Penn Traffic Reports Financial Results for the Fourth Quarter and 12 Months of Fiscal...

Penn Traffic Reports Financial Results for the Fourth Quarter and 12 Months of Fiscal 2008

SYRACUSE, N.Y.--(Business Wire)--
The Penn Traffic Company ("Pink Sheets": PTFC), which operates or
supplies more than 220 Northeastern U.S. supermarkets, reported
audited financial results for the fourth quarter and 12 months of
fiscal 2008.

For the fiscal year ended Feb. 2, 2008, Penn Traffic reported a
net loss of $41.7 million, or $4.92 per share, compared to $28.0
million, or $3.29 per share, during the same period last year. Fiscal
2008 results included a loss from discontinued operations of $11.3
million and non-recurring charges of $19.6 million for items
including: (1) professional fees; (2) closed-store costs; (3)
fixed-asset policy change; (4) SEC legal costs; (5) personnel
engagement costs; (6) severance; (7) Chapter 11 reorganization costs
and (8) a proposed acquisition that was not consummated. Fiscal 2007
results included a loss from discontinued operations of $587,000 and
non-recurring charges of $13.7 million.

For the fourth quarter of fiscal 2008, Penn Traffic reported a net
loss of $19.8 million, or $2.34 per share, including a loss from
discontinued operations of $8.9 million and $3.6 million of
non-recurring charges. For the fourth quarter of fiscal 2007, the
company reported a net loss of $15.0 million, or $1.76 per share,
including a loss from discontinued operations of $519,000 and $7.5
million of non-recurring charges.

"While much work remains to be done, Penn Traffic's fiscal 2008
financial results overall demonstrate our progress toward stabilizing
the business, improving gross margins, enhancing the in-store customer
experience and investing in the most promising locations in Penn
Traffic's core store portfolio," President and Chief Executive Officer
Gregory J. Young said. "These results also reflect substantial
non-recurring expenses and a smaller corporate-owned store portfolio."

12 Month Results from Continuing Operations

Penn Traffic posted revenues of $1.22 billion for the 52 weeks
ended Feb. 2, 2008 versus $1.29 billion for the 53 weeks ended Feb. 3,
2007, primarily due to a reduction in the number of Penn Traffic's
corporate-owned stores to 103 from 106 locations during the period.

Fiscal 2008 gross profit was $322.0 million, or 26.4 percent of
revenues, compared to $328.8 million, or 25.4 percent of revenues
during the prior year. The 100 basis-point increase was achieved in
spite of the impact of higher fuel prices driving up distribution
costs, reflecting aggressive gross-margin-improvement initiatives
including improved transportation and distribution efficiency,
increased emphasis on higher-margin private label and signature
products, the implementation of a new price-optimization software
system and improved operational discipline to reduce shrinkage.

Penn Traffic's operating loss from continuing operations was $15.2
million in fiscal 2008 compared to $16.8 million the year prior.

EBITDA, including non-recurring charges, was $8.9 million in
fiscal 2008 and $9.7 million in fiscal 2007. Adjusted for
non-recurring charges, EBITDA was $28.5 million, or 2.3 percent of
revenues in 2008 compared to $23.4 million, or 1.8 percent of
revenues, during 2007.

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ADJUSTED EBITDA
RECONCILED TO GAAP LOSS FROM CONTINUING OPERATIONS

Fourth Quarter 12 Months
($000s) 2008 2007 2008 2007
------------------- -------------------

Loss from continuing ops $(10,896) $(14,458) $(30,438) $(27,363)
Tax expense 58 57 234 228
Interest expense 2,799 2,943 9,617 9,357
Reorganization expense 420 214 5,365 1,020
--------- --------- --------- ---------
Operating income (loss) $ (7,619) $(11,244) $(15,222) $(16,758)
Less reorganization expenses (420) (214) (5,365) (1,020)
Depreciation and amortization 7,047 7,772 26,242 25,925
Asset impairment charge 547 - 547 -
LIFO Provision 1,744 553 2,719 1,528
--------- --------- --------- ---------
EBITDA $ 1,299 $ (3,133) $ 8,921 $ 9,675
Reorganization and other
Expenses:
Proposed acquisition that was
not consummated 626 - 4,796 -
Chapter 11 reorganization
costs (206) 214 569 1,060
--------- --------- --------- ---------
420 214 5,365 1,060
SG&A Expenses:
Professional fees 1,301 1,230 7,029 1,546
Closed store costs - 1,308 2,030 2,536
Fixed asset policy change 447 - 1,354 -
SEC legal costs 260 (186) 1,240 4,122
Personnel engagement costs 95 445 962 819
Loss on asset disposition 890 2,605 781 263
Severance 68 2,002 537 1,600
Other 85 (1,074) 312 867
Flood loss - 923 - 923
--------- --------- --------- ---------
3,146 7,253 14,245 12,676
--------- --------- --------- ---------
Total EBITDA adjustments 3,566 7,467 19,610 13,736
--------- --------- --------- ---------
Adjusted EBITDA $ 4,865 $ 4,334 $ 28,531 $ 23,411
========= ========= ========= =========
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EBITDA (operating loss less reorganization expense and before
interest, taxes, depreciation, amortization, asset impairment charge,
and LIFO provision) 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.

At Feb. 2, 2008, the company had cash and equivalents on hand of
$20.9 million, compared to $24.7 million on Feb. 3, 2007.

Results reported today for fiscal 2007 reflect a restatement. As a
result of cancellation of debt in the Chapter 11 proceedings, the
Company previously entirely eliminated all net operating loss
carryforwards and reduced the tax basis of its long-lived assets
effective January 29, 2006. During the year ended February 2, 2008,
the Company corrected the amount of debt forgiveness in the Chapter 11
proceedings that reduced tax attributes which results in an increase
aggregating $66 million in the tax basis of its long-lived assets and
net operating loss carryforwards.

Fourth Quarter Results from Continuing Operations

Penn Traffic posted fourth quarter revenues of $304.9 million in
2008 versus $337.9 million in 2007. Fourth quarter 2008 gross profit
was $77.2 million, or 25.3 percent of revenues, compared to $85.5
million, or 25.3 percent of revenues in the same period last year.
Penn Traffic's fourth quarter operating loss from continuing
operations was $10.9 million in 2008 compared to $14.5 million in
2007.

Fourth quarter EBITDA, including non-recurring charges, was $1.3
million in 2008 and ($3.1) million in 2007. Adjusted for non-recurring
charges, EBITDA was $4.9 million, or 1.6 percent of revenues in the
fourth quarter of 2008 compared to $4.3 million, or 1.3 percent of
revenues, in the same period last year.

Retail Food Segment

Retail Food segment revenues from the 103 stores comprising
continued operations were $1.0 billion in the 52 weeks of fiscal 2008
compared to $1.1 billion in the 53 weeks of fiscal 2007. Same-store
sales from continuing operations improved 140 basis points to a
0.3 percent decrease in fiscal 2008 from a 1.7 percent decrease the
year prior. Gross profit from continuing retail operations was $306.2
million, or 30.5 percent of revenues during fiscal 2008, compared to
$313.4 million, or 29.3 percent of revenues during the prior year.
Operating profit from continuing retail operations was $57.2 million
in fiscal 2008, a 10.4 percent increase over $51.8 million in fiscal
2007.

"The core of our corporate-owned-store portfolio is very healthy,
though we still have some locations that are not performing at the
high level we require," Young explained. "We're making great strides
to increase retail profitability, offering the right products at the
right prices for our customers. Penn Traffic is also putting resources
into rewarding, retaining and training in-store associates and
investing in renovating and enhancing retail stores."

The retail food segment, which represents about 80 percent of Penn
Traffic's total revenues, reported fourth quarter revenues of $249.1
million in 2008 compared to $280.6 million in 2007. Same-store sales
from continuing operations improved 230 basis points to a 1.6 percent
decrease in the fourth quarter of 2008 from a 3.9 percent decrease the
year prior. Fourth quarter retail gross profit was $74.5 million, or
29.9 percent of segment revenues, in 2008 compared to $81.6 million,
or 29.1 percent of revenues, in 2007. Fourth quarter retail operating
income was $12.3 million, or 4.9 percent of segment revenues, in 2008
compared to $11.6 million, or 4.1 percent of revenues, in 2007.

Wholesale Food Distribution Segment

Wholesale food distribution segment revenues were $210.0 million
in fiscal 2008 compared to $217.3 million the year prior. Segment
gross profit increased to $13.0 million, or 6.2 percent of segment
revenues, in fiscal 2008, compared to $11.7 million, or 5.4 percent of
revenues, in fiscal 2007. Wholesale operating profit from continuing
operations was $6.9 million in fiscal 2008, a 46.8 percent increase
over $4.7 million in fiscal 2007.

Wholesale reported fourth quarter revenues of $52.8 million in
2008 compared to $54.0 million in 2007. Fourth quarter wholesale gross
profit was $3.1 million, or 5.8 percent of segment revenues, in 2008
compared to $2.8 million, or 5.3 percent of revenues, in 2007. Fourth
quarter wholesale operating income was $1.5 million, or 2.9 percent of
segment revenues, in 2008 compared to $1.0 million, or 1.8 percent of
revenues, in 2007.

Conference Call

Penn Traffic will host a conference call at 9:00 a.m. Eastern Time
on Friday, April 18 to review the company's financial results and
performance. The call can be accessed by dialing 800-897-8505 and
entering reference number 21380904. A recording of the conference call
will be archived for 14 days, and it may be accessed by dialing
800-633-8284 and entering reference number 21380904.

About Penn Traffic

The Penn Traffic Company, headquartered in Syracuse, N.Y.,
operates or supplies more than 220 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; the ability of the company to pursue 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, including the
previously announced SEC and U.S. Attorney's Office investigations.
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.

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The Penn Traffic Company
Consolidated Statement of Operations
(In thousands)

52 Weeks 53 Weeks
Ended Ended
February 2, February 3,
2008 2007 (1)
----------- -----------

Revenues $1,219,541 $1,293,861
----------- -----------

Cost and operating expenses
Cost of sales 897,546 965,095
Selling and administrative expenses 334,641 342,824
Loss on store and distribution center
closings 2,029 2,700
Asset impairment 547 -
----------- -----------
1,234,763 1,310,619
----------- -----------

Operating (loss) income (15,222) (16,758)

Interest expense 9,617 9,357
Reorganization and other expenses 5,365 1,020
----------- -----------

Loss from continuing operations
before income taxes (30,204) (27,135)

Income tax expense 234 228
----------- -----------

Loss from continuing operations (30,438) (27,363)

Discontinued operations

Loss from discontinued operations
(including loss on disposal of
$8.2 million in fiscal year 2008) (11,270) (587)
----------- -----------

Net loss $ (41,708) $ (27,950)
=========== ===========

Net Loss Per Share - Basic and Diluted:

Loss from continuing operations $ (3.59) $ (3.22)
Loss from discontinued operations $ (1.33) (0.07)
----------- -----------

Net Loss Per Share - Basic and Diluted $ (4.92) $ (3.29)
=========== ===========

Basic and diluted weighted average shares
outstanding and to be issued 8,501,323 8,498,752
----------- -----------
*T

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The Penn Traffic Company
Consolidated Balance Sheets
(in thousands)

February February
2, 3,
2008 2007 (1)
--------- ---------

ASSETS

Current assets:
Cash and cash equivalents $ 20,916 $ 24,661
Accounts and notes receivable (less allowance for
doubtful accounts of $5,690 and $3,736,
respectively) 37,513 35,112
Inventories 89,208 100,035
Prepaid expenses and other current assets 7,307 8,469
--------- ---------
Total current assets 154,944 168,277
--------- ---------

Capital leases:
Capital leases 11,364 12,023
Less: Accumulated amortization (3,096) (2,168)
--------- ---------
Capital leases, net 8,268 9,855
--------- ---------

Fixed assets:
Land 9,313 9,313
Buildings 13,273 13,214
Equipment and furniture 96,652 94,742
Vehicles 7,984 7,766
Leasehold improvements 10,246 9,050
--------- ---------
Total fixed assets 137,468 134,085
Less: Accumulated depreciation (59,066) (37,597)
--------- ---------
Fixed assets, net 78,402 96,488
--------- ---------

Other assets:
Intangible assets, net 15,397 25,188
Deferred income taxes 2,440 3,621
Other assets 2,998 4,038
--------- ---------
Total other assets 20,835 32,847
--------- ---------

Total assets $262,449 $307,467
========= =========
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The Penn Traffic Company
Consolidated Balance Sheets
(in thousands)

February February
2, 3,
2008 2007 (1)
--------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of obligations under capital
leases $ 1,368 $ 1,472
Current maturities of long-term debt 278 314
Accounts payable 34,178 34,704
Other current liabilities 47,060 49,653
Accrued interest expense 176 30
Deferred income taxes 11,485 13,542
Liabilities subject to compromise 2,516 2,696
--------- ---------
Total current liabilities 97,061 102,411
--------- ---------

Non-current liabilities:
Obligations under capital leases 8,962 10,956
Long-term debt 50,209 52,412
Defined benefit pension plan liability 6,326 22,150
Other non-current liabilities 30,716 26,813
--------- ---------
Total noncurrent liabilities 96,213 112,331
--------- ---------

Total liabilities 193,274 214,742
--------- ---------

Commitments and contingencies

Stockholders' equity:
Preferred stock - authorized 1,000,000 shares,
$.01 par value; 10,000 shares issued in 2008
and none in 2007 (Note 14) 100 -
Common stock - authorized 15,000,000 shares,
$.01 par value; shares issued and to be
issued, 8,519,095 in 2008 and 8,498,752 in 2007 85 85
Capital in excess of par value 128,149 118,493
Deficit (74,356) (32,648)
Accumulated other comprehensive income 15,197 6,795
--------- ---------
Total stockholders' equity 69,175 92,725
--------- ---------

Total liabilities and stockholders' equity $262,449 $307,467
========= =========
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The Penn Traffic Company
Consolidated Statement of Cash Flows
(in thousands of dollars)

52 Weeks 53 Weeks
Ended Ended
February February
2, 3,
2008 2007 (1)
--------- ---------

Operating activities:
Net loss $(41,708) $(27,950)
Adjustments to reconcile net loss to net cash
(used in)
provided by operating activities:
Depreciation and amortization 26,242 25,925
Loss on disposal of discontinued operations 8,207 1,206
Asset impairment charge 547 -
Amortization of deferred finance cost 1,021 1,201
Loss on sale of assets 340 542

Net change in operating assets and liabilities:
Accounts and notes receivable, net (2,401) 1,858
Prepaid expenses and other current assets 1,161 (2,312)
Inventories 10,567 12,996
Liabilities subject to compromise (181) (175)
Accounts payable and other current liabilities (2,972) 841
Other assets 23 96
Defined benefit pension plan (5,756) (2,278)
Other non-current liabilities 1,846 636
--------- ---------

Net cash (used in) provided by operating
activities (3,064) 12,586
--------- ---------

Investing activities:
Acquisition - (1,531)
Capital expenditures (7,879) (22,926)
Proceeds from sale of fixed assets 1,113 10,271
--------- ---------

Net cash used in investing activities (6,766) (14,186)
--------- ---------

Financing activities:
Payments of mortgages (314) (287)
Net (repayments) borrowings under credit
facility (1,925) 15,500
Reduction in capital lease obligations (1,432) (1,384)
Issuance of preferred stock 9,756 -
--------- ---------

Net cash provided by (used in) financing
activities 6,085 13,829
--------- ---------

Net (decrease) increase in cash and cash
equivalents (3,745) 12,229

Cash and cash equivalents at beginning of period 24,661 12,432
--------- ---------

Cash and cash equivalents at end of period $ 20,916 $ 24,661
========= =========
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(1) Restatement: As a result of cancellation of debt in the
Chapter 11 proceedings, the Company previously entirely eliminated all
net operating loss carryforwards and reduced the tax basis of its
long-lived assets effective January 29, 2006. During the year ended
February 2, 2008, the Company corrected the amount of debt forgiveness
in the Chapter 11 proceedings that reduced tax attributes which
results in an increase aggregating $66 million in the tax basis of its
long-lived assets and net operating loss carryforwards. The correction
resulted in an increase in deferred tax assets attributable to the net
operating loss carryforwards and the recording of a related valuation
allowance and a reduction in the deferred tax liability attributable
to the increase in the tax basis of long-lived assets. The net effect
of the above was a $3.5 million reduction in the net deferred tax
liability and a corresponding reduction in the carrying value of
certain long-lived assets upon adoption of fresh-start reporting on
April 16, 2005.

For Penn Traffic
Travers, Collins & Company Investor Relations
Jeffrey Schoenborn, 716-842-2222
jschoenborn@traverscollins.com

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