
                                                                      ============            ==========
</Table>

                                     - 79 -
<Page>

          Components of the amounts recognized in the Company's Consolidated
Balance Sheet consist of:

<Table>
<Caption>
                                                   PENSION BENEFITS
                                             FEBRUARY 2,       FEBRUARY 3,
                                                2002              2001
                                             -----------       -----------
                                                (IN THOUSANDS OF DOLLARS)
<S>                                          <C>               <C>
Prepaid benefit cost                         $    10,409       $    20,375
Accrued benefit liability                        (20,177)           (4,493)
Intangible asset                                     438
Accumulated other comprehensive income            33,977
                                             -----------       -----------
Net amount recognized                        $    24,647       $    15,882
                                             ===========       ===========
</Table>

          The projected benefit obligation, accumulated benefit obligation and
fair value of plan assets for the pension plans with accumulated benefit
obligations in excess of plan assets were $157.2 million, $153.0 million and
$132.9 million, respectively, as of February 2, 2002. The projected benefit
obligation, accumulated benefit obligation and fair value of plan assets for the
pension plans with accumulated benefit obligations in excess of plan assets were
$26.6 million, $26.6 million and $23.5 million, respectively, as of February 3,
2001.

          In calculating benefit obligations and plan assets for Fiscal 2002,
the Company assumed a weighted average discount rate of 7.25%, compensation
increase rate of 3.5% and an expected long-term rate of return on plan assets of
10.5%. In calculating benefit obligations and plan assets for Fiscal 2001, the
Company assumed a weighted average discount rate of 7.5%, compensation increase
rate of 3.5% and an expected long-term rate of return on plan assets of 10.5%.
In calculating benefit obligations and plan assets for the 31-week period ended
January 29, 2000, and the 21-week period ended June 26, 1999, the Company
assumed a weighted average discount rate of 8.0%, compensation increase rate of
3.5% and an expected long-term rate of return on plan assets of 10.5%.

          Pursuant to Statement of Accounting Standards No. 87, "Employers'
Accounting for Pensions," during Fiscal 2002, the Company recognized a pretax
loss of $34.0 million ($20.0 million, net of an income tax benefit) in
accumulated other comprehensive income. This was comprised of (1) the recording
of an additional minimum pension liability of $20.2 million in other noncurrent
liabilities (representing the amount by which the accumulated benefit obligation
exceeded the fair value of plan assets) and (2) a $13.8 million reduction of the
prepaid pension assets included in other assets. There was no additional minimum
pension liability adjustment as of February 3, 2001, or January 29, 2000.

          The Company's defined benefit plans, other than the Penn Traffic Cash
Balance Plan, generally provides a retirement benefit to employees based on (1)
specified percentages applied to final average compensation, as defined, coupled
with years of service earned to the date of retirement or (2) specific dollar
amounts coupled with years of service earned to the date of retirement. The
assets of Penn Traffic's defined benefit plans are maintained in separate trusts
and are managed by independent investment managers. The assets are invested
primarily in equity and long-term and short-term debt securities.

                                     - 80 -
<Page>

          The Penn Traffic Cash Balance Plan is a defined benefit Plan which
assigns account balances to the independent participants. Account balances are
credited based on a fixed percentage of each participant's compensation paid for
the year, plus interest at a rate comparable to the yield on long-term treasury
securities. Upon retirement, employees are permitted to take a lump-sum
distribution equal to their account balance, or receive an annuity benefit based
on formulas set for the Plan.

          Contributions by the Company to its 401(k) Plan totaled approximately
$1.1 million, $1.1 million, $0.4 million and $0.7 million in Fiscal 2002, Fiscal
2001, the 31-week period ended January 29, 2000 and the 21-week period ended
June 26, 1999, respectively.

          The Company also contributes to multi-employer pension funds, which
cover certain union employees under collective bargaining agreements. Such
contributions aggregated $4.6 million, $3.8 million, $1.6 million and $2.1
million in Fiscal 2002, Fiscal 2001, the 31-week period ended January 29, 2000
and the 21-week period ended June 26, 1999, respectively. The applicable portion
of the total plan benefits and net assets of these plans is not separately
identifiable. The Company is currently the majority contributor to a
multi-employer plan covering substantially all of its employees in eastern
Pennsylvania. Due to the Company's decision to exit certain markets (see Note
5), the Company has accrued a withdrawal liability to cover its pro rata portion
of the unfunded vested benefit obligations in this plan.

          During Fiscal 2002, one of the Company's defined benefit plans was
terminated. The assets and liabilities associated with the vested participants
in such plan (other than retirees) were transferred to a multi-employer pension
fund. The remaining assets and the liabilities associated with retired
participants in such plan were transferred into the Penn Traffic Cash Balance
Plan.

                                     - 81 -
<Page>

NOTE 14 - STOCKHOLDERS' EQUITY:

          The 1999 Equity Incentive Plan (the "Equity Plan") was adopted on the
Effective Date. The Equity Plan provides for long-term incentives based upon
objective, quantifiable measures of the Company's performance over time through
the payment of incentive compensation of the types commonly known as stock
options. The Equity Plan makes available the granting of options to acquire an
aggregate of 2,297,000 shares of Common Stock. All of the Company's officers and
employees are eligible to receive options under the Equity Plan. The options
expire 10 years after the date of grant and generally vest 20% on the date of
grant and 20% on each of the next four anniversary dates. As of February 2,
2002, options to acquire an additional 1,058,000 shares may be granted by the
Compensation Committee of the Company's Board of Directors.

          In July 1999, the Company adopted the 1999 Directors' Stock Option
Plan (the "Directors Plan"). The Directors Plan makes available to the Company's
directors, who are not employees of the Company, options to acquire in the
aggregate up to 250,000 shares of Common Stock. Under the terms of the Directors
Plan, each eligible director receives as of the date of appointment to the Board
of Directors, an option to purchase 20,000 shares of Common Stock (subject to
antidilution adjustments) at a price equal to the fair value (as defined in the
Directors Plan) of such shares on the date of grant. The Directors Plan also
provides for the issuance of additional options annually thereafter as of the
first business day after the conclusion of each Annual Meeting of Stockholders
of the Company. The options expire 10 years after the date of grant and vest
immediately upon issuance. As of February 2, 2002, options to acquire an
additional 76,000 shares may be granted under the Directors Plan.

          A summary of the status of the Company's Equity Plan and Directors
Plan as of February 2, 2002, February 3, 2001, and January 29, 2000, and the
changes during Fiscal 2002, Fiscal 2001 and the 31-week period ended January 29,
2000, are presented below:

<Table>
<Caption>
                                                Equity Plan                         Directors Plan
                                     ---------------------------------   ---------------------------------
                                                          Weighted                             Weighted
                                                          Average                              Average
                                          Number          Exercise            Number           Exercise
Plan Options                            of Shares          Price            of Shares           Price
------------                         ---------------   ---------------   ---------------   ---------------
<S>                                        <C>         <C>                       <C>       <C>
Outstanding at June 26, 1999
    Granted                                2,164,500   $         14.53           140,000   $         12.13
    Forfeited                               (845,000)            15.55
                                     ---------------   ---------------   ---------------   ---------------

Outstanding at January 29, 2000            1,319,500             13.87           140,000             12.13
    Granted                                  129,000              3.94            27,000              5.96
    Forfeited                                (73,500)            12.13
                                     ---------------   ---------------   ---------------   ---------------

Outstanding at February 1, 2001            1,375,000             13.03           167,000             11.13
    Granted                                  510,000              4.35             7,000              4.48
    Exercised                                 (2,000)             3.94
    Forfeited                               (644,000)            16.18
                                     ---------------   ---------------   ---------------   ---------------

Outstanding at February 2, 2002            1,239,000   $          7.84           174,000   $         10.86
                                     ===============   ===============   ===============   ===============
</Table>

                                     - 82 -
<Page>

          As of February 2, 2002, the 1,239,000 options outstanding under the
Equity Plan have exercise prices between $3.94 and $12.13 and a weighted average
remaining contractual life of 8.5 years. As of February 2, 2002, the 174,000
options outstanding under the Directors Plan have exercise prices between $4.48
and $12.13 and a weighted average remaining contractual life of 7.6 years.

          The following table summarizes information about stock options
outstanding at February 2, 2002:

<Table>
<Caption>
                                        OPTIONS OUTSTANDING          OPTIONS EXERCISABLE
                                  --------------------------------   -------------------
                 Exercise                             Remaining
                  Price               Shares             Life               Shares
             ----------------     --------------    --------------   -------------------
               <S>                    <C>                 <C>              <C>
               $   3.94               107,000             8.8               42,800
                   4.35               510,000             9.7              102,000
                   4.48                 7,000             9.4                7,000
                   5.89                20,000             8.2               20,000
                   6.16                 7,000             8.4                7,000
                   8.75               140,000             7.6               84,000
                  12.13               622,000             7.4              429,200
</Table>

          Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), defines a fair value based method of
accounting for an employee stock option by which compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period. A company may elect to adopt SFAS 123 or elect to continue
accounting for its stock option or similar equity awards using the method of
accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), by which compensation cost is
measured at the date of grant based on the excess of the market value of the
underlying stock over the exercise price. The Company has elected to continue to
account for its stock-based compensation plans under the provisions of APB 25.
No compensation expense has been recognized in the accompanying financial
statements for options granted under the Equity Plan or Directors Plan except as
described below.

          During Fiscal 2002, options previously granted to certain executives
to purchase 497,000 shares at $18.30 per share and 87,000 shares at $8.75 per
share were canceled. At the same time, new options to purchase 510,000 shares at
$4.35 were granted to the same executives. In accordance with APB 25, such new
options are deemed to be variable options and under FASB Interpretation No. 44,
variable accounting will apply to the new options to purchase 477,000 shares.
This requires recognition of compensation expense for changes in intrinsic
option value over the vesting period. Compensation expense recognized in Fiscal
2002 for these options was approximately $0.4 million.

                                     - 83 -
<Page>

          Prior to the Effective Date, the Company had a 1988 Stock Option plan,
a Performance Incentive Plan and a stock option plan for directors. Prior to the
Effective Date, there were stock options outstanding under each of these plans.
In addition, certain persons previously affiliated with Miller Tabak Hirsch +
Co. ("MTH") held warrants to purchase 289,000 shares of common stock ("Old
Warrants"). On the Effective Date, pursuant to the Plan, the Company's former
common stock was canceled. As a result, all stock options and warrants
outstanding as of the Effective Date were canceled.

          Pro forma information regarding Net loss and Net loss per share is
required by SFAS 123 and has been determined as if the Company had accounted for
its employee stock options under the fair value method of that statement. The
weighted average fair values of options granted during Fiscal 2002, Fiscal 2001
and the 31-week period ended January 29, 2000 are as follows:

<Table>
<Caption>
                                  52 WEEKS               53 WEEKS               31 WEEKS
                                   ENDED                  ENDED                  ENDED
                                 FEBRUARY 2,            FEBRUARY 1,            JANUARY 29,
                                    2002                   2001                   2000
                                -----------            -----------            -----------
<S>                             <C>                    <C>                    <C>
Equal to Market Price           $      2.14            $      1.98            $      4.89

Less than Market Price                 1.90                   3.18

In excess of Market Price                                     2.21                   0.30
</Table>

          The average fair value of these options was estimated at the date of
grant using the Black-Scholes options pricing model with the following weighted
average assumptions:

<Table>
<Caption>
                                                 52 WEEKS               53 WEEKS               31 WEEKS
                                                  ENDED                  ENDED                  ENDED
                                                FEBRUARY 2,            FEBRUARY 1,            JANUARY 29,
                                                   2002                   2001                   2000
                                            -------------------    -------------------    -------------------
<S>                                               <C>                    <C>                    <C>
Risk free interest rate                           3.95%                  5.81%                  5.77%

Weighted average expected life (in years)         4.97                   4.65                   3.95

Volatility                                          50%                    50%                    40%

Dividends                                            0                      0                      0
</Table>

                                     - 84 -
<Page>

          For purpose of the pro forma disclosures, the estimated fair value of
the options is amortized over the options' vesting periods. This pro forma
information is as follows:

<Table>
<Caption>
                                          RESTATED               RESTATED               RESTATED
                                          52 WEEKS               53 WEEKS               31 WEEKS
                                            ENDED                 ENDED                   ENDED
                                         FEBRUARY 2,           FEBRUARY 3,             JANUARY 29,
                                            2002                   2001                   2000
                                      --------------           ------------           ------------
                                             (In thousands of dollars, except per share data)
<S>                                     <C>                    <C>                    <C>
Net loss - as reported                  $    (98,755)          $   (102,340)          $    (61,209)

Net loss - pro forma                         (99,466)              (103,261)               (62,362)

Net loss per share - as reported:
   Basic and diluted                           (4.92)                 (5.09)                 (3.04)

Net loss per share - pro forma:
   Basic and diluted                           (4.96)                 (5.14)                 (3.10)
</Table>

          On June 29, 2000, the Company announced that its Board of Directors
has authorized the Company to repurchase up to an aggregate value of $10 million
of Penn Traffic's common stock from time to time in the open market or privately
negotiated transactions. The timing and amounts of purchases will be governed by
prevailing market conditions and other considerations. To date, the Company has
repurchased 53,000 shares of common stock at an average price of $7.08 per
share.

                                     - 85 -
<Page>

NOTE 15 - RELATED PARTIES:

          During Fiscal 1999 and the first month of Fiscal 2000, the Company's
former Chairman and current Chief Financial Officer served as general partner of
the managing partner of MTH and Executive Vice President of MTH, respectively.
During Fiscal 1999 and the first month of Fiscal 2000, MTH provided financial
consulting and business management services to the Company. During Fiscal 1999,
the Company paid MTH fees of $1.44 million for such services.

          On February 28, 1999, the Company terminated its agreement with MTH.
On March 1, 1999, the Company engaged the services of Hirsch & Fox LLC (an
entity formed by the Company's former Chairman and current Chief Financial
Officer) to provide financial consulting and business management services during
the pendency of the Bankruptcy Cases, for which the Company agreed to pay Hirsch
& Fox LLC a management fee at an annual rate of $1.45 million. On the Effective
Date, the Company and Hirsch & Fox LLC entered into a new two-year management
agreement pursuant to which Hirsch & Fox LLC provided the services of the
principals of Hirsch & Fox LLC as Chairman and Vice Chairman, respectively, of
the Executive Committee of the Company. In return for these services, Hirsch &
Fox LLC received management fees at an annual rate of $1.45 million. As a result
of the foregoing, during Fiscal 2001 the Company paid Hirsch & Fox LLC fees of
$1.33 million.

          At the end of Fiscal 2000, the Company and Hirsch & Fox LLC agreed to
terminate the management agreement prior to its expiration and the Company made
a payment of $4.9 million to Hirsch & Fox LLC in full satisfaction of all
amounts payable under such agreement and in return for the cancellation of
options to purchase 840,000 shares of Common Stock held by one of the members of
Hirsch & Fox LLC. Such agreement was executed on February 1, 2000. Simultaneous
with the termination of the management agreement, the Company entered into an
employment agreement with Martin A. Fox, one of the members of Hirsch & Fox LLC,
pursuant to which the Company agreed to employ Mr. Fox as the Company's
Executive Vice President and Chief Financial Officer. On December 19, 2001, the
Company entered into an amended and restated employment agreement with Mr. Fox.

NOTE 16 - COMMITMENTS AND CONTINGENCIES:

          The Company enters into various purchase commitments in the normal
course of business. No losses are expected to result from these purchase
commitments.

          The Company and its subsidiaries are involved in several lawsuits,
claims and inquiries, most of which are routine to the nature of the business.
Estimates of the future liability of these matters are based on an evaluation of
currently available facts regarding each matter. Liabilities are recorded when
it is probable that costs will be incurred and can be reasonably estimated.

          Based on management's evaluation, the resolution of these matters
will not materially affect the financial position, results of operations or
liquidity of the Company.

                                     - 86 -
<Page>

NOTE 17 - SEGMENT INFORMATION

          The Company sells and distributes products that are typically found in
supermarkets. In the fourth quarter of Fiscal 2002, management reevaluated its
reportable operating segments to more closely reflect how the business is
currently analyzed and evaluated. The Company has two reportable segments: the
Retail Food Business and the Wholesale Food Distribution Business. The Retail
Food Business consists of more than 200 stores which the Company operates and a
bakery processing operation. The Wholesale Food Distribution Business supplies
independently owned supermarkets located primarily in New York and Pennsylvania
with food and non-food products.

          The Company's senior management utilizes more than one measurement to
evaluate segment performance and allocate resources. However, the dominant
measures utilized are (1) Revenues and (2) EBITDA before unallocated
expenses/income.

          The accounting policies of the reportable segments are the same as
those described in Note 1 except that the Company accounts for inventory on a
FIFO basis at the segment level compared to a LIFO basis at the consolidated
level.

          The table below presents Revenues and EBITDA by reportable segment:

<Table>
<Caption>
                                                                                WHOLESALE
                                                           RETAIL                  FOOD
                                                            FOOD               DISTRIBUTION              TOTAL
                                                       ---------------        ---------------        ---------------
                                                                        (IN THOUSANDS OF DOLLARS)
<S>                                                    <C>                    <C>                    <C>
RESTATED 52 WEEKS ENDED FEBRUARY 2, 2002

Revenues                                               $     2,112,257        $       274,781        $     2,387,038
EBITDA(1)                                                      140,299(2)              17,890                158,189

RESTATED 53 WEEKS ENDED FEBRUARY 1, 2001

Revenues                                               $     2,113,542        $       278,152        $     2,391,694
EBITDA(1)                                                      137,103(3)              19,080                156,183

RESTATED 31 WEEKS ENDED JANUARY 29, 2000

Revenues                                               $     1,237,198        $       167,047        $     1,404,245
EBITDA(1)                                                       88,230                 10,710                 98,940

RESTATED 21 WEEKS ENDED JUNE 26, 1999

Revenues                                               $       838,217        $       119,063        $       957,280
EBITDA(1)                                                       48,322                  6,475                 54,797
</Table>

                                     - 87 -
<Page>

          Reconciliation of Total segment revenues to Consolidated revenues and
Total EBITDA for reportable segments to Loss before income taxes and
extraordinary items:

<Table>
<Caption>
                                                                                                       PREDECESSOR
                                                            SUCCESSOR COMPANY                            COMPANY
                                          ----------------------------------------------------        ------------
                                             RESTATED            RESTATED            RESTATED            RESTATED
                                             52 WEEKS            53 WEEKS            31 WEEKS            21 WEEKS
                                              ENDED               ENDED               ENDED               ENDED
                                           FEBRUARY 2,         FEBRUARY 1,         JANUARY 29,           JUNE 26,
                                               2002                2001                2000                1999
                                          ------------        ------------        ------------        ------------
<S>                                       <C>                 <C>                 <C>                 <C>
REVENUES:
Total segment revenues                    $  2,387,038        $  2,391,694        $  1,404,245        $    957,280
Other revenues(4)                               16,509              20,412              16,741              11,754
                                          ------------        ------------        ------------        ------------
    Consolidated revenues                 $  2,403,547        $  2,412,106        $  1,420,986        $    969,034
                                          ============        ============        ============        ============

EBITDA(1):
Total EBITDA for
    reportable segments                   $    158,189        $    156,183        $     98,940        $     54,797
New England Lease income                                             5,726               7,443               5,086
Unallocated expenses/income                    (58,782)            (63,230)            (40,354)            (31,167)
Special charge(5)                                                                                           (3,900)
Unusual items(6)                                                     1,741              (7,408)              4,631
Depreciation and amortization                  (41,926)            (41,870)            (26,176)            (25,832)
Amortization of excess
    reorganization value                      (109,810)           (111,928)            (65,452)
LIFO provision                                    (648)             (1,519)               (892)             (1,009)
Interest expense                               (36,100)            (39,164)            (22,923)            (21,794)
Reorganization items                                                                                      (165,974)
                                          ------------        ------------        ------------        ------------
Loss before income taxes
    and extraordinary items               $    (89,077)       $    (94,061)       $    (56,822)       $   (185,162)
                                          ============        ============        ============        ============
</Table>

   (1)    EBITDA is earnings before interest, taxes, depreciation, amortization,
          amortization of excess reorganization value, LIFO provision, special
          charges, unusual items, reorganization items and extraordinary items.

   (2)    Retail Food EBITDA for the 52-week period ended February 2, 2002
          includes loyalty card startup costs of $2.4 million.

   (3)    Retail Food EBITDA for the 53-week period ended February 3, 2001
          includes loyalty card startup costs of $1.5 million and startup costs
          and operating losses associated with the commencement of operation of
          the Company's New England stores of $1.1 million.

   (4)    Other Revenues include income associated with the Company's prior
          lease of 10 stores in New England to another supermarket chain which
          expired in August 2000 of $5.7 million, $7.4 million and $5.1 million
          for the 53-week period ended February 3, 2001, the 31-week period
          ended January 29, 2000 and the 21-week period ended June 26, 1999.

   (5)    See Note 4 to the Consolidated Financial Statements.

   (6)    See Note 5 to the Consolidated Financial Statements.

                                     - 88 -
<Page>

REPORT OF MANAGEMENT

          Penn Traffic's management has prepared the financial statements
presented in this Annual Report on Form 10-K/A and is responsible for the
integrity of all information contained herein. The financial statements
presented in this report have been audited by the independent accountants
appointed by the Board of Directors on the recommendation of its Audit Committee
and management. The Company maintains an effective system of internal accounting
controls. The independent accountants, with respect to financial reporting,
obtain an understanding of the Company's internal accounting controls and
conduct such tests and related procedures as they deem necessary to express an
opinion on the fairness of the presentation of the financial statements. The
Audit Committee, composed solely of outside directors, meets periodically with
management and independent accountants to review auditing and financial
reporting matters and to ensure that each group is properly discharging its
responsibilities.


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

          None

                                     - 89 -
<Page>

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

          The information required by this Item is incorporated herein by
reference to the captions "Election of Directors" and "Executive Officers" in
the Company's Proxy Statement to be filed in connection with the Company's
Annual Meeting of Stockholders to be held on or about July 17, 2002.

ITEM 11.  EXECUTIVE COMPENSATION

          The information required by this Item is incorporated herein by
reference to the caption "Executive Compensation" in the Company's Proxy
Statement to be filed in connection with the Company's Annual Meeting of
Stockholders to be held on or about July 17, 2002. The information set forth in
"Compensation and Stock Option Committee" and "Performance Graph" in the
Company's Proxy Statement to be filed in connection with the Company's Annual
Meeting of Stockholders to be held on or about July 17, 2002, is not deemed
"filed" as a part hereof.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The information required by this Item is incorporated herein by
reference to the caption "Security Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement to be filed in connection with the
Company's Annual Meeting of Stockholders to be held on or about July 17, 2002.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The information required by this Item is incorporated herein by
reference to the caption "Compensation of Directors" in the Company's Proxy
Statement to be filed in connection with the Company's Annual Meeting of
Stockholders to be held on or about July 17, 2002.

                                     - 90 -
<Page>

                                     PART IV

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

          The index for Financial Statements and Supplementary Data is on page
47 under Item 8 of this Form 10-K/A.


EXHIBITS:

The following are filed as Exhibits to this Report:


EXHIBIT NO.                          DESCRIPTION

   2.1         Joint Plan of Reorganization of Penn Traffic and certain of its
               subsidiaries under Chapter 11 of The U.S. Bankruptcy Code (the
               "Joint Plan") (incorporated by reference to Exhibit 2.1 to Form
               8-K filed on June 11, 1999).

   3.1         Amended and Restated Certificate of Incorporation of Penn Traffic
               (incorporated by reference to Exhibit 1 to Form 8-A12G/A filed on
               June 29, 1999).

   3.2         Amended and Restated By-Laws of Penn Traffic (incorporated by
               reference to Exhibit 2 to Form 8-A12G/A filed on June 29, 1999).

   4.1         Indenture, including form of 11% Senior Note due June 29, 2009,
               dated as of June 29, 1999, between Penn Traffic and IBJ Whitehall
               Bank and Trust Company, as Trustee (incorporated by reference to
               Exhibit 3 to Form 8-A12G/A filed on June 29, 1999).

   4.2         Warrant Agreement, dated June 29, 1999, between Penn Traffic and
               Harris Trust and Savings Bank (incorporated by reference to
               Exhibit 1 to Form 8-A12G filed on June 29, 1999).

   4.3         Form of Common Stock Certificate (incorporated by reference to
               Exhibit 4.2 to Form 10-K filed on January 28, 1995).

   4.4         Form of Warrant Certificate adopted as part of Joint Plan
               (incorporated by reference to Exhibit 1 to Form 8-A12G filed on
               June 29, 1999).

                                     - 91 -
<Page>

EXHIBITS (CONTINUED):

EXHIBITS NO.                         DESCRIPTION

   10.1        Amended and Restated Employment Agreement of Joseph V. Fisher,
               dated December 19, 2001 (incorporated by reference to Exhibit
               10.1 to Form 10-K filed May 3, 2002).

   10.2        Management Agreement of Hirsch & Fox LLC, dated June 29, 1999
               (incorporated by reference to Exhibit 10.23 to Form 10-Q filed on
               September 14, 1999).

   10.2A       Amended and Restated Management Agreement of Hirsch & Fox LLC,
               dated December 2, 1999 (incorporated by reference to Exhibit
               10.23A to Form 10-Q filed on December 14, 1999).

   10.2B       Termination of Management Agreement dated January 31, 2000 among
               Hirsch & Fox LLC, Gary D. Hirsch, Martin A. Fox and Penn Traffic
               (incorporated by reference to Exhibit 10.3B to Form 10-K filed on
               April 28, 2000).

   10.3        Amended and Restated Employment Agreement of Martin A. Fox, dated
               December 19, 2001 (incorporated by reference to Exhibit 10.3 to
               Form 10-K filed May 3, 2002).

   10.4        1999 Equity Incentive Plan (incorporated by reference to Exhibit
               10.24 to Form 10-Q filed on September 14, 1999).

   10.5        1999 Directors' Stock Option Plan (incorporated by reference to
               Exhibit 10.25 to Form 10-Q filed on September 14, 1999).

   10.6        Supplemental Retirement Plan for Non-Employee Executives
               (incorporated by reference to Exhibit 10.26 to Form 10-Q filed on
               September 14, 1999).

   10.7        Registration Rights Agreement (incorporated by reference to
               Exhibit 10.27 to Form 10-Q filed on September 14, 1999).

   10.8        Revolving Credit and Term Loan Agreement dated as of June 29,
               1999, by and among Penn Traffic, certain of its subsidiaries,
               Fleet Capital Corporation and the Lenders party thereto
               (incorporated by reference to Exhibit 10.1 to Form 8-K filed on
               July 14, 1999).

   10.8A       Amendment No. 1 to the Revolving Credit and Term Loan Agreement
               by and among Penn Traffic, certain of its subsidiaries, Fleet
               Capital Corporation and the Lenders party thereto (incorporated
               by reference to Exhibit 10.10A to Form 10-Q filed on September
               12, 2000).

                                     - 92 -
<Page>

EXHIBITS (CONTINUED):

EXHIBITS NO.                         DESCRIPTION

   10.8B       Amendment No. 2 to the Revolving Credit and Term Loan Agreement
               by and among Penn Traffic, certain of its subsidiaries, Fleet
               Capital Corporation and the lenders party thereto (incorporated
               by reference to Exhibit 10.10B to Form 10-Q filed on November 3,
               2001).

   10.8C       Amendment No. 3 to the Revolving Credit and Term Loan Agreement
               by and among Penn Traffic, certain of its subsidiaries, Fleet
               Capital Corporation and the lenders party thereto (incorporated
               by reference to Exhibit 10.8C to Form 10-K filed May 3, 2002).

   10.9        Collateral and Security Agreement, dated as of June 29, 1999,
               made by Penn Traffic and certain of its subsidiaries in favor of
               Fleet Capital Corporation (incorporated by reference to Exhibit
               10.2 to Form 8-K filed on July 14, 1999).

   21.1        Subsidiaries of Penn Traffic (incorporated by reference to
               Exhibit 21.1 to Penn Traffic's 1994 10-K).

  *23.1        Consent of Independent Accountants.

----------
* Filed herewith.

          Copies of the above exhibits will be furnished without charge to any
shareholder by writing to Vice President - Finance and Chief Accounting Officer,
The Penn Traffic Company, 1200 State Fair Boulevard, Syracuse, New York
13221-4737.


REPORTS ON FORM 8-K

          No reports on Form 8-K were filed during fiscal quarter ended February
2, 2002.

                                     - 93 -
<Page>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

THE PENN TRAFFIC COMPANY

       September 18, 2002               By:   /s/ Joseph V. Fisher
       ------------------                     ----------------------------------
           DATE                               Joseph V. Fisher
                                              President, Chief Executive Officer


                                     - 94 -
<Page>

                            THE PENN TRAFFIC COMPANY

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS

                            (IN THOUSANDS OF DOLLARS)

<Table>
<Caption>
Column A                                   Column B       Column C        Column D         Column E
--------                                   --------       --------        --------         --------
                                                          Additions
                                            Balance        Charged        Deductions        Balance
                                         at beginning     to costs           from           at end
Description                                of period    and expenses       accounts        of period
-----------                              ------------   ------------      ----------       ---------
<S>                                        <C>           <C>              <C>              <C>
Reserve deducted from asset
  to which it applies:

SUCCESSOR COMPANY:

FOR THE 52 WEEKS ENDED
   FEBRUARY 2, 2002

   Provision for doubtful accounts         $     4,634   $        399     $     2,926(1)   $     2,107
                                           ===========   ============     ===========      ===========


FOR THE 53 WEEKS ENDED
   FEBRUARY 3, 2001

   Provision for doubtful accounts         $    10,561   $      2,048     $     7,975(1)   $     4,634
                                           ===========   ============     ===========      ===========


FOR THE 31 WEEKS ENDED
   JANUARY 29, 2000

   Provision for doubtful accounts         $     8,650   $      1,965     $        54(1)   $    10,561
                                           ===========   ============     ===========      ===========

   Tax valuation allowance                 $   104,321   $          0     $   104,321(2)   $         0
                                           ===========   ============     ===========      ===========

PREDECESSOR COMPANY:

FOR THE 21 WEEKS ENDED
   JUNE 26, 1999

   Provision for doubtful accounts         $     5,731   $      3,598     $       679(1)   $     8,650
                                           ===========   ============     ===========      ===========

   Tax valuation allowance                 $   104,321   $          0     $         0      $   104,321
                                           ===========   ============     ===========      ===========

</Table>

   (1)    Uncollectible receivables written off, net of recoveries.

   (2)    Valuation allowance eliminated due to the implementation of
          fresh-start reporting.

                                     - 95 -
<Page>

                            THE PENN TRAFFIC COMPANY

                               SUPPLEMENTARY DATA


QUARTERLY FINANCIAL DATA (UNAUDITED)


Summarized below is quarterly financial data for the fiscal years ended February
2, 2002 ("Fiscal 2002") and February 3, 2001 ("Fiscal 2001"). As described in
"Notes to the Consolidated Financial Statements - Note 1," the Company has
restated its financial statements for a three and one-quarter year period ended
May 4, 2002. The tables below present the quarterly financial data for Fiscal
2002 and Fiscal 2001 as restated and as previously reported.

<Table>
<Caption>

                                                                  Restated Fiscal 2002
                                        --------------------------------------------------------------------------
                                            1st                 2nd                 3rd                 4th
                                        --------------     ---------------    -----------------    ---------------
                                          13 Weeks           13 Weeks            13 Weeks            13 Weeks
                                           Ended               Ended               Ended               Ended
                                           May 5,            August 4,          November 3,         February 2,
DESCRIPTION                                 2001               2001                2001              2002 (1)
-----------                             --------------     ---------------    -----------------    ---------------
                                                    (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                  <C>
Revenues                                  $  578,785         $  611,383         $   598,631          $   614,748
Gross Margin                                 154,695            164,275             160,376              168,090
Net loss (3)                                 (27,855)           (22,868)            (26,964)             (21,068)
Per common share data
   (Basic and Diluted):
   Net loss (3)                           $    (1.39)        $    (1.14)        $     (1.34)         $     (1.04)

<Caption>

                                                                As Reported Fiscal 2002
                                        --------------------------------------------------------------------------
                                            1st                 2nd                 3rd                 4th
                                        --------------     ---------------    -----------------    ---------------
                                          13 Weeks           13 Weeks            13 Weeks            13 Weeks
                                           Ended               Ended               Ended               Ended
                                           May 5,             August 4,          November 3,         February 2,
DESCRIPTION                                 2001               2001                2001               2002 (1)
-----------                             --------------     ---------------    -----------------    ---------------
                                                    (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                  <C>
Revenues                                  $  579,055         $  611,504         $   598,766          $   614,977
Gross Margin                                 156,643            166,446             162,094              170,409
Net loss (3)                                 (27,135)           (22,002)            (26,402)             (20,177)
Per common share data
   (Basic and Diluted):
   Net loss (3)                           $    (1.35)        $    (1.10)        $     (1.32)         $     (1.00)
</Table>



No dividends were paid on common stock during Fiscal 2002


                                     - 96 -
<Page>

                            THE PENN TRAFFIC COMPANY

                               SUPPLEMENTARY DATA


QUARTERLY FINANCIAL DATA (UNAUDITED) CONTINUED:

<Table>
<Caption>

                                                                  Restated Fiscal 2002
                                        --------------------------------------------------------------------------
                                            1st                 2nd                 3rd                 4th
                                        --------------     ---------------    -----------------    ---------------
                                          13 Weeks           13 Weeks            13 Weeks            13 Weeks
                                           Ended               Ended               Ended               Ended
                                           May 5,            August 4,          November 3,         February 2,
DESCRIPTION                                 2001               2001                2001              2002 (1)
-----------                             --------------     ---------------    -----------------    ---------------
                                                    (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                  <C>
EBITDA (4)                                $   20,357         $   28,297         $    21,431          $    29,322
Depreciation and amortization                 10,454             10,532              10,443               10,497
LIFO provision (benefit)                         625                625                 625               (1,227)
Capital expenditures, including
   capital leases and acquisitions            11,149             11,311              10,606               14,942


<Caption>

                                                                As Reported Fiscal 2002
                                        --------------------------------------------------------------------------
                                            1st                 2nd                 3rd                 4th
                                        --------------     ---------------    -----------------    ---------------
                                          13 Weeks           13 Weeks            13 Weeks            13 Weeks
                                           Ended               Ended               Ended               Ended
                                           May 5,            August 4,          November 3,         February 2,
DESCRIPTION                                 2001               2001                2001              2002 (1)
-----------                             --------------     ---------------    -----------------    ---------------
                                                    (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                  <C>
EBITDA (4)                                $   21,351         $   29,537         $    22,156          $    30,605
Depreciation and amortization                 10,454             10,532              10,443               10,497
LIFO provision (benefit)                         625                625                 625               (1,227)
Capital expenditures, including
   capital leases and acquisitions            11,149             11,311              10,606               14,942


MARKET VALUE PER COMMON
   SHARE:
     High                                 $    7.440         $    6.470         $     5.350          $     7.390
     Low                                       4.000              4.060               4.330                4.400
</Table>


                                     - 97 -
<Page>

                            THE PENN TRAFFIC COMPANY

                               SUPPLEMENTARY DATA


QUARTERLY FINANCIAL DATA (UNAUDITED) CONTINUED:

<Table>
<Caption>

                                                                 Restated Fiscal 2001
                                        ------------------------------------------------------------------------
                                            1st                 2nd                3rd                4th
                                        --------------     ---------------    ---------------    ---------------
                                          13 Weeks           13 Weeks           13 Weeks           14 Weeks
                                           Ended               Ended              Ended              Ended
                                         April 29,           July 29,          October 28,        February 3,
DESCRIPTION                                 2000               2000               2000             2001 (1)
-----------                             --------------     ---------------    ---------------    ---------------
                                                   (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                <C>
Revenues                                  $  566,076         $  601,883         $   584,755        $   659,393
Gross Margin                                 151,875            160,532             154,060            178,871
Net loss  (2) (3)                            (27,519)           (24,196)            (28,932)           (21,693)
Per common share data
   (Basic and Diluted):
   Net loss  (2) (3)                      $    (1.37)        $    (1.20)        $     (1.44)       $     (1.08)

<Caption>

                                                               As Reported Fiscal 2001
                                        ------------------------------------------------------------------------
                                            1st                 2nd                3rd                4th
                                        --------------     ---------------    ---------------    ---------------
                                          13 Weeks           13 Weeks           13 Weeks           14 Weeks
                                           Ended               Ended              Ended              Ended
                                         April 29,           July 29,          October 28,        February 3,
DESCRIPTION                                 2000               2000               2000             2001 (1)
-----------                             --------------     ---------------    ---------------    ---------------
                                                   (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                <C>
Revenues                                  $  566,087         $  602,123         $   585,366        $   659,719
Gross Margin                                 153,929            162,188             155,771            180,364
Net loss  (2) (3)                            (26,727)           (23,564)            (28,344)           (21,267)
Per common share data
   (Basic and Diluted):
   Net loss  (2) (3)                      $    (1.33)        $    (1.17)        $     (1.41)       $     (1.06)
</Table>



No dividends were paid on common stock during Fiscal 2001.


                                     - 98 -
<Page>

                            THE PENN TRAFFIC COMPANY

                               SUPPLEMENTARY DATA


QUARTERLY FINANCIAL DATA (UNAUDITED) CONTINUED:

<Table>
<Caption>

                                                                 Restated Fiscal 2001
                                        ------------------------------------------------------------------------
                                            1st                 2nd                3rd                4th
                                        --------------     ---------------    ---------------    ---------------
                                          13 Weeks           13 Weeks           13 Weeks           14 Weeks
                                           Ended               Ended              Ended              Ended
                                         April 29,           July 29,          October 28,        February 3,
DESCRIPTION                                 2000               2000               2000             2001 (1)
-----------                             --------------     ---------------    ---------------    ---------------
                                                   (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                  <C>
EBITDA (4)                                $   20,932         $   27,360         $    18,769        $    31,618
Depreciation and amortization                 10,224             10,310              10,893             10,443
LIFO provision                                   500                500                 500                 19
Capital expenditures, including
   capital leases and acquisitions            21,789             13,145              13,030             10,018

<Caption>

                                                               As Reported Fiscal 2001
                                        ------------------------------------------------------------------------
                                            1st                 2nd                3rd                4th
                                        --------------     ---------------    ---------------    ---------------
                                          13 Weeks           13 Weeks           13 Weeks           14 Weeks
                                           Ended               Ended              Ended              Ended
                                         April 29,            July 29,          October 28,        February 3,
DESCRIPTION                                 2000               2000               2000               2001 (1)
-----------                             --------------     ---------------    ---------------    ---------------
                                                   (In thousands of dollars, except per share data)

<S>                                       <C>                <C>                <C>                <C>
EBITDA (4)                                $   22,048         $   28,203         $    19,538        $    32,095
Depreciation and amortization                 10,224             10,310              10,893             10,443
LIFO provision                                   500                500                 500                 19
Capital expenditures, including
   capital leases and acquisitions            21,789             13,145              13,030             10,018



MARKET VALUE PER COMMON
   SHARE:
     High                                 $    8.750         $    8.800         $     8.000        $     4.875
     Low                                       6.125              4.688               4.625              3.250
</Table>


                                     - 99 -

<Page>

FOOTNOTES:

   (1)    Comparisons of financial data for the fourth quarters of Fiscal 2002
          and Fiscal 2001 are affected by the additional week in the fourth
          quarter of Fiscal 2001.

   (2)    During Fiscal 2001, the Company recorded an unusual item (expense) of
          $1.3 million related to the implementation of a warehouse
          consolidation project. The Company recorded $0.4 million of this
          unusual item during first quarter Fiscal 2001 and $0.9 million of this
          unusual item during the second quarter of Fiscal 2001. During the
          14-week period ended February 3, 2001, the Company recorded an unusual
          item (income) of $3.0 million associated with a reduction in the
          estimate of the remaining liability associated with the Store
          Rationalization Program.

   (3)    The tax provisions for each quarter of Fiscal 2002 and Fiscal 2001 are
          not recorded at statutory rates due to differences between income
          calculations for financial reporting and tax reporting purposes that
          result primarily from the nondeductible amortization of excess
          reorganization value.

   (4)    "EBITDA" is earnings before interest, taxes, depreciation,
          amortization, amortization of excess reorganization value, LIFO
          provision and unusual items. EBITDA should not be interpreted as a
          measure of operating results, cash flow provided by operating
          activities, a measure of liquidity, or as an alternative to any
          generally accepted accounting principle measure of performance. The
          Company reports EBITDA because it is a widely used financial measure
          of the potential capacity of a company to incur and service debt. Penn
          Traffic's reported EBITDA may not be comparable to similarly titled
          measures used by other companies.


                                    - 100 -