CONFIDENTIAL
DRAFT –12/11/08












FOR
IMMEDIATE RELEASE: December 11, 2008





PENN
TRAFFIC REPORTS FINANCIAL RESULTS FOR


THIRD
QUARTER AND FIRST NINE MONTHS OF FISCAL 2009





SYRACUSE,
N.Y. – The Penn Traffic Company (“Pink Sheets”: PTFC), which operates or
supplies more than 210 Northeastern U.S. supermarkets, reported financial
results for the quarter and nine months ended November 1, 2008.





Penn
Traffic revenues were $287.3 million in the third quarter of fiscal 2009,
compared to $298.7 million in the third quarter of fiscal 2008, reflecting a
reduction in corporate-owned grocery stores to 93 from 104 one year
ago.





Penn
Traffic’s net loss was $5.6 million, or $0.67 per share, in the third quarter of
fiscal 2009, compared to $9.6 million, or $1.13 per share, during the same
period last year.  Third quarter fiscal 2009 results reflect $1.3
million in non-recurring charges including: (1) professional fees; (2)
closed-store costs; (3) SEC legal costs; (4) severance; (5) asset sales and (6)
Chapter 11 reorganization costs.  Third quarter 2008 results included
non-recurring charges of $5.6 million.





“We
continued to make solid progress in improving Penn Traffic’s efficiency and cost
structure during the third quarter,” President and Chief Executive Officer
Gregory J. Young said.  “Our commitment to offer our customers good
value in a welcoming shopping environment is unwavering.  And, while
we don’t control the economic forces that have pressured revenues and margins
across the retail grocery industry, we will continue to modernize and streamline
operations to ensure Penn Traffic is well prepared to emerge from this recession
stronger and fully prepared to take advantage of incremental improvements in the
economy as they occur.”





The
fiscal 2009 industry-wide trend of consumers consolidating shopping trips,
trading down in their purchasing decisions and curbing impulse buying continued
during the third quarter, resulting in lower sales volumes compared to the third
quarter of fiscal 2008.  Mitigating the impact of this trend in the
third quarter were the continued success of the company’s rewards program,
launched early in fiscal 2009, investments in marketing and advertising, and
value pricing.





Penn
Traffic’s gross margins, like those of many other food retailers, were pressured
by high commodity costs that have not been fully passed onto customers in order
to maintain value pricing in the competitive marketplace.  Gross
profit was $72.4 million, or 25.2 percent of revenues, in the third quarter of
fiscal 2009, compared to $79.8 million, or 26.7 percent of revenues, during the
third quarter of fiscal 2008.





Even
while increasing ad spending in the third quarter of fiscal 2009, Penn Traffic
reduced selling and administrative expenses to $76.3 million, or 26.6 percent of
revenues, compared to $83.3 million, or 27.9 percent, during the same
period last year.  Lower selling and administrative expenses reflect
the company’s aggressive continuous-improvement initiatives and
corporate-overhead reductions during fiscal 2009, as well as its smaller store
portfolio.





Third
quarter fiscal 2009 operating loss from continuing operations was $3.1 million,
compared to $3.3 million during the same period the year prior.




1
 CONFIDENTIAL
DRAFT –12/11/08





EBITDA,
including non-recurring charges, was $2.1 million in third quarter of fiscal
2009, compared to $1.0 million in the same period last year.  Adjusted
for non-recurring charges, EBITDA was $3.4 million, or 1.2 percent of revenues
in the quarter ending November 1, 2008, compared to $6.6 million, or 2.2 percent
of revenues, during the same period last year.








EBITDA
ADJUSTED FOR NON-RECURRING CHARGES


RECONCILED
TO GAAP LOSS FROM CONTINUING OPERATIONS








Third
      Quarter
                                                    
                                                    
                                                    Nine
      Months(in
      $000s)
                                                    
                                                    2009
                                                    
                                                    
                                                    2008
                                                    
                                                    
                                                    2009
                                                    
                                                    
                                                    2008Loss
      from continuing operations
                                                    
                                                    $
                                                    (5,562
                                                    )
                                                    
                                                    $
                                                    (8,128
                                                    )
                                                    
                                                    $
                                                    (21,310
                                                    )
                                                    
                                                    $
                                                    (19,846
                                                    )Tax
      expense
                                                    
                                                    
                                                    109
                                                    
                                                    
                                                    
                                                    59
                                                    
                                                    
                                                    
                                                    386
                                                    
                                                    
                                                    
                                                    175Interest
      expense
                                                    
                                                    
                                                    2,179
                                                    
                                                    
                                                    
                                                    2,023
                                                    
                                                    
                                                    
                                                    6,743
                                                    
                                                    
                                                    
                                                    6,818Reorganization
      expense
                                                    
                                                    
                                                    185
                                                    
                                                    
                                                    
                                                    2,792
                                                    
                                                    
                                                    
                                                    366
                                                    
                                                    
                                                    
                                                    4,945Operating
      loss
                                                    
                                                    
                                                    (3,089
                                                    )
                                                    
                                                    
                                                    (3,254
                                                    )
                                                    
                                                    
                                                    (13,815
                                                    )
                                                    
                                                    
                                                    (7,908
                                                    )Less:  
      Reorganization expenses
                                                    
                                                    
                                                    (185
                                                    )
                                                    
                                                    
                                                    (2,792
                                                    )
                                                    
                                                    
                                                    (366
                                                    )
                                                    
                                                    
                                                    (4,945
                                                    )Depreciation
      and amortization
                                                    
                                                    
                                                    5,680
                                                    
                                                    
                                                    
                                                    6,680
                                                    
                                                    
                                                    
                                                    17,090
                                                    
                                                    
                                                    
                                                    20,378Asset impairment
      charge
                                                    
                                                    
                                                    175
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    3,178
                                                    
                                                    
                                                    
                                                    -LIFO
    Provision
                                                    
                                                    
                                                    (499
                                                    )
                                                    
                                                    
                                                    325
                                                    
                                                    
                                                    
                                                    166
                                                    
                                                    
                                                    
                                                    975EBITDA
                                                    
                                                    
                                                    2,082
                                                    
                                                    
                                                    
                                                    959
                                                    
                                                    
                                                    
                                                    6,253
                                                    
                                                    
                                                    
                                                    8,500Reorganization
      and other expenses:Proposed acquisition that
      wasnot
      consummated
                                                    
                                                    
                                                    75
                                                    
                                                    
                                                    
                                                    2,604
                                                    
                                                    
                                                    
                                                    83
                                                    
                                                    
                                                    
                                                    4,170Chapter 11 reorganization
      costs
                                                    
                                                    
                                                    110
                                                    
                                                    
                                                    
                                                    188
                                                    
                                                    
                                                    
                                                    283
                                                    
                                                    
                                                    
                                                    775Total
      reorganization and other expenses:
                                                    
                                                    
                                                    185
                                                    
                                                    
                                                    
                                                    2,792
                                                    
                                                    
                                                    
                                                    366
                                                    
                                                    
                                                    
                                                    4,945SG&A
      expenses:Professional
      fees
                                                    
                                                    
                                                    1,180
                                                    
                                                    
                                                    
                                                    1,393
                                                    
                                                    
                                                    
                                                    3,639
                                                    
                                                    
                                                    
                                                    5,110Closed store
      costs
                                                    
                                                    
                                                    (99
                                                    )
                                                    
                                                    
                                                    146
                                                    
                                                    
                                                    
                                                    822
                                                    
                                                    
                                                    
                                                    2,030SEC legal
      costs
                                                    
                                                    
                                                    689
                                                    
                                                    
                                                    
                                                    650
                                                    
                                                    
                                                    
                                                    2,330
                                                    
                                                    
                                                    
                                                    1,299Personnel engagement
      costs
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    250
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    947Loss/(Gain) on asset
      disposition
                                                    
                                                    
                                                    (770
                                                    )
                                                    
                                                    
                                                    294
                                                    
                                                    
                                                    
                                                    607
                                                    
                                                    
                                                    
                                                    (272
                                                    )Severance
                                                    
                                                    
                                                    88
                                                    
                                                    
                                                    
                                                    225
                                                    
                                                    
                                                    
                                                    857
                                                    
                                                    
                                                    
                                                    469Other
                                                    
                                                    
                                                    70
                                                    
                                                    
                                                    
                                                    (109
                                                    )
                                                    
                                                    
                                                    263
                                                    
                                                    
                                                    
                                                    1,516Total
      SG&A expenses:
                                                    
                                                    
                                                    1,158
                                                    
                                                    
                                                    
                                                    2,849
                                                    
                                                    
                                                    
                                                    8,518
                                                    
                                                    
                                                    
                                                    11,099Total
      EBITDA adjustments
                                                    
                                                    
                                                    1,343
                                                    
                                                    
                                                    
                                                    5,641
                                                    
                                                    
                                                    
                                                    8,884
                                                    
                                                    
                                                    
                                                    16,044Adjusted
      EBITDA
                                                    
                                                    
                                                    3,425
                                                    
                                                    
                                                    
                                                    6,600
                                                    
                                                    
                                                    
                                                    15,137
                                                    
                                                    
                                                    
                                                    24,544




2
 CONFIDENTIAL
DRAFT –12/11/08


EBITDA
(operating loss before interest, taxes, depreciation, amortization, asset
impairment charge, and LIFO provision, less reorganization expense) and adjusted
EBITDA should not be interpreted as measures of operating results, cash flow
provided by operating activities or liquidity, or as alternatives to any
generally accepted accounting principle (GAAP) measure of
performance.  Penn Traffic reports EBITDA and adjusted EBITDA as they
are important measures utilized by management to monitor the operating
performance of our business.  EBITDA and adjusted EBITDA may also
assist investors in evaluating the company’s capacity to service debt and
capital expenditures.
 
 On the
company’s consolidated balance sheets, Penn Traffic reported cash and
equivalents of $32.9 million on November 1, 2008 and $6.7 million on November 3,
2007.





First
Nine Months of Fiscal 2009


For the
nine months ended November 1, 2008, Penn Traffic’s revenues were $881.2 million
compared to $914.7 million the same period the year prior.  The
company’s net loss was $21.4 million, or $2.55 per share, in the first nine
months of fiscal 2009 compared to $21.9 million, or $2.58 per share, during the
same period last year.  The company’s results for the first nine
months of fiscal 2009 reflect $8.9 million in non-recurring charges including:
(1) professional fees; (2) closed-store costs; (3) SEC legal costs; (4)
severance; (5) asset sales and (6) Chapter 11 reorganization
costs.  Penn Traffic’s results for the first nine months of fiscal
2008 included non-recurring charges of $16.0 million.





Gross
profit was $225.5 million, or 25.6 percent of revenues, in the first nine months
of fiscal 2009, compared to $244.7 million, or 26.8 percent of revenues during
the same period last year.  Selling and administrative expenses were
$238.0 million, or 27.0 percent of revenues, in the first nine months of fiscal
2009, compared to $253.0 million, or 27.7 percent, during the same period last
year.  The company’s operating loss for the first nine months of
fiscal 2009 was $13.8 million compared to $7.9 million during the same period
the year prior.





EBITDA,
including non-recurring charges, was $6.3 million in the first nine months of
fiscal 2009, compared to $8.5 million in the same period last
year.  Adjusted for non-recurring charges, EBITDA was $15.1 million,
or 1.7 percent of revenues, in the nine months ended November 1, 2008, compared
to $24.5 million, or 2.7 percent, during the same period last year.





Retail
Food Segment


Penn
Traffic’s retail food segment, which represents about 80 percent of company
sales, posted revenues from continuing operations of $225.9 million in the third
quarter of fiscal 2009, compared to $244.4 million during the same period last
year.  Same store sales decreased 0.8 percent, compared to a 0.4
percent decrease the same period the year prior.  Gross profit from
continuing retail operations was $66.8 million, or 29.6 percent of segment
revenues, during third quarter of fiscal 2009, compared to $76.5 million, or
31.3 percent of revenues, during the same period last year.  Retail
segment operating profit was $5.0 million for the third quarter of fiscal 2009
and $8.9 million in the third quarter of fiscal 2008.





Retail
segment sales from continuing operations were $702.5 million for the 39 weeks
ended November 1, 2008, compared to $751.5 million during the same period last
year.  Same store sales decreased 1.3 percent compared to a 0.2
percent decrease the same period the year prior.  Gross profit from
continuing retail operations was $210.8 million, or 30.0 percent of revenues,
during the first nine months of fiscal 2009, compared to $233.9 million, or 31.1
percent of revenues during the same period last year.  Operating
profit from continuing retail operations was $17.3 million for the first nine
months of fiscal 2008 and $29.9 million in the first nine months of fiscal
2008.


3
 CONFIDENTIAL
DRAFT –12/11/08


Wholesale
Food Distribution Segment


Wholesale
food distribution segment revenues were $59.3 million in the third quarter of
fiscal 2009 compared to $52.2 million during the same period last
year.  Segment top-line gains are due in part to the sale of three
corporate-owned stores to independent owners served by Penn Traffic’s wholesale
business, as well as three new customers added at the end of fiscal
2008.  Wholesale segment gross profit was $3.6 million, or 6.0 percent
of segment revenues, during the third quarter of fiscal 2009, compared to $3.3
million, or 6.3 percent of revenues, during the same period last
year.  Wholesale operating profit from continuing operations was $2.5
million in the 13 weeks ended November 1, 2008 versus $1.7 million in the third
quarter of fiscal 2008.





Wholesale
segment sales were $172.6 million for the 39 weeks ended November 1, 2008,
compared to $156.7 million during the same period last year.  Gross
profit from wholesale operations was $10.3 million, or 6.0 percent of segment
revenues, during the first nine months of fiscal 2009, compared to $10.6
million, or 6.8 percent of revenues, during the same period last
year.  Wholesale segment operating profit was $6.4 million for
the first nine months of fiscal 2009, compared to $5.9 million in the first nine
months fiscal 2008.





Conference
Call


Penn
Traffic will host a conference call at 9 a.m. Eastern Time on Thursday, December
18 to review the company’s financial results and performance. The call can be
accessed by dialing 877-641-0093 from the U.S. and Canada.  Callers
outside the U.S. and Canada may access the call by dialing
904-596-2360.
 
 A
recording of the conference call will be archived for 90 days, and it may be
accessed by dialing 888-284-7564 from the U.S. and Canada, or 904-596-3174, and
entering reference number 243411.





About
Penn Traffic


The Penn
Traffic Company, headquartered in Syracuse, N.Y., operates or supplies more than
210 supermarkets in Upstate New York, Pennsylvania, Vermont and New Hampshire.
Penn Traffic’s retail food business includes corporate-owned stores with the
P&C, Quality and BiLo banners, and its wholesale food distribution business
supplies independently operated supermarkets and other wholesale accounts. More
information on the company may be found at www.penntraffic.com.





Forward
Looking Statements


This
press release contains forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995, as amended, reflecting management’s
current analysis and expectations, based on what management believes to be
reasonable assumptions. These forward-looking statements include statements
relating to our anticipated financial performance and business prospects.
Statements preceded by, followed by or that include words such as “believe,”
“anticipate,” “estimate,” “expect,” “could,” and other similar expressions are
to be considered such forward-looking statements. Forward-looking statements may
involve known and unknown risks, uncertainties and other factors, which may
cause the actual results to differ materially from those projected, stated or
implied, depending on such factors as: the ability of the company to improve its
operating performance and effectuate its business plans; the ability of the
company to operate pursuant to the terms of its credit facilities and to comply
with the terms of its lending agreements or to amend or modify the terms of such
agreements as may be needed from time to time; the ability of the company to
generate cash; the ability of the company to attract and maintain adequate
capital; the ability of the company to refinance; increases in prevailing
interest rates; the ability of the company to obtain trade credit, and shipments
and terms with vendors and service providers for current orders; the ability of
the company to maintain contracts that are critical to its operations; potential
adverse developments with respect to the company’s liquidity or results of
operations; general economic and business conditions; competition, including
increased capital investment and promotional activity by the company’s
competitors; availability, location and terms of sites for store development;
the successful implementation of the company’s capital expenditure program;
labor relations; labor and employee benefit costs including increases in health
care and pension costs and the level of contributions to the company sponsored
pension plans; the result of the pursuit of strategic alternatives; economic and
competitive uncertainties; changes in strategies; changes in generally accepted
accounting principles; adverse changes in economic and political climates around
the world, including terrorist activities and international hostilities; and the
outcome of pending, or the commencement of any new, legal proceedings against,
or governmental investigations of the company. The company cautions that the
foregoing list of important factors is not exhaustive. Accordingly, there can be
no assurance that the company will meet future results, performance or
achievements expressed or implied by such forward-looking statements. This
paragraph is included to provide safe harbor for forward-looking statements,
which are not generally required to be publicly revised as circumstances change,
and which the company does not intend to update.





###





FOR PENN
TRAFFIC:





Investors
and business/financial media contact Jeffrey Schoenborn of Travers, Collins
& Company Investor Relations, 716.842.2222,
jschoenborn@traverscollins.com.





Trade and
local media contact Chuck Beeler of Eric Mower and Associates, 315.413.4346,
cbeeler@mower.com.


4
 CONFIDENTIAL
DRAFT –12/11/08


The Penn
Traffic Company


Condensed
Consolidated Statements of Operations


(In
thousands, except share and per share data)


(unaudited)






Quarter
      Ended
                          
                          
                          Year
      to DateNovember
      1, 2008
                          
                          
                          November
      3, 2007
                          
                          
                          November
      1, 2008
                          
                          
                          November
      3, 2007Revenues
                          
                          $
                          287,285
                          
                          
                          $
                          298,702
                          
                          
                          $
                          881,233
                          
                          
                          $
                          914,687Cost
      and operating expenses:Cost of sales
                          
                          
                          214,932
                          
                          
                          
                          218,857
                          
                          
                          
                          655,768
                          
                          
                          
                          669,995Selling and administrative
      expenses
                          
                          
                          76,324
                          
                          
                          
                          83,281
                          
                          
                          
                          238,037
                          
                          
                          
                          252,993Gain on sale of
      assets
                          
                          
                          (958
                          )
                          
                          
                          (328
                          )
                          
                          
                          (2,757
                          )
                          
                          
                          (2,422
                          )Loss on store and
      distribution
                            center
      closings (including asset impairment of $175 and $3,178 for the quarter
      and year to date endedNovember 1, 2008)
                          
                          
                          76
                          
                          
                          
                          146
                          
                          
                          
                          4,000
                          
                          
                          
                          2,029Operating
      loss
                          
                          
                          (3,089
                          )
                          
                          
                          (3,254
                          )
                          
                          
                          (13,815
                          )
                          
                          
                          (7,908
                          )Interest
expense
                          
                          
                          2,179
                          
                          
                          
                          2,023
                          
                          
                          
                          6,743
                          
                          
                          
                          6,818Reorganization and other
      expenses
                          
                          
                          185
                          
                          
                          
                          2,792
                          
                          
                          
                          366
                          
                          
                          
                          4,945Loss
      from continuing operations before income taxes
                          
                          
                          (5,453
                          )
                          
                          
                          (8,069
                          )
                          
                          
                          (20,924
                          )
                          
                          
                          (19,671
                          )Income tax
    expense
                          
                          
                          109
                          
                          
                          
                          59
                          
                          
                          
                          386
                          
                          
                          
                          175Loss
      from continuing operations
                          
                          
                          (5,562
                          )
                          
                          
                          (8,128
                          )
                          
                          
                          (21,310
                          )
                          
                          
                          (19,846
                          )Discontinued
      operationsLoss from discontinued
      operations
                          
                          
                          (23
                          )
                          
                          
                          (1,448
                          )
                          
                          
                          (103
                          )
                          
                          
                          (2,052
                          )Net
      loss
                          
                          $
                          (5,585
                          )
                          
                          $
                          (9,576
                          )
                          
                          $
                          (21,413
                          )
                          
                          $
                          (21,898
                          )Net
      Loss per share - basic and
                            dilutedLoss from continuing
      operations
                          
                          $
                          (0.67
                          )
                          
                          $
                          (0.96
                          )
                          
                          $
                          (2.54
                          )
                          
                          $
                          (2.34
                          )Loss from discontinued
      operations
                          
                          $
                          (0.00
                          )
                          
                          $
                          (0.17
                          )
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.24
                          )Net
      Loss per share – basic and diluted
                          
                          $
                          (0.67
                          )
                          
                          $
                          (1.13
                          )
                          
                          $
                          (2.55
                          )
                          
                          $
                          (2.58
                          )Weighted
      average shares – basic and diluted
                          
                          
                          8,650,110
                          
                          
                          
                          8,498,752
                          
                          
                          
                          8,650,110
                          
                          
                          
                          8,498,752






5
 CONFIDENTIAL
DRAFT –12/11/08
 The Penn
Traffic Company


Condensed
Consolidated Balance Sheets


(In
thousands)





November
      1,
                              
                              
                              February
      2,2008
                              
                              
                              2008(unaudited)ASSETSCurrent
      Assets:Cash and cash
      equivalents
                              
                              $
                              32,896
                              
                              
                              $
                              20,916Accounts and notes receivable
      (less allowance fordoubtful accounts of $5,186 and
      $5,690, respectively)
                              
                              
                              30,274
                              
                              
                              
                              37,513Inventories
                              
                              
                              51,981
                              
                              
                              
                              89,208Prepaid expenses and other
      current assets
                              
                              
                              6,662
                              
                              
                              
                              7,307Total
      current assets
                              
                              
                              121,813
                              
                              
                              
                              154,944Capital
      Leases, net
                              
                              
                              7,457
                              
                              
                              
                              8,268Fixed
      Assets, net
                              
                              
                              64,624
                              
                              
                              
                              78,402Other
      Assets:Intangible
    assets
                              
                              
                              12,059
                              
                              
                              
                              15,397Deferred tax
    asset
                              
                              
                              -
                              
                              
                              
                              2,440Other assets
                              
                              
                              3,729
                              
                              
                              
                              2,998Total
      other assets
                              
                              
                              15,788
                              
                              
                              
                              20,835Total
      Assets
                              
                              $
                              209,682
                              
                              
                              $
                              262,449







6
 CONFIDENTIAL
DRAFT –12/11/08





The Penn
Traffic Company


Condensed
Consolidated Balance Sheets


(In
thousands, except share and per share data)





November
      1,
                    
                    
                    February
      2,2008
                    
                    
                    2008(unaudited)LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Current portion of obligations
      under capital leases
                    
                    $
                    1,493
                    
                    
                    $
                    1,368Current maturities of long-term
      debt
                    
                    
                    48,365
                    
                    
                    
                    278Accounts
payable
                    
                    
                    17,448
                    
                    
                    
                    34,178Other current
      liabilities
                    
                    
                    41,028
                    
                    
                    
                    47,060Accrued interest
      expense
                    
                    
                    503
                    
                    
                    
                    176Deferred income
      taxes
                    
                    
                    7,358
                    
                    
                    
                    11,485Liabilities subject to
      compromise
                    
                    
                    13
                    
                    
                    
                    2,516Total
      current liabilities
                    
                    
                    116,208
                    
                    
                    
                    97,061Non-current
      liabilities:Obligations under capital
      leases
                    
                    
                    7,826
                    
                    
                    
                    8,962Long-term debt
                    
                    
                    3,414
                    
                    
                    
                    50,209Defined benefit pension plan
      liability
                    
                    
                    4,389
                    
                    
                    
                    6,326Deferred
      income taxes
                    
                    
                    1,787
                    
                    
                    
                    -Other non-current
      liabilities
                    
                    
                    28,726
                    
                    
                    
                    30,716Total
      non-current liabilities
                    
                    
                    46,142
                    
                    
                    
                    96,213Total
      liabilities
                    
                    
                    162,350
                    
                    
                    
                    193,274Commitments
      and contingenciesStockholders’
      equity:Preferred stock - authorized
      1,000,000 shares,$.01 par value; 10,000 shares
      issued
                    
                    
                    100
                    
                    
                    
                    100Common stock - authorized
      15,000,000 shares, $.01 par value;shares issued and to be issued
      8,650,110 at November 1, 2008, and 8,519,095 at February 2,
      2008
                    
                    
                    86
                    
                    
                    
                    85Capital in excess of par
      value
                    
                    
                    128,148
                    
                    
                    
                    128,149Deficit
                    
                    
                    (95,769
                    )
                    
                    
                    (74,356
                    )Accumulated other comprehensive
      income
                    
                    
                    14,767
                    
                    
                    
                    15,197Total stockholders’
      equity
                    
                    
                    47,332
                    
                    
                    
                    69,175Total
      liabilities and stockholders’ equity
                    
                    $
                    209,682
                    
                    
                    $
                    262,449






7
 CONFIDENTIAL
DRAFT –12/11/08


The Penn
Traffic Company


Condensed
Consolidated Statements of Cash Flows


(In
thousands)


(unaudited)





For
      the Period
                    
                    
                    For
      the PeriodFebruary
      3, 2008
                    
                    
                    February
      4, 2007to
      November 1, 2008
                    
                    
                    to
      November 3, 2007Operating
      activities:Net loss
                    
                    $
                    (21,413
                    )
                    
                    $
                    (21,898
                    )Adjustments to reconcile net
      loss to net cash
                      Provided by (used in) operating
      activities:Depreciation and
      amortization
                    
                    
                    17,090
                    
                    
                    
                    20,492Provision for doubtful
      accounts
                    
                    
                    327
                    
                    
                    
                    1,430Gain on sale of
      assets
                    
                    
                    (2,757
                    )
                    
                    
                    (328
                    )Asset impairment
      charge
                    
                    
                    3,178
                    
                    
                    
                    -Amortization of deferred
      financing cost
                    
                    
                    608
                    
                    
                    
                    744Deferred income
      taxes
                    
                    
                    378
                    
                    
                    
                    -Phantom stock
      compensation
                    
                    
                    (52
                    )
                    
                    
                    86Net
      change in operating assets and liabilities:Accounts
      and notes receivable, net
                    
                    
                    6,912
                    
                    
                    
                    (74
                    )Prepaid
      expenses and other current assets
                    
                    
                    645
                    
                    
                    
                    1,094Inventories
                    
                    
                    37,227
                    
                    
                    
                    941Liabilities
      subject to compromise
                    
                    
                    (2,503
                    )
                    
                    
                    (180
                    )Accounts
      payable and other current liabilities
                    
                    
                    (22,435
                    )
                    
                    
                    (13,471
                    )Other
      assets
                    
                    
                    (85
                    )
                    
                    
                    13Defined
      benefit pension plan
                    
                    
                    (2,644
                    )
                    
                    
                    (2,438
                    )Other
      non-current liabilities
                    
                    
                    (1,311
                    )
                    
                    
                    1,054Net
      cash provided by (used in) operating activities
                    
                    
                    13,165
                    
                    
                    
                    (12,535
                    )Investing
      activities:Capital
      expenditures
                    
                    
                    (5,269
                    )
                    
                    
                    (4,942
                    )Proceeds from sale of
      assets
                    
                    
                    5,058
                    
                    
                    
                    1,879Net
      cash used in investing activities
                    
                    
                    (211
                    )
                    
                    
                    (3,063
                    )Financing
      activities:Payments of mortgage
      debt
                    
                    
                    (208
                    )
                    
                    
                    (233
                    )Net borrowings (repayments)
      under revolving credit facility
                    
                    
                    1,500
                    
                    
                    
                    (350
                    )Reduction in capital lease
      obligations
                    
                    
                    (1,011
                    )
                    
                    
                    (1,792
                    )Payment of deferred financing
      costs
                    
                    
                    (1,255
                    )
                    
                    
                    -Net
      cash used in financing activities
                    
                    
                    (974
                    )
                    
                    
                    (2,375
                    )Increase
      (decrease) in cash and cash equivalents
                    
                    
                    11,980
                    
                    
                    
                    (17,973
                    )Cash
      and cash equivalents at the beginning of period
                    
                    
                    20,916
                    
                    
                    
                    24,661Cash
      and cash equivalents at end of period
                    
                    $
                    32,896
                    
                    
                    $
                    6,688





8