SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)

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


For the fiscal year ended      November 3, 2001
                          --------------------------
                                                         OR
[ ]    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              0-14900
                       ---------------------------

                                    PSS, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                       91-1335798
-------------------------------                 -------------------------------
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                        Identification No.)

     P.O. Box 21093, Seattle, WA                          98111-3093
----------------------------------------        -------------------------------
(Address of principal executive offices)                  (Zip Code)

(Registrant's telephone number, including area code) (206) 901-3790
                                                     --------------

Former name, former address and former fiscal year, if changed since last
report.

Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
 Common stock - $1.00 par value
 7-1/8% Convertible Debentures due July 15, 2006

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes  X   No
                                       ---     ---

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

Aggregate market value of the registrant's voting stock held by nonaffiliates of
the registrant as of December 1, 2001: $90,000.

The  number of shares  of common  stock  outstanding  as of  December  1,  2001:
19,473,728.

Documents incorporated by reference:  None.
-----------------------------------


                                  Page 1 of 23

<PAGE>

                                     PART I

ITEM 1 - BUSINESS

PSS, Inc. ("PSS"),  through its wholly owned subsidiary,  PNS Inc. ("PNS"), owns
PSSC Inc. ("PSSC");  together, PSS, PNS and PSSC are referred to collectively as
the "Company".  The Company, through PSSC, owns a pass-through and participation
certificate issued by the Federal Home Loan Mortgage Corporation backed by whole
pool real  estate  mortgages  ("Mortgage  Certificates"),  and as a  result,  is
primarily  engaged in the  business of owning  mortgages  and other liens on and
interests in real estate.  At November 3, 2001, the Company's  principal  assets
consisted  of  approximately  $2.2 million of Mortgage  Certificates  from which
interest  income  is  earned.  The  Mortgage   Certificates  are  financed  with
borrowings,  payable  on  demand,  secured  by the  Mortgage  Certificates  (the
"Mortgage Financing"). The principal obligations of the Company are the Mortgage
Financing  borrowings,  the PNS 12-1/8% Senior  Subordinated  Notes due July 15,
1996 (the "Senior Notes") and the PSS 7-1/8% Convertible Debentures due July 15,
2006 (the "Debentures"), upon which interest expense is incurred.

See the Liquidity and Capital Resources  section of Management's  Discussion and
Analysis of Financial  Condition and Results of Operations  regarding the status
of the Company's  defaults on the Senior Notes and  Debentures  and factors upon
which the Company's future operating  results,  liquidity and capital  resources
are primarily dependent.

ITEM 2 - PROPERTIES
-------------------

None

ITEM 3 - LEGAL PROCEEDINGS
--------------------------

None.


                                       2

<PAGE>

ITEM 4 - SUBMISSON OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

Not applicable.

                                     PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
-------------------------------------------------------------------------
MATTERS
-------

Market Information

The Company's common stock is traded  over-the-counter.  High and low prices are
the high and low bids as reported by National Quotation Bureau,  Inc., which are
those  quoted by dealers to each  other,  exclusive  of  markups,  markdowns  or
commissions,  and do not represent actual transactions.  The high and low prices
for the stock during the two years ended November 3, 2001 were reported as being
less than $0.01 per share.

Holders

As of December 1, 2001, there were 969 holders of record of the Company's common
stock.

Dividends on Common Stock

The Company has never paid a dividend and does not anticipate  paying  dividends
for the foreseeable future. The indentures  governing the Company's Senior Notes
and Debentures  contain  covenants  which restrict the ability of the Company to
pay dividends (see Note 5 to the financial statements).


                                       3

<PAGE>


ITEM 6 - SELECTED FINANCIAL DATA
--------------------------------

The following selected financial data should be read in conjunction with the
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere herein. As
explained in Note 2 to the financial statements, information is presented on a
liquidation basis. Presentation of per share information on a liquidation basis
is not considered meaningful and has been omitted.

<TABLE>
<CAPTION>

                                                                              Year Ended
                                                   November 3,    October 28,    October 30,    October 31,    November 1,
                                                      2001           2000           1999           1998           1997
                                                   -----------------------------------------------------------------------
                                                                         (thousands of dollars)
<S>                                                <C>            <C>            <C>            <C>            <C>
Statement of Changes in Net Liabilities Data:
Increase in Net Liabilities                        $ (2,290)      $ (2,290)      $ (2,290)      $ (2,265)      $ (2,265)

<CAPTION>

                                                   November 3,    October 28,    October 30,    October 31,    November 1,
                                                      2001           2000           1999           1998           1997
                                                   -----------------------------------------------------------------------
<S>                                                <C>            <C>            <C>            <C>            <C>
Statements of Net Liabilities Data:
Total Assets                                       $   2,236      $  2,863       $ 3,268        $   3,984      $  4,829
Short-term borrowings                                  1,615         2,255         2,641            3,270         4,073
Long-term debt                                        28,178        28,178        28,178           28,178        28,178
Total Liabilities                                     48,562        46,899        45,014           43,440        42,020
Net Liabilities                                    $ (46,326)     $(44,036)      $(41,746)      $ (39,456)     $(37,191)

</TABLE>


                                       4

<PAGE>

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

Liquidity and Capital Resources
-------------------------------

At November 3, 2001, the Company's  principal  assets consisted of approximately
$2.2 million of Mortgage  Certificates  from which interest income is earned and
its principal  obligations  consisted of Mortgage Financing  borrowings,  Senior
Notes and Debentures upon which interest expense is incurred.

PNS is restricted by terms of its Senior Notes  Indenture from paying  dividends
or making  other  payments to PSS,  except that PNS may pay  dividends to PSS in
amounts  sufficient to enable PSS to meet its obligation on its Debentures  when
due. PNS, like its parent company, has a stockholder's deficit.

At November 3, 2001, the Company had total assets of approximately $2.24 million
and liabilities,  other than the Senior Notes and Debentures  including  accrued
interest and liquidation  costs, of $1.78 million,  thus having a net difference
of approximately  $460,000 available for holders of Senior Notes and Debentures.
At  November 3, 2001,  approximately  $5.26  million of Senior  Notes and $22.92
million  of  Debentures  remain  outstanding,  such  outstanding  amounts  being
unchanged since 1995.

The Company  failed to pay the interest due January 15 and July 15, 1995,  1996,
1997,  1998,  1999, 2000 and 2001 on its Debentures and such default  continues.
The trustee for the Debentures  has informed the holders of the Debentures  that
it does not  intend to  accelerate  payment  of the  Debentures  "because  it is
unlikely that the Debenture  holders would receive any payment if the Debentures
were accelerated."

PNS failed to pay interest due July 15, 1995, January 15, 1996 and July 15, 1996
and failed to pay the  outstanding  principal which became due on July 15, 1996.
All such defaults continue.  In 1997, the Company was advised by the trustee for
the Senior Notes that, after concluding that the Company lacks sufficient assets
to pay the Senior  Notes,  the trustee had  petitioned a district  court for the
State of  Minnesota to  authorize  and instruct it to refrain from  pursuing any
default remedy against the Company and to discharge it as trustee,  and that the
Court had granted the trustee's requests.

The  Company's  future  operating  results,  liquidity,  capital  resources  and
requirements  are  primarily  dependent  upon actions  which may be taken by the
trustee for the  Debentures to collect  amounts due  thereunder,  the payment of
amounts due on and  purchases  of Senior Notes and  Debentures  and, to a lesser
extent,  interest  rate  fluctuations  as they  relate  to the  market  value of
Mortgage  Certificates  and to the  spread of  interest  income  therefrom  over
interest expense on related borrowings.  The Company is exclusively  invested in
Mortgage Certificates,  and, accordingly, is presently relying solely on such as
its source of cash funds.  It has not been  determined what course of action the
Company  may  pursue  with  respect  to debt  service  on the  Senior  Notes and
Debentures.


                                       5

<PAGE>

Results of Operations
---------------------

     Investment income
     -----------------

Investment  income for the year ended  November 3, 2001 decreased as compared to
the  prior  year  primarily  as a result of lower  balances  of  investments  in
Mortgage  Certificates.  Investment  income for the year ended  October 28, 2000
increased  as  compared  to the prior year as a result of the change in Mortgage
Certificates unrealized appreciation offset by a decrease in interest income due
to lower  balances of investments in Mortgage  Certificates.  Investment  income
decreased  during the year ended  October 30, 1999, as compared to the immediate
preceding  year  primarily  as a result  of lower  balances  of  investments  in
Mortgage  Certificates  as well as decreases  in  unrealized  appreciation.  The
weighted  average  interest  income  rate  earned on the  Mortgage  Certificates
approximated  7.5 %, 7.5% and 7.3%  during  the years  ended  November  3, 2001,
October 28, 2000 and October 30, 1999, respectively.

Included in investment  income are unrealized  gains (or losses)  resulting from
increases   (or   decreases)   in   unrealized   appreciation   resulting   from
mark-to-market adjustments on Mortgage Certificates.  As a result of declines in
market  values  as  well  as  principal  repayments  on  Mortgage  Certificates,
unrealized  appreciation  resulting from  mark-to-market  adjustments  decreased
during the year ended  October 30, 1999 by $83,000.  Increases in market  values
offset  decreases  in  unrealized  appreciation  due  to  principal  repayments,
resulting in a net  decrease in  unrealized  appreciation  during the year ended
October 28, 2000 of $1,000, and a net increase in unrealized appreciation during
the year ended November 3, 2001 of $3,000.

     Interest expense
     ----------------

Interest  expense for each of the years  ended  November 3, 2001 and October 30,
1999  decreased as compared to the  immediate  preceding  year  primarily due to
lower average balances of Mortgage Financing  borrowings  outstanding during the
periods,  as well as lower interest rates in 2001.  Interest  expense  increased
during the year ended  October  28,  2000 as  compared  to the prior year due to
higher interest rates offset by lower average  balances of Mortgage  Certificate
borrowings.  The weighted average interest expense rate on Mortgage  Certificate
related  borrowings  approximated  5.8%,  6.9%,  and 5.8% during the years ended
November 3, 2001, October 28, 2000 and October 30, 1999, respectively.

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

The Company's  investment in mortgage  certificates  is a market risk  sensitive
instrument relative primarily to interest rate risk. The investment represents a
pass-through  and  participation  certificate  issued by the  Federal  Home Loan
Mortgage  Corporation in 1990 with an original  principal of  approximately  $11
million and a 2020 maturity date. The Company's average investment  approximated
$2.5  million,  $3.0  million,  and $3.3  million  during the fiscal years ended
November 3, 2001,  October 28,  2000,  and October 30, 1999,  respectively.  The
investment in


                                       6

<PAGE>

mortgage  certificates  has declined  over the past three years due primarily to
principal   repayments  from  the  underlying   mortgages  within  the  mortgage
certificate  pool.  Principal  repayments  have  approximated  12% to 21% of the
mortgage  investment  during each of the past three  fiscal  years.  The rate of
interest  to be earned  on the  mortgage  certificates  is  adjustable  based on
general interest rate trends, with certain maximums,  including limits of 2% for
annual rate changes and interest rate maximums of  approximately  13%.  Interest
rates on the underlying  mortgages are adjusted,  as applicable,  throughout the
year.  The  weighted  average  interest  income  rates  earned  on the  mortgage
certificates   approximated   7.5%  and  7.5%  during   fiscal  2001  and  2000,
respectively, and the interest rate at November 3, 2001 approximated 7.0%.

Mortgage certificates are financed with borrowings from an investment bank, such
borrowings  being  secured by the mortgage  certificates  and payable on demand.
Borrowings  bear  interest  at rates  generally  approximating  the three  month
Federal Funds rate plus 25 to 75 basis points.  The Company's average borrowings
approximated  $2.0  million,  $2.5 million,  and $2.9 million  during the fiscal
years  ended  November  3,  2001,  October  28,  2000,  and  October  30,  1999,
respectively.  The  borrowings  have  declined  over the past  three  years  due
primarily to applying  principal  repayments  from the mortgage  certificates to
repay  borrowings.  The weighted  average interest expense rates incurred on the
borrowings  approximated  5.8% and 6.9% during the years ended November 3, 2001,
and October 28, 2000,  respectively,  and the interest  rate at November 3, 2001
approximated 3.8%. Borrowings at November 3, 2001 approximated $1.6 million.

Generally,  a decline in interest  rates would  result in a decrease in interest
rates  earned on mortgage  certificates  as  underlying  mortgages  would likely
adjust interest rates down,  however such adjustment  would occur throughout the
year. Interest rates paid on borrowings would likely decline on a more immediate
basis.  The  timing of when  interest  income  and  expense  rates are  effected
historically has resulted in a short-term margin  improvement  during periods of
interest  rate  declines.   The  market  price  of  mortgage   certificates  has
historically  increased as interest  rates  decline.  During periods of interest
rate increases, the opposite is the case.

In the  Company's  circumstances,  whereby  its  future  operating  results  and
financial  condition  are  primarily  dependent  upon  actions  to be taken with
respect to the $5.26  million of 12 1/8%  Senior  Notes and $22.92  million of 7
1/8% Debentures,  both of which are in default, and its financial statements are
presented on a liquidation  basis utilizing a liquidation date in November 2002,
additional quantitative and qualitative disclosures about market risk, including
projections  of future cash flows,  are not  considered  meaningful and have not
been presented.


                                       7

<PAGE>

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

INDEX TO FINANCIAL STATEMENTS
-----------------------------

    Financial statements                                                    Page
    --------------------                                                    ----

    Report of Independent Accountants                                          9
    Consolidated Statements of Net Liabilities                                10
    Consolidated Statements in Changes in Net Liabilities                     11
    Notes to Financial Statements                                             12

SUPPLEMENTARY FINANCIAL INFORMATION
-----------------------------------

    Selected quarterly financial data (unaudited)                             17
    ---------------------------------------------


                                       8

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of PSS, Inc.

We have audited the accompanying  consolidated  statements of net liabilities of
PSS, Inc. and its subsidiaries in liquidation as of November 3, 2001 and October
28, 2000 and the related  consolidated  statements of changes in net liabilities
in  liquidation  for the years ended  November 3, 2001,  October 28,  2000,  and
October 30, 1999.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

As described in Note 2 of the consolidated  financial statements,  as of October
28, 1995, the Company adopted the liquidation basis of accounting.

In our opinion,  the consolidated  financial statements referred to in the first
paragraph  present  fairly,  in all material  respects,  the net  liabilities in
liquidation  of PSS, Inc. and its  subsidiaries  at November 3, 2001 and October
28, 2000 and the changes in their net  liabilities in liquidation  for the years
ended  November 3, 2001,  October 28, 2000,  and October 30, 1999, in conformity
with accounting  principles  generally  accepted in the United States of America
applied on the basis described in the preceding paragraph.

PricewaterhouseCoopers LLP

Seattle, Washington
January 22, 2002


                                       9
<PAGE>

                                    PSS, INC.
                   Consolidated Statements of Net Liabilities
                               (Liquidation Basis)
                             (thousands of dollars)

<TABLE>
<CAPTION>

                                                                          November 3,      October 28,
                                                                             2001             2000
                                                                         ---------------------------------
<S>                                                                       <C>              <C>
Cash and short-term investments                                           $       --       $     115

Related party receivable (Note 3)                                                 56              --

Investment in mortage certificates                                             2,155           2,712

Accrued interest receivable                                                       25              36
                                                                         ---------------------------------
             Total Assets                                                      2,236           2,863
                                                                         ---------------------------------

Borrowings under mortgage certificate financing agreement                      1,615           2,255
Accounts payable and accrued liabilities                                         160             161
Reserve for estimated costs during period of liquidation                          59              64
PNS 12 1/8% senior notes                                                       5,258           5,258
Accrued interest payable on PNS notes                                          4,344           3,696
Reserve for interest on PNS notes during period of liquidation                   636             636
PSS 7 1/8% debentures                                                         22,920          22,920
Accrued interest payable on PSS debentures                                    11,941          10,280
Reserve for interest on PSS debentures during period of liquidation            1,629           1,629
                                                                         ---------------------------------

        Total Liabilities                                                     48,562          46,899
                                                                         ---------------------------------

        Net Liabilities                                                     ($46,326)       ($44,036)
                                                                            =========       =========

</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       10

<PAGE>

                                    PSS, INC.
              Consolidated Statements of Changes in Net Liabilities
                               (Liquidation Basis)
                             (thousands of dollars)

<TABLE>
<CAPTION>

                                                                                 Year Ended
                                                                                 ----------

                                                                  November      October 28,     October 30,
                                                                  3, 2001          2000           1999
                                                                  ----------------------------------------
<S>                                                              <C>              <C>           <C>
Investment income                                                 $    194             $217     $      156

Interest expense                                                    (2,429)          (2,436)        (2,432)

General and administrative expense                                     (60)             (70)           (54)

Decrease in reserve for estimated costs
  and interest during period of liquidation                          2,295            2,289          2,330

Provision for estimated costs and interest
  during period of liquidation                                     (2,290)          (2,290)        (2,290)
                                                                 ---------        ---------     ----------
Increase in Net Liabilities                                      $ (2,290)        $  (2,290)    $   (2,290)
                                                                 =========        =========     ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       11
<PAGE>

                                    PSS, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - The Company
--------------------

The consolidated  financial statements of PSS, Inc. ("PSS"),  include its direct
subsidiary  PNS  Inc.   ("PNS")  and  its  subsidiary   PSSC,   Inc.   ("PSSC"),
collectively,  the "Company".  The Company is principally owned by Seacorp, Inc.
("Seacorp") and Zimmerman  Retailing Group Limited ("Zimco").  Seacorp and Zimco
own approximately 41% and 12%, respectively, of the Company's outstanding common
stock, with the remainder publicly owned.

The Company,  through PSSC, owns a pass-through  and  participation  certificate
issued by the Federal Home Loan Mortgage  Corporation  backed by whole pool real
estate  mortgages  ("Mortgage  Certificates"),  and as a  result,  is  primarily
engaged in the business of owning  mortgages and other liens on and interests in
real  estate.  The  principal  obligations  of the Company  are PSSC  borrowings
secured by Mortgage Certificates, PNS 12-1/8% Senior Subordinated Notes due July
15, 1996 (the "Senior Notes") and PSS 7-1/8% Convertible Debentures due July 15,
2006 (the "Debentures").

The Company  failed to pay the interest due January 15 and July 15, 1995,  1996,
1997, 1998, 1999, 2000 and 2001on its Debentures and such default continues. The
trustee for the Debentures  has informed the holders of the  Debentures  that it
does not intend to accelerate payment of the Debentures  "because it is unlikely
that the  Debenture  holders would  receive any payment if the  Debentures  were
accelerated."

PNS failed to pay interest  due on July 15, 1995,  January 15, 1996 and July 15,
1996 and  failed to pay the  outstanding  principal  on its Senior  Notes  which
became  due on July 15,  1996.  All such  defaults  continue.  In June  1997 the
Company was advised by the trustee for the Senior Notes that,  after  concluding
that the Company lacks  sufficient  assets to pay the Senior Notes,  the trustee
had  petitioned a district  court for the State of  Minnesota  to authorize  and
instruct it to refrain from pursuing any default  remedy against the Company and
to  discharge  it as  trustee,  and that the Court  had  granted  the  trustee's
requests.

At November 3, 2001, the Company had total assets of approximately $2.24 million
and liabilities,  other than the Senior Notes and Debentures  including  accrued
interest and liquidation  costs, of approximately  $1.78 million,  thus having a
net difference of approximately  $460,000  available for holders of Senior Notes
and Debentures. At November 3, 2001, approximately $5.26 million of Senior Notes
and  $22.92  million of  Debentures  remain  outstanding  and,  annual  interest
thereon,  approximates $636,000 and $1.63 million,  respectively.  The Company's
future  operating  results,  liquidity,  capital  resources and requirements are
primarily  dependent  upon  actions  which may be taken by the  trustee  for the
Debentures to collect amounts due thereunder,  the payment of amounts due on and
purchases of Senior Notes and Debentures and, to a lesser extent,  interest rate
fluctuations as they relate to the market value of Mortgage  Certificates and to
the  spread of  interest  income  therefrom  over  interest  expense  on related
borrowings.  The Company is exclusively invested in Mortgage Certificates,  and,
accordingly, is presently relying solely on such


                                       12
<PAGE>

as its source of cash funds.  It has not been  determined  what course of action
the  Company  may pursue with  respect to debt  service on the Senior  Notes and
Debentures.

NOTE 2 - Liquidation Basis of Accounting
----------------------------------------

Effective  October 28,  1995,  the  Company  adopted  the  liquidation  basis of
accounting for presenting its consolidated  financial statements.  This basis of
accounting is considered appropriate when, among other things,  liquidation of a
company  appears  imminent  and the net  realizable  value  of it's  assets  are
reasonably  determinable.  Under this basis of  accounting,  cash and short term
investments,   investments  in  mortgage   certificates   and  accrued  interest
receivable are stated at their net realizable value, net deferred tax assets are
stated at zero,  liabilities  are stated at contractual  face value with accrued
interest  through  the  liquidation   date,  and  estimated  costs  through  the
liquidation date are provided to the extent reasonably determinable.

The net effect of converting  from the going  concern  basis to the  liquidation
basis of accounting as of October 28, 1995 was an increase in net liabilities of
approximately  $1.7  million,  as a result  of  recording  estimated  costs  and
interest expense to the liquidation date. No adjustment to the reported value of
assets was required.  Under the  liquidation  basis,  the Company accrued future
liabilities  and  estimated  future net revenues  from interest and other income
associated with mortgage certificates to the liquidation date.

A summary of significant  estimates and judgments utilized in preparation of the
consolidated financial statements on a liquidation basis follows:

     o    The Company's next fiscal year end, the Saturday closest to the end of
          October,  November 2, 2002, has been utilized as the liquidation  date
          for the November 3, 2001  financial  statements,  November 3, 2001 was
          utilized on the  liquidation  date for the October 28, 2001  financial
          statements  and the October  28, 2000 fiscal year end was  utilized as
          the liquidation date for the October 30, 1999 financial statements.

     o    Mortgage Certificates are stated at estimated market value and related
          interest receivable at face value.

     o    Deferred tax assets relating to net operating loss carry forwards, net
          of valuation allowance, are stated at zero.

     o    Borrowings secured by Mortgage  Certificates are stated at face value,
          which approximates market value.

     o    The  reserve  for  estimated  costs  during the period of  liquidation
          represents  estimates  of  future  costs to be  incurred  through  the
          liquidation date.

     o    Net estimated interest income to be earned on Mortgage Certificates in
          excess of interest  expense on related  borrowings has been considered
          in  determining  the


                                       13

<PAGE>

          reserve for estimated costs during the period of liquidation.

NOTE 2 - Liquidation Basis of Accounting (continued)
----------------------------------------------------

     o    Senior Notes and Debentures and related interest accrued are stated at
          contractual face value.

     o    The reserve for interest  during the period of liquidation  represents
          interest on Senior Notes and  Debentures  for the period from the date
          of the  Consolidated  Statements of Net  Liabilities  to the estimated
          liquidation date, as applicable.

All of the above  estimates  and judgments may be subject to change as facts and
circumstances   change.   Similarly,   actual  costs  and  expenses  may  differ
significantly  depending on a number of factors,  particularly the length of the
liquidation period.

During the fiscal years ended  November 3, 2001,  October 28, 2000,  and October
30, 1999, the Company's  actual net excess of costs incurred over net investment
income reasonably approximated the recorded reserve for such years.

Presentation  of per common  share  information  on a  liquidation  basis is not
considered meaningful and has been omitted.

NOTE 3 - Summary of Accounting Principles
-----------------------------------------

Cash and Short-Term Investments and Related Party Receivables
-------------------------------------------------------------

Cash and short-term investments,  having maturities of three months or less when
purchased, are primarily comprised of interest-bearing short-term bank deposits.
During the year ended November 3, 2001, the Company,  along with other companies
affiliated with Seacorp,  invested cash with an affiliate of Seacorp,  a related
party,  in 7 day  certificates  of deposit and has  received,  together with the
other  parties  whose  funds  have been  invested,  its pro rata  portion of the
interest  earned and has reported this amount as a related  party  receivable in
the Statement of Net Liabilities.

Investment in Mortgage Certificates
-----------------------------------

The  investment in Mortgage  Certificates  is recorded at estimated  fair value,
based upon market  prices  obtained from an  investment  bank.  Gains and losses
realized  upon sale of Mortgage  Certificates  and  unrealized  gains and losses
resulting from mark-to-market adjustments are included in investment income.

Accounting Estimates
--------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported


                                       14

<PAGE>

amounts  of assets and  liabilities  and  disclosure  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 amounts.

NOTE 4 - Investment in Mortgage Certificates

Mortgage  Certificates  are financed with  borrowings  provided by an investment
bank pursuant to a letter  agreement  (the  "Financing  Agreement").  Borrowings
pursuant to the Financing  Agreement (the "Mortgage  Financing")  are secured by
the Mortgage  Certificates.  In the event of a decrease in the aggregate  market
value of the  Mortgage  Certificates  below the  requirements  of the  Financing
Agreement,  additional  collateral is required.  Principal and interest payments
received on Mortgage  Certificates are maintained in an interest earning account
and amounts in excess of required  collateral are released to the Company at its
request.  The  Mortgage  Financing  is  payable on demand  and  generally  bears
interest at rates approximating the three month Federal Funds Rate plus 25 to 75
basis  points.   Mortgage  Financing   borrowings  and  related  interest  rates
approximated $1.6 million and 3.8% at November 3, 2001 and $2.3 million and 7.5%
at October 28,  2000,  respectively.  During the years  ended  November 3, 2001,
October 28, 2000, and October 30, 1999, the average balance of mortgage  related
borrowings  outstanding  approximated  $2.0  million,  $2.5  million,  and  $2.9
million,  and the weighted annual average  interest  expense rates  approximated
5.8%, 6.9% and 5.8%, respectively.

At November 3, 2001, the interest rate to be earned on the Mortgage Certificates
approximated  7.0%.  The  rate  of  interest  on the  Mortgage  Certificates  is
adjustable  based  on  general  interest  rate  trends  with  certain  maximums,
including  limits of 2% for annual  interest  rate  changes  and  interest  rate
maximums of approximately 13%. The weighted average interest income rates earned
on the Mortgage Certificates  approximated 7.5%, 7.5% and 7.3%, during the years
ended November 3, 2001, October 28, 2000 and October 30, 1999, respectively.

NOTE 5 - Subordinated Debt
--------------------------

Subordinated  debt and related  interest payable through the balance sheet dates
are summarized as follows (thousands of dollars):

                                           November 3,     October 28,
                                              2001            2000
                                              ----            ----

PNS 12-1/8% Senior Notes                   $ 5,258         $ 5,258
Interest payable on Senior Notes             4,344           3,696
                                           -------         -------
                                           $ 9,602         $ 8,954
                                           =======         =======

PSS 7-1/8% Debentures                      $22,920         $22,920
Interest payable on Debentures              11,941          10,280
                                           -------         -------
                                           $34,861         $33,200
                                           =======         =======


                                       15

<PAGE>

NOTE 5 - Subordinated Debt (continued)
--------------------------------------

In July 1986,  the Company  completed  three public  securities  offerings  (the
"Public  Offerings").  PNS issued $150 million of Senior Notes and PSS sold 3.25
million  shares of its  common  stock and  issued  $150  million  of  Debentures
convertible  to PSS common  stock at $19.68 per share (the  conversion  price is
subject to adjustment  in the case of  dilution).  PSS invested the net proceeds
from its two offerings in PNS, in the form of a  contribution  to capital and an
intercompany  debenture  between PNS and PSS in the amount of $150  million with
substantially   the  same  interest  rate  and  redemption   provisions  as  the
Debentures.  The indenture  governing the Senior Notes  restricts the ability of
PNS and its  subsidiaries  to pay  dividends or make other  payments to PSS. The
Senior Notes indenture permits PNS to pay dividends to PSS in amounts sufficient
to enable PSS to meet its obligations on the Debentures when due,  provided that
no event of default (as defined in the Senior Notes  indenture) has occurred and
is continuing.  PNS, like its parent company,  has a stockholder's  deficit. The
Senior Notes and  Debentures  provide for semiannual  interest  payments and are
unsecured.

The indentures for the Senior Notes and Debentures  contain certain  restrictive
covenants which, among other things,  limit dividends and similar  distributions
to  stockholders,  essentially  prohibit  redemptions  and  retirements  of  the
Company's equity, limit the Company's ability to incur debt, and restrict action
and  agreements  by the  Company  that  would  prohibit  dividends  and  similar
distributions to the Company from its subsidiaries.

NOTE 6 - Income Taxes
---------------------

Due to losses for each of the years ended November 3, 2001, October 28, 2000 and
October 30, 1999, there was no provision for income taxes recorded.

As of November 3, 2001, for income tax purposes,  the Company has  approximately
$83 million of net  operating  loss  carry-forwards  available to offset  future
taxable income and a portion of such carry-forwards expires at the end of fiscal
2002. As Company  management  cannot  determine  that it is more likely than not
that the Company  will  receive the benefit of deferred  tax assets  relating to
these loss carry-forwards, a valuation allowance equal to the deferred tax asset
has been established.  If certain substantial changes in the Company's ownership
should  occur,  there  would  be an  annual  limitation  on  the  amount  of the
carry-forwards which could be utilized.

NOTE 7 - Stockholders' Deficit
------------------------------

The Company's  common stock  consists of 60 million  authorized  shares,  $1 par
value,  19,473,728 shares of which are issued and outstanding.  The Company also
has 10 million authorized shares of preferred stock, $1 par value, none of which
have been issued.  There have been no changes in common stock or additional paid
in capital  since  October 29, 1994.  Effective  October 28, 1995 as a result of
presenting  financial statements on the liquidation basis, changes in components
of stockholders' deficit are not presented.


                                       16

<PAGE>

NOTE 8 - Selected Quarterly Financial Data (Unaudited)
------------------------------------------------------

Selected quarterly financial data are as follows (thousands of dollars):

<TABLE>
<CAPTION>

                                                                Fiscal Quarters Ended
                                                                ---------------------
                                                   November     July 28,    April 28,   January 27,
                                                   3, 2001        2001        2001         2001
                                                   ------------------------------------------------
<S>                                                <C>          <C>         <C>         <C>
Decrease in reserve for estimated costs and
interest during period of liquidation              $   618      $    556    $     556   $     565

Provision for estimated costs and interest
during period of liquidation                        (2,290)           --           --          --

Increase in Net Liabilities                         (2,290)           --           --          --

<CAPTION>

                                                                Fiscal Quarters Ended
                                                                ---------------------
                                                   October 28,  July 29,    April 29,   January 29,
                                                      2000        2000        2000         2000
                                                   ------------------------------------------------
<S>                                                <C>          <C>         <C>         <C>
Decrease in reserve for estimated costs and
interest during period of liquidation              $     599    $    552    $     587   $     551

Provision for estimated costs and interest
during period of liquidation                          (2,290)         --          --           --

Increase in Net Liabilities                           (2,290)         --          --           --

</TABLE>

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

None.


                                       17
<PAGE>

                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

The  following  table  sets forth  certain  information  concerning  each of the
directors and executive officers of the Company.  All directors will serve until
the next Annual Meeting of  Shareholders  and until his respective  successor is
elected or appointed. Each director of the Company is also a director of PNS.


                                                Present Principal
Name and Position                               Occupation or Employment
With the Company             Age                and Five Year Employment History
----------------             ---                --------------------------------

Mark Todes
President and Director       46              President   and   Director  of  the
                                             Company  for  more  than  5  years.
                                             President of City  Realty,  Inc. (a
                                             real estate  holding  company)  and
                                             Vice    President   of   200   West
                                             Holdings,  Ltd.  (a  subsidiary  of
                                             City  Realty) for more than 5 years
                                             prior  thereto.  Vice  President of
                                             Seacorp for more than 5 years.

Gerald P. Nathanson          66              Director  of  the   Company   since
Director                                     October 1986 and a private investor
                                             for more than 5 years.

Carite L. Torpey             53              Vice   President,   Secretary   and
Vice President, Secretary                    Treasurer of the Company since July
and Treasurer                                1997 and  Assistant  Secretary  for
                                             more  than 5 years  prior  thereto.
                                             Vice  President or  Assistant  vice
                                             President  of TG  Services,  Inc.(a
                                             private  investment   company)  for
                                             more than 5 years.

ITEM 11 - EXECUTIVE COMPENSATION
--------------------------------

Compensation of Directors and Executive Officers

The Company has no employees.  There are currently no  arrangements  under which
any officer or director of the Company will receive  compensation for serving as
such; however, other arrangements may be made in the future.


                                       18

<PAGE>

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

The following table sets forth, as of December 1, 2001,  information  concerning
the beneficial ownership of the common stock of the Company by (i) persons known
by the Company to own beneficially more than 5% of its outstanding common stock,
(ii) each of the  directors of the Company and (iii) all directors and executive
officers of the Company as a group.  Except as set forth in the footnotes to the
table, the stockholders  have sole voting and investment power over such shares.
Unless otherwise specified,  the address for all directors is the address of the
Company's executive offices.  The address for Messrs.  Julius and Eddie Trump is
the address set forth below for Seacorp.  The address for Mr. Christopher Podoll
is the address set forth below for Zimmerman Retailing Group Limited.

                                              Amount and Nature
                                                of Beneficial        Percent
Name                                             Ownership           of Class
----                                             ---------           --------

Christopher Podoll (a)                            2,391,079            12.3%
Zimmerman Retailing Group Limited (a)             2,391,079            12.3%
 P.O. Box 948
 Route 2, Pleasant Plain Road
 Fairfield, IA 52556
Seacorp, Inc. (b)                                 8,014,705            41.1%
 P.O. Box 2573
 Seattle, WA 98111
Eddie Trump (b)                                   8,014,705            41.1%
Julius Trump (b)                                  8,014,705            41.1%
All Directors and Executive Officers as
 a Group (3 persons)                                      0               0%

(a)  According to the Schedule 13D, as amended (the "Zimco Amended 13D"),  filed
     with the Securities and Exchange Commission (the "Commission"), Zimco is an
     Iowa limited partnership, the sole general partner of which is Soma 2 L.P.,
     a  Delaware  limited  partnership  ("Soma  2").  Soma 2 has as its  general
     partner ZRG Co., Inc., a Delaware corporation ("ZRG"), for which Mr. Podoll
     serves as the sole executive officer and director.  Mr. Podoll is a manager
     of  investments  of the William  Zimmerman  family.  Amounts  include 8,079
     shares issuable upon conversion of Debentures  beneficially owned by Zimco.
     Amounts do not  include  the  ownership  of 6,000  shares and 3,810  shares
     issuable upon  conversion of Debentures  owned by the Surya  Financial Inc.
     Retirement Plan, a retirement plan for the benefit of various  employees of
     Surya Financial Inc., an affiliate of Zimco.

(b)  According to the Schedule  13D, as amended,  filed with the  Commission  by
     Julius Trump, Eddie Trump and Seacorp,  Seacorp is, and Messrs.  Julius and
     Eddie  Trump may be


                                       19

<PAGE>

     deemed to be, the beneficial  owner(s) of 8,014,705 shares of common stock.
     Such amount  includes 8,079 shares  issuable upon  conversion of Debentures
     beneficially owned by an affiliate of Seacorp. As set forth in the Schedule
     13D,  Seacorp is a Delaware  corporation  and does not  presently  have any
     business other than the ownership of shares of common stock of the Company.
     Seacorp is indirectly controlled by Messrs. Julius and Eddie Trump.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

During the year ended November 3, 2001, the Company,  along with other companies
affiliated with Seacorp,  invested cash with an affiliate of Seacorp,  a related
party,  in 7 day  certificates  of deposit and has  received,  together with the
other  parties  whose  funds  have been  invested,  its pro rata  portion of the
interest  earned and has reported this amount as a related  party  receivable in
the Statement of Net Liabilities.


                                       20

<PAGE>

                           PART IV. OTHER INFORMATION
                           --------------------------

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

(a)  See the section  entitled "Index to Financial  Statements"  appearing under
     Item 8 of this Annual Report on Form 10-K.

(b)  Not applicable

(c)  Exhibits:

     3.1   Restated Certificate of           Incorporated   by  referenced  from
           Incorporation of the Registrant   Exhibit  3.1  to  the  Registration
                                             Statement  on Form  S-1  (File  No.
                                             33-5560)   of  the   Company   (the
                                             "Registration Statement").

     3.2   Certificate of Amendment of       Incorporated   by  reference   from
           Certificate of Incorporation of   Exhibit  3.2  to  the  Registration
           the Registrant                    Statement.

     3.3   Certificate of Amendment of       Incorporated   by  reference   from
           Certificate of Incorporation      Exhibit 3.1 to Quarterly  Report on
           of the Registrant                 Form  10-Q  for the  quarter  ended
                                             July 30, 1988.

     3.4   Certificate of Amendment of       Incorporated   by  reference   from
           Certificate of Incorporation      Exhibit 3.4 to the Annual Report on
           of the Registrant                 Form   10-K  for  the  year   ended
                                             October 31, 1992.

     3.5   By-Laws of the Registrant         Incorporated   by  reference   from
                                             Exhibit  3.3  to  the  Registration
                                             Statement.

     4.1   Indenture between the             Incorporated   by  reference   from
           Registrant Inc. and United        Exhibit  4.1  to  the  Registration
           States Trust Company of           Statement.
           New York, as Trustee,
           relating to the 7-1/8% Con-
           vertible Debentures due July
           15, 2006 (including the form
           of Convertible Debenture).

     4.2   First Supplemental Indenture      Incorporated   by  reference   from
           between the Registrant and        Exhibit 4.1 to the Quarterly Report
           United States Trust Company of    on  Form  10-Q  for  quarter  ended
                                             April 30, 1988.


                                       21

<PAGE>

           New York as Trustee, relating
           to the 7-1/8% Convertible De-
           bentures due July 15, 2006.

     4.3   Indenture between PNS Inc. and    Incorporated   by  reference   from
           Norwest Bank Minneapolis, Nat-    Exhibit  4.1  to  the  Registration
           ional Association as Trustee,     Statement  on Form  S-1  (File  No.
           relating to the 12-1/8% Senior    33-5591) of PNS Inc.
           Subordinated Notes due July
           15, 1996 (including the form
           of Senior Subordinated Note.

     4.4   First Supplemental Indenture      Incorporated   by  reference   from
           between PNS Inc., and Norwest     Exhibit 4.2 to the Quarterly Report
           Bank Minnesota, National          on Form 10-Q for the quarter  ended
           Association as Trustee,           April 30, 1988.
           relating to the 12-1/8%
           Senior Subordinated Notes due
           July 15, 1996.


     10.5  Letter Agreement dated            Incorporated   by  reference   from
           February 9, 1990 by and among     Exhibit (i) to Quarterly  Report on
           PSSC Inc. and Bear Stearns &      form  10-Q  for the  quarter  ended
           Co., Inc. for the purchase and    February 3, 1990.
           the financing of adjustable-
           rate mortgages.

     22.1  Subsidiaries of the Registrant.   Incorporated   by  reference   from
                                             Exhibit  22.to the Annual Report on
                                             Form   10-K  for  the  year   ended
                                             October 31, 1992.


                                       22

<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.

                                        PSS, INC.
                                        (Registrant)


Date:  January 23, 2002             By: /s/ MARK TODES
                                        ---------------
                                        Mark Todes, President and Director


                                       23
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

         Date             Title            Signature
         ----             -----            ---------

January 23, 2002          Director         /s/ Gerald Nathanson
                                           -------------------------------------
                                           Gerald Nathanson

January 23, 2002          Director         /s/ Mark Todes
                                           -------------------------------------
                                           Mark Todes


                                       24