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

                                   FORM 10-K/A
                                 (Amendment #1)

(Mark One)

[X]  Annual report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the fiscal year ended December 31, 1999 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:  0-9919

                                    PSC Inc.
              ----------------------------------------------------
              Exact name of registrant as specified in its charter

          New York                                            16-0969362
------------------------------                           -------------------
State or other jurisdiction of                           IRS Employer ID No.
incorporation or organization

675 Basket Road, Webster, New York                               14580
--------------------------------------                          --------
Address of principal executive offices                          Zip Code

Registrant's telephone number, including area code:  716-265-1600

                    Securities registered pursuant to Section
                               12(b) of the Act:

                                      None
                                     ------
 Securities registered pursuant to Section 12(g) of the Act: Nasdaq Stock Market

                          Common Stock, $.01 par value
                          ----------------------------
                               (Title of Class)

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].

                                      -1-

<PAGE>


As of March 27,  2000,  the  aggregate  market value of the voting stock held by
non-affiliates  of  the  registrant  was  approximately   $65,539,284   (Assumes
officers, directors and any shareholder holding 5% of the outstanding shares are
affiliates.)

As of March 27, 2000, there were outstanding 12,208,801 shares of Common Stock.

Documents incorporated by reference:  None


                                       -2-

<PAGE>


                                TABLE OF CONTENTS


                                    PART III

                                                                     Page Number
                                                                     -----------

Item 10: Directors and Executive Officers of the Registrant..............  4

Item 11: Executive Compensation..........................................  7

Item 12: Security Ownership of Certain Beneficial Owners and Management.. 15

Item 13: Certain Relationships and Related Transactions.................. 17


















                                      -3-

<PAGE>


     PSC Inc.  hereby  amends its Annual Report on Form 10-K for the fiscal year
ended  December 31, 1999, by restating Part III, Items 10, 11, 12 and 13 thereof
in their entirety, as follows:

                                    PART III

ITEM 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

     The Company's Restated Certificate of Incorporation provides for a Board of
Directors to serve in three classes having  staggered terms of three years each.
At  present,  there are ten  directors,  nine of whom have been  elected  by the
holders of the Common  Shares and one of whom has been elected by the holders of
the  Series  A  Convertible  Preferred  Shares.  Under  the  Company's  Restated
Certificate of Incorporation,  as amended, so long as Hydra Investissements S.A.
holds at least 27,500  Series A  Convertible  Preferred  Shares,  the holders of
Series  A  Convertible   Preferred  Shares  have  the  exclusive  right,  voting
separately as a class,  to elect one director (the "Series A Director")  and are
entitled  to vote  together  with the  holders of the Common  Shares as a single
class in the  election of the other  directors.  Three  directors  have terms of
office expiring at the 2000 Annual Meeting of Shareholders;  four directors (one
of whom is the  Series A  Director)  have terms of office  expiring  at the 2001
Annual  Meeting;  and three  directors have terms of office expiring at the 2002
Annual Meeting.

Directors whose terms expire in 2000:

     Donald K. Hess, age 69, has served as a director of the Company since 1987.
From 1975 until his  retirement in December  1995, Mr. Hess was a Vice President
of the University of Rochester,  Rochester, New York. He currently continues his
association  with the  University  of  Rochester  on a  part-time  basis as Vice
President Emeritus.

     James C.  O'Shea,  age 54, has served as a director  of the  Company  since
1989. He has been Chairman of the Board and Chief  Executive  Officer of Bioject
Medical  Technologies,  Inc.,  a  medical  device  manufacturer  of  needle-free
injection systems in Portland,  Oregon,  since April 1995. Prior thereto, he was
President  of  Biopure  Corporation,   a  biomedical   manufacturer  in  Boston,
Massachusetts, from January 1989 until April 1995.

     Justin L.  Vigdor,  age 70, has served as a director of the  Company  since
1989.  He has been an  attorney  since  1951 and is a partner in the law firm of
Boylan,  Brown, Code, Vigdor & Wilson, LLP, Rochester,  New York, counsel to the
Company.  He is also a director of IEC Electronics  Corp.,  Newark, New York, an
independent  contract  manufacturer of complex printed circuit board  assemblies
and electronic products and systems.

Directors whose terms expire in 2001:

     Robert S.  Ehrlich,  age 62, has served as a director of the Company  since
1983 and has been  Chairman of the Board of Directors  since April 1997.  He was
Vice Chairman of the Board of Directors  from February 1997 until April 1997. He
was also Chairman of the Board of Directors  from December 1987 until July 1992.
From  January  1995 until  December  1996,  Mr.  Ehrlich  was engaged to provide
consulting  services to the Company.  From August 1991 until  December 1994, Mr.
Ehrlich  was  employed  by the  Company as a senior  management  executive.  Mr.
Ehrlich has been  Chairman of the Board of Electric  Fuel Company  ("EFC") since
January  1993 and Chief  Financial  Officer  of EFC  since  May 1991.  EFC is an
Israel-based company engaged in the research,  development and commercialization
of advanced zinc air battery products.

                                      -4-
<PAGE>

     Jack E.  Rosenfeld,  age 61, has served as a director of the Company  since
1989. He has been President and Chief Executive Officer of Potpourri Collection,
Inc., a consumer catalog company in Medfield,  Massachusetts,  since 1998. Prior
thereto,  he was President and Chief Executive  Officer of Hanover Direct,  Inc.
(formerly  Horn & Hardart  Co.)  from  September  1990  until  January  1996 and
President and Chief Executive  Officer of its direct  marketing  subsidiary from
May  1988  until  January  1996.  He is  also  a  director  of EFC  and  Maurice
Corporation, an apparel retailer.

     Robert C. Strandberg, age 42, has served as a director since May 1998.
He has served as the President and Chief Executive  Officer of the Company since
April 1997 and as Executive  Vice President from November 1996 until April 1997.
Between 1991 and 1996,  Mr.  Strandberg  was Chairman of the Board of Directors,
President  and Chief  Executive  Officer  of Datamax  International  Corporation
("Datamax"), Orlando, Florida. Datamax designs and manufactures thermal bar code
printers. Mr. Strandberg is also a director of Sawtek, Inc., Orlando, Florida, a
manufacturer of surface  acoustical  filters for cellular  phones.  He is also a
director of Merix Corporation,  Forest Grove, Oregon, a manufacturer of advanced
printed circuit boards for use in sophisticated electronic equipment.

     Dr.  Romano  Volta,  age 63, is the Series A  Director  and has served as a
director of the Company  since  September  1997.  Dr.  Volta is President of the
Board  of  Directors  of  Hydra  S.p.A.,  an  Italian  corporation,  which is an
industrial  and real  estate  holding  corporation.  He is also the  founder and
President of Datalogic S.p.A., an Italian  corporation,  which manufactures auto
identification and data collection  systems.  Dr. Volta is a member of the Board
of Directors of Bank Institution and Bank Foundation of Bologna, Italy.

Directors whose terms expire in 2002:

     Dr. Jay M.  Eastman,  age 51, has served as a director of the Company since
April 1996.  He also served as Senior Vice  President,  Strategic  Planning from
December 1995 until October 1997 and as Executive  Vice President of the Company
from  December  1987  until  December  1995.  Dr.  Eastman is  President,  Chief
Executive Officer and major shareholder of Lucid, Inc.,  Rochester,  New York, a
corporation he founded in November 1991. Lucid designs and  manufactures  custom
electro-optical  instrumentation  for  application  in  fields  such as  desktop
publishing and medical  diagnosis.  Dr. Eastman holds Ph.D. and Bachelor degrees
in Optics  from the  University  of  Rochester  and is an  inventor on 18 United
States  patents owned by the Company.  Dr. Eastman is also a director of EFC and
Centennial Technologies,  Inc., Wilmington,  Massachusetts, a manufacturer of PC
card-based solutions to original equipment manufacturers.

     Thomas J.  Morgan,  age 64, has served as a director of the  Company  since
April 1996.  Mr.  Morgan was the  President  and Chief  Executive  Officer  from
October  1984 until  January  1993 and  Chairman of the Board from  January 1993
until January 1995 of Verax Systems,  Inc., Rochester,  New York, a manufacturer
of data collection and specialized software for statistical process control. Mr.
Morgan  is also a  director  of In  Touch  Massage  Center,  Inc.,  Seal  Beach,
California, a woman's fitness studio.

     Bert W.  Wasserman,  age 67, has served as a director of the Company  since
May 1999. Mr.  Wasserman  served as Executive Vice President and Chief Financial
Officer of Time Warner,  Inc. from 1990 until his  retirement in 1995 and served
on the Board of  Directors of Time Warner,  Inc.  and its  predecessor  company,
Warner Communications, Inc., from 1981 to 1995. He joined Warner Communications,
Inc. in 1966 and had been an officer of that company since 1970.  Mr.  Wasserman
is a director of several investment companies in the Dreyfus Family of Funds. He
is  a   director   of  Malibu   Entertainment   International,   Inc.,   Winstar
Communications, Inc. and Lillian Vernon Corporation.

                                      -5-

<PAGE>


Executive Officers

     The  executive  officers of the  Registrant  are set forth in Part I of the
Registrant's  Annual Report on Form 10-K filed with the  Securities and Exchange
Commission ("SEC") on April 14, 2000.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors  and  executive  officers,  and  persons  who own  more  than 10% of a
registered  class  of the  Company's  equity  securities,  to file  with the SEC
reports of  ownership  and changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater-than-10% shareholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

     Based  solely on review of the  copies  of such  reports  furnished  to the
Company or written  representations  that no other  reports were  required,  the
Company  believes  that,  during the 1999 fiscal year,  all filing  requirements
applicable to its officers,  directors and  greater-than-10%  beneficial  owners
were complied  with,  except for a late initial report on Form 3 filed by George
A.  Plesko,  who became a Senior Vice  President  of the Company on December 21,
1999.

                                      -6-

<PAGE>


ITEM 11:  EXECUTIVE COMPENSATION

Summary Compensation Table

     Set  forth  below  is   information   concerning   the  cash  and  non-cash
compensation  for services in all capacities to the Company for the fiscal years
1999,  1998 and 1997  received by (i) the Chief  Executive  Officer and (ii) the
four other most highly paid  executive  officers in the employ of the Company at
December 31, 1999 (the  individuals  in (i) and (ii),  collectively,  the "Named
Executive Officers").

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                                               Long-term
                                                                                              Compensation
                                                Annual Compensation                              Awards
                               ------------------------------------------------------  --------------------------
                                                                                         Restricted    Securities
                                                                     Other Annual          Stock       Underlying      All Other
 Name & Principal Position     Year   Salary($)    Bonus($)(1)    Compensation ($)(2)   Awards ($)(3)  Options(#) Compensation($)(4)
---------------------------    ----   ---------    -----------    -------------------  --------------- ---------- ------------------
<S>                            <C>     <C>          <C>                <C>               <C>             <C>           <C>

Robert C. Strandberg (5)       1999    $319,800     $152,208           $ 50,442              --           37,500        $ 5,000
  President and Chief          1998     165,000(6)   133,380            132,170          $403,125           --            4,500
  Executive Officer            1997      80,460(6)      --               64,345              --          298,846           --


William J. Woodard             1999    $199,307      $ 75,500          $ 37,243              --            6,500        $55,000
  Vice President, Chief        1998     179,384       156,690            59,704              --             --            5,000
  Financial Officer and        1997     160,000          --              26,710              --           30,000          3,139
  Treasurer

William L. Parnell, Jr. (7)    1999    $215,031      $ 81,540          $152,304              --            7,500        $ 5,000
  Chief Operating Officer      1998     187,445       142,758              --                --             --            4,850
  and Senior Vice President    1997     169,386         1,597              --                --           30,000          4,750

Linda J. Miller (8)            1999    $179,308      $ 67,950              --                --           33,750           --
  Senior Vice President        1998     113,846       121,496              --                --           35,000           --
  and General Manager

Brad R. Reddersen              1999    $194,661      $ 51,529              --                --            5,000        $ 4,000
  Vice President, Chief        1998     184,784       140,634              --                --             --            4,620
  Technology Officer           1997     170,836         1,597              --                --           30,000          4,393


</TABLE>


(1)  For 1999, the amounts in this column reflect annual  incentive awards under
     the Company's  Management  Incentive Plan ("MIP"). For 1998, the amounts in
     this column reflect annual  incentive awards under the Company's MIP and/or
     bonus payments made in lieu of stock options. The amounts of the MIP awards
     and the bonus in lieu of options, respectively, for 1998 were as follows:

                                MIP ($)          Bonus in Lieu of Options ($)
                               --------          ----------------------------

     R. Strandberg             $133,380                      --
     W. Woodard                $ 66,690                   $90,000
     W. Parnell                $ 48,758                   $94,000
     L. Miller                 $ 41,496                   $80,000
     B. Reddersen              $ 48,032                   $92,602

     Messrs.   Parnell   and   Reddersen   had  been   executive   officers   of
     Spectra-Physics Scanning Systems, Inc. ("Spectra") prior to its acquisition
     by the Company on July 12, 1996. Bonus amounts for 1997 for Messrs. Parnell
     and Reddersen were payable pursuant to Spectra's Phantom Stock Option Plan.

                                      -7-

<PAGE>

(2)  Except as noted,  none of the Named Executive  Officers  received  personal
     benefits  in excess of the lesser of  $50,000  or 10% of such  individual's
     reported  salary  and bonus for 1999,  1998 or 1997.  The  amounts  in this
     column  for 1999  include  the  following:  Mr.  Strandberg  - $50,442  for
     automobile  expenses,  club  membership  dues and  fees,  and  premiums  on
     enhanced life and disability insurance policies;  Mr. Woodard - $37,243 for
     automobile  expenses,  club  membership  dues and  fees,  and  premiums  on
     enhanced life and disability insurance policies; Mr. Parnell - $130,170 for
     relocation  expenses and other amounts for automobile expenses and premiums
     on  enhanced  life and  disability  insurance  policies,  and a related tax
     gross-up.

     The amounts in this column for 1998 include the following: Mr. Strandberg -
     $97,412 for relocation expenses and other amounts for automobile  expenses,
     club membership dues and fees, and premiums on enhanced life and disability
     insurance policies,  and a related tax gross-up;  Mr. Woodard - $15,779 for
     automobile  expenses,  $23,728 for club  membership dues and fees and other
     amounts for premiums on enhanced life and  disability  insurance  policies,
     and a related tax gross-up.

     The amounts in this column for 1997 include the following: Mr. Strandberg -
     $47,516 for relocation  expenses and other amounts for automobile  expenses
     and  premiums on  enhanced  life and  disability  insurance  policies;  Mr.
     Woodard - $15,641 for  automobile  expenses  and  $11,069  for  premiums on
     enhanced life and disability insurance policies and club membership dues.

(3)  Restricted  stock awards are valued in the table above at their fair market
     value  based on the  closing  price  for the  Company's  Common  Shares  as
     reported by The Nasdaq Stock  Market(R) on the date of award.  On March 25,
     1998,  Mr.  Strandberg was awarded 37,500  restricted  shares.  The closing
     price of the Company's Common Shares on that date was $10.75. At the end of
     the 1998 fiscal year, the fair market value of Mr. Strandberg's  restricted
     stock holdings was $356,250,  based upon the closing price of the Company's
     Common  Shares on December 31, 1998 of $9.50.  The  restrictions  on 50% of
     such shares will lapse in four equal annual installments on March 25, 1999,
     March 25, 2000, March 25, 2001 and March 25, 2002 so long as Mr. Strandberg
     is an  officer  on such  dates.  The  restrictions  on the other 50% of the
     shares will not lapse unless and until certain  performance  levels for the
     Company's shares are attained - with respect to 6,250 shares,  at such time
     as the  trading  price of the  Company's  Common  Shares  equals or exceeds
     $14.30 per share for seven  consecutive days at any time prior to March 25,
     2002;  with respect to 6,250  shares,  at such time as the trading price of
     the Company's  Common  Shares equals or exceeds  $16.87 per share for seven
     consecutive  days at any time prior to March 25, 2002;  and with respect to
     6,250 shares,  at such time as the trading  price of the  Company's  Common
     Shares equals or exceeds $19.57 per share for seven consecutive days at any
     time prior to March 25, 2002.  If the trading  price of the shares does not
     reach the specified  performance levels by March 25, 2002, all shares still
     subject  to the  restrictions  will  be  returned  to or  cancelled  by the
     Company.

(4)  The amounts in this column for 1999 consist of the following:

     The Company's  matching  contributions  to its 401(k) Plan as follows:  Mr.
     Strandberg  -  $5,000;  Mr.  Woodard - $5,000;  Mr.  Parnell - $5,000;  Mr.
     Reddersen  - $4,000.  In  addition,  Mr.  Woodard  received a cash award of
     $50,000 in order to exercise stock options pursuant to a program adopted by
     the Board in 1999 designed to encourage an increase in the ownership of the
     Company's Common Shares by management. As conditions to the receipt of such
     award,  any  executive  officer  electing  to  receive  the award  would be
     required to hold the stock  acquired  upon the exercise of the stock option
     for a minimum period of three years and the size of such  officer's  annual
     stock  option  grant for 1999  would be  reduced.  Mr.  Woodard  elected to
     receive this special cash award and,  accordingly,  also received a reduced
     annual stock option grant.

     The amounts in this column for 1998 consist of the following:

     The Company's  matching  contributions  to its 401(k) Plan as follows:  Mr.
     Strandberg  -  $4,500;  Mr.  Woodard - $5,000;  Mr.  Parnell - $4,850;  Mr.
     Reddersen - $4,620.

                                      -8-

<PAGE>


     The amounts in this column for 1997 consist of the following:

     The Company's  matching  contributions  to its 401(k) Plan as follows:  Mr.
     Woodard - $3,139; Mr. Parnell - $4,750; Mr. Reddersen - $4,393.

(5)  Mr.  Strandberg  became the President and Chief Executive  Officer on April
     30,  1997.  He joined the Company as Executive  Vice  President in November
     1996.

(6)  The amount set forth as salary for 1998  represents the cash payment to Mr.
     Strandberg  for the period June 1, 1998  through  December 31, 1998 and the
     amount set forth for 1997 represents the cash payment to Mr. Strandberg for
     the period January 1, 1997 through May 31, 1997. Pursuant to his Employment
     Agreement,  Mr.  Strandberg  elected  to  receive  all of his  base  salary
     ($240,000) for the period between June 1, 1997 and May 31, 1998 in the form
     of stock options.  Accordingly,  on June 2, 1997, Mr. Strandberg received a
     stock option to purchase  73,846  shares at an exercise  price of $6.50 per
     share (the fair market value of the Company's  Common Shares on the date of
     grant).  Said option vested in four equal quarterly  installments on August
     31, 1997, November 30, 1997, February 28, 1998 and May 31, 1998 and expires
     on June 2, 2000.

(7)  Mr. Parnell left the Company on January 11, 2000.

(8)  Ms. Miller became  Senior Vice  President and General  Manager in May 1999.
     She joined the Company as Vice President, Marketing in April 1998.

Options and Stock Appreciation Rights

     The  following  tables  summarize  option  grants to, and exercises by, the
Named  Executive  Officers in fiscal 1999,  and the value of the options held by
such persons at the end of fiscal 1999. No stock  appreciation  rights have ever
been granted by the Company.

<TABLE>
<CAPTION>
                              OPTION GRANTS IN 1999
                                                                                                    Potential Realizable Value
                                                                                                     at Assumed Annual Rates
                                                                                                    of Stock Price Appreciation
                                       Individual Grants                                                for Option Term (1)
                        ---------------------------------------------------                         ---------------------------
                            Number of      Percent of Total
                           Securities      Options Granted     Exercise or
                           Underlying      to Employees in      Base Price
      Name              Options Granted(#)  Fiscal 1999 (2)    ($/Share)(3)   Expiration Date (4)       5% ($)        10%($)
      ----              ------------------ ----------------    ------------   -------------------   ---------------------------
<S>                         <C>                 <C>               <C>               <C>               <C>           <C>
Robert C. Strandberg        37,500 (5)          8.7%              $8.625            3/25/04           $89,360       $ 97,462

William J. Woodard           6,500 (6)          1.5%              $6.750           10/25/04           $12,122       $ 26,786

William L. Parnell, Jr.      7,500 (6)          1.7%              $6.750           10/25/04           $13,987       $ 30,907

Linda J. Miller              7,500 (6)          1.7%              $6.750           10/25/04           $13,987       $ 30,907
                            26,250 (7)          6.1%              $7.094           12/6/04            $51,448       $113,688

Brad R. Reddersen            5,000 (6)          1.2%              $6.750           10/25/04           $ 9,325       $ 20,605

</TABLE>

(1)  The potential  realizable value portion of the table  illustrates the value
     that might be realized  upon exercise of the options  immediately  prior to
     the expiration of their term,  assuming the specified  compounded  rates of
     appreciation  on the Company's  Common Shares over the term of the options.
     This hypothetical value is based entirely on assumed annual growth rates of
     5% and 10% in the  Company's  stock  price  over  the  term of the  options
     granted  in  1999.  The  assumed  rates  of  growth  were  selected  by the
     Securities and Exchange Commission for illustration  purposes only, and are
     not intended to predict future performance and prospects.  These numbers do
     not  take  into  account   provisions  of  certain  options  providing  for
     termination   of  the   option   following   termination   of   employment,
     nontransferability or vesting over various periods.

(2)  Percentages  indicated are based on a total of 432,000  options  granted to
     106 employees during 1999.

                                      -9-
<PAGE>

(3)  The exercise  price per share is 100% of fair market value of the Company's
     Common Shares on the date of grant.

(4)  All stock options expire five years from the date of grant.

(5)  See "Employment Contracts and Severance and Change-in-Control  Arrangements
     - Robert C. Strandberg".

(6)  Options are  exercisable in four equal annual  installments  commencing one
     year from the date of grant.

(7)  Represents  options  granted in 1999 to replace  35,000  options  initially
     granted on April 6, 1998 at $10.875.  The  options  will not vest or become
     exercisable  unless and until certain  performance levels for the Company's
     Common  Shares are attained - one-third  will vest at such time as the Fair
     Market Value of the  Company's  Common  Shares  equals or exceeds $9.44 per
     share for seven consecutive  days;  one-third will vest at such time as the
     Fair Market Value of the Company's  Common Shares equals or exceeds  $11.14
     per share for seven  consecutive days; and one-third will vest at such time
     as the Fair Market Value of the  Company's  Common Shares equals or exceeds
     $12.91 per share for seven consecutive  days. If the specified  performance
     goals  are  not  reached,   the  options  will  nevertheless  become  fully
     exercisable  after June 6, 2004 in order to maintain  favorable  accounting
     treatment.

<TABLE>
<CAPTION>

                       AGGREGATED OPTION EXERCISES IN 1999
                         AND 1999 YEAR-END OPTION VALUES

                                                              Number of Securities              Value of Unexercised
                                                             Underlying Unexercised           In-the-Money Options at
                                                         Options at December 31, 1999 (#)     December 31, 1999 ($)(1)
                                                         --------------------------------   ---------------------------
                        Shares Acquired        Value
        Name            on Exercise (#)   Realized ($)(2)  Exercisable    Unexercisable     Exercisable   Unexercisable
       ------           ---------------   ---------------  -----------    -------------     -----------   -------------
<S>                          <C>               <C>           <C>             <C>              <C>           <C>
Robert C. Strandberg           --                --          186,346         200,000          $139,615      $134,375

William J. Woodard           15,000            $8,445         86,605          20,250          $ 18,125      $ 12,188

William L. Parnell, Jr.        --                --           46,250          26,250          $ 25,625      $ 15,313

Linda J. Miller                --                --             --            33,750          $   --        $ 12,064

Brad R. Reddersen              --                --           46,250          23,750          $ 25,625      $ 13,750

</TABLE>


(1)  An individual,  upon exercise of an option,  does not receive cash equal to
     the amount  contained in the Value Realized column of this table.  Instead,
     the amounts  contained in the Value Realized column reflect the increase in
     the price of the Company's  Common Shares from the option grant date to the
     option exercise date. Value is calculated  based on the difference  between
     the option price and the closing  market price of the Common  Shares on the
     date of exercise  multiplied  by the number of shares to which the exercise
     relates.  No cash is realized until the shares received upon exercise of an
     option are sold.

(2)  The closing price for the Company's Common Shares as reported by The Nadsaq
     Stock Market(R) on December 31, 1999 was $7.375. Value is calculated on the
     basis of the difference  between the option price and $7.375  multiplied by
     the  number  of  Common  Shares   underlying  the  option.   An  option  is
     in-the-money if the market value of the Common Shares subject to the option
     exceeds the option price.

                                      -10-

<PAGE>


Employment Contracts and Severance and Change-in-Control Arrangements

Robert C. Strandberg

     Effective June 2, 1998, the Company entered into a new Employment Agreement
with Mr.  Strandberg,  which was  amended  in  December  1998 and July 1999 (the
Employment Agreement, as amended, is referred to as the "Strandberg Agreement"),
and which will expire on December 31, 2000 (the "Initial Term"). However, unless
written notice is given to the contrary by either the Company or Mr.  Strandberg
at least 75 days  prior to the  expiration  date,  the  employment  period  will
automatically  be extended for  additional  one-year  terms (each an "Additional
Term").  Under the Strandberg  Agreement,  Mr. Strandberg will receive an annual
base salary of $336,000 or such  increased  amount as may be  determined  by the
Board from time to time. In addition, under the Strandberg Agreement, if certain
performance  goals and targets  determined  annually by the  Company's  Board of
Directors  for the  Company's  Management  Incentive  Plan  ("MIP") are met, Mr.
Strandberg will be entitled to receive a performance bonus for that year ranging
from 40% to 170% of his base salary with no performance bonus if the performance
goal is not achieved in a particular  year.  Mr.  Strandberg is also eligible to
participate in employee benefit plans generally made available by the Company to
its executive officers.

     If Mr.  Strandberg's  services  are  terminated  without  cause (as defined
below),  the Company will  continue to pay him for a period of one year his base
salary  and  all  current  health,   dental,   life  and  accidental  death  and
dismemberment insurance benefits.

     In the event Mr. Strandberg terminates his employment for any reason within
90 days after the occurrence of a Change-in-Control (as defined below) or in the
event of the  termination  of employment of Mr.  Strandberg  within the two-year
period following a Change-in-Control (as defined below), and such termination is
(i) by the Company for any reason other than  Termination  for Cause (as defined
below),  death or  disability,  or (ii) by Mr.  Strandberg for "Good Reason" (as
defined below), the Company will pay Mr. Strandberg over a period of three years
following such  termination an amount equal to the product of the sum of (x) Mr.
Strandberg's  base  salary at the annual rate then in effect and (y) the highest
annual  bonus paid to Mr.  Strandberg  under the  Company's  current  Management
Incentive Plan in the three full fiscal years preceding  termination  multiplied
by  2.9.  In  addition,  Mr.  Strandberg  will  be  immediately  vested  in  any
retirement,  incentive,  restricted stock, or option plans or agreements then in
effect and the Company  will  continue to provide Mr.  Strandberg  with his then
current health,  dental,  life and accidental death and dismemberment  insurance
benefits for a period of three years.

     If any of the payments to Mr.  Strandberg are considered  "excess parachute
payments" as defined in Section 280G of the Internal  Revenue Code, the payments
will be reduced to avoid such a characterization.

     The Strandberg Agreement contains confidentiality provisions and a covenant
not-to-compete  for a period of 24 months  after the  expiration  of the Initial
Term and the Additional Term, if any.

     Pursuant to the Strandberg Agreement, in March 1998 Mr. Strandberg received
an award of  37,500  restricted  shares  which  cannot be sold,  transferred  or
otherwise  disposed of until the  restrictions  lapse.  See  Footnote (3) to the
Summary  Compensation  Table for further  details with respect to the restricted
shares.  Pursuant to the Strandberg Agreement, on March 25, 1999, Mr. Strandberg
received an option for 37,500 Common  Shares at an exercise  price of $8.625 per
share  (the Fair  Market  Value of the  Company's  Common  Shares on the date of
grant).  This option replaced the award of 37,500  restricted shares which would
have been awarded on March 25, 1999 and  represents a 50%  reduction in the size
of the  option  grant to which he  otherwise  would have been  entitled.  Of the
37,500 stock  options  granted,  options for 18,750 shares will vest as follows:
4,688 on March 25, 2000;  4,687 on March 25, 2001;  4,688 on March 25, 2002; and
4,687 on March 25, 2003.

                                      -11-
<PAGE>

     The options for the remaining  18,750 shares will not vest unless and until
certain  performance  levels for the Company's Common Shares are attained - with
respect to 6,250 shares,  at such time as the Fair Market Value of the Company's
Common Shares  equals or exceeds  $11.47 per share for seven  consecutive  days;
with  respect  to 6,250  shares,  at such time as the Fair  Market  Value of the
Company's Common Shares equals or exceeds $13.53 per share for seven consecutive
days; and with respect to 6,250 shares, at such time as the Fair Market Value of
the  Company's  Common  Shares  equals  or  exceeds  $15.70  per share for seven
consecutive  days.  If the  specified  performance  goals are not  reached,  the
options will  nevertheless  become fully  exercisable  after December 1, 2003 in
order to maintain  favorable  accounting  treatment.  The options will expire on
March 25, 2004.

Severance/Change-in-Control Agreements

     Severance/Change-in-Control  Agreements  have  been  entered  into with all
senior executive officers,  including Messrs. Parnell, Reddersen and Woodard and
Ms.  Miller,  in order to assure the Company of the continued  services of those
executives to the Company in an effective  manner without  distraction by reason
of the  possibility of a termination of employment by the Company or a change in
control  of the  Company.  In  general,  all  provide  that in the  event of the
termination of the executive's  employment by the Company,  for any reason other
than  Termination  for  Cause  (as  defined  below),  death,   disability  or  a
Change-in-Control  (as  defined  below),  the Company  will  continue to pay the
executive for a period of one year following such termination an amount equal to
the  executive's  salary at the annual  rate then in effect.  In  addition,  the
Company will provide the executive  with the  executive's  then current  health,
dental,  life and accidental death and  dismemberment  insurance  benefits for a
period of one year  following such  termination.  Each agreement also contains a
covenant  not-to-compete  during the one-year period in which severance benefits
are being paid. In the event of the  termination of the  executive's  employment
within the two-year period following a  Change-in-Control  (as defined below) of
the  Company,  and such  termination  is (i) by the Company for any reason other
than  Termination  for Cause (as defined  below) or (ii) by the executive if the
executive  terminates such employment for Good Reason (as defined below), or, in
the case of Mr.  Woodard,  in addition,  if he terminates his employment for any
reason within 90 days after the  occurrence of a  Change-in-Control  (as defined
below),  the Company will pay the executive  either over a period of three years
or in a lump sum  payment an amount  equal to the  product of the sum of (x) the
executive's  salary at the annual rate then in effect and (y) the highest annual
bonus paid to the executive  under the Company's  current  Management  Incentive
Plan or any successor plan in the three full fiscal years preceding  termination
multiplied by 2.9. In addition,  the executive will be immediately vested in any
retirement,  incentive  or option  plans  then in effect  and the  Company  will
continue to provide the executive with his or her then current  health,  dental,
life and accidental death and dismemberment  insurance  benefits for a period of
three years.

     If any of the payments to the executive are  considered  "excess  parachute
payments" as defined in Section 280G of the Internal  Revenue Code, the payments
will be reduced to avoid such a characterization.

     Certain  Definitions.  As used in the  Ehrlich  Agreement,  the  Strandberg
Agreement and the Severance/Change-in-Control Agreements:

     (a)  Change-in-Control  generally  means  the  acquisition  of  30%  of the
Company's voting  securities (20% in the Strandberg  Agreement),  or a change of
one-third of the incumbent Board of Directors  without the prior approval of the
members of the incumbent Board of Directors,  or the merger or  consolidation of
the Company with another corporation where the shareholders of the Company would
not,  immediately  after the  merger or  consolidation,  own at least 50% of the
voting  securities  of the  corporation  issuing the cash or  securities  in the
merger or  consolidation,  or the sale of substantially all of the assets of the
Company.

                                      -12-
<PAGE>
     (b) Termination for Cause generally means the termination of the employment
of an officer because the officer has failed or refused to perform such services
as may  reasonably  be delegated to the officer  consistent  with the  officer's
position,  or has been grossly  negligent in connection  with the performance of
his  or  her  duties,  or  has  committed  acts  involving  dishonesty,  willful
misconduct,  breach of  fiduciary  duty,  fraud,  or any similar  offense  which
materially  affects the  officer's  ability to perform his or her duties for the
Company or may materially adversely affect the Company, or has been convicted of
a felony.

     (c) Good  Reason  generally  means an  officer's  annual  rate of salary is
reduced  from the annual rate then  currently in effect or the  officer's  other
employee  benefits  are in the  aggregate  materially  reduced  from  those then
currently in effect,  (unless such  reduction  of employee  benefits  applies to
employees of the Company),  or the  officer's  place of employment is moved from
its then current location,  or the officer is assigned duties that are demeaning
or  are  otherwise  materially  inconsistent  with  the  duties  then  currently
performed by the officer.

     (d)  Termination  without  Cause  generally  means the  termination  of the
employment of an officer for reasons other than death,  disability,  termination
for cause or termination upon Change-in-Control.

Compensation of Directors

     In 1999,  each  non-employee  director  was paid  $500 for each  Board  and
Committee  meeting  attended  by him,  except that no more than $500 was paid if
more than one meeting occurred on the same day. Also, each non-employee director
received a retainer at the annual rate of $12,500 (the "Director Retainer"), and
each Chairman of a Board Committee  (except Mr. Erhlich)  received an additional
annual retainer of $2,500 (the "Chairman Retainer").  Both the Director Retainer
and the Chairman  Retainer were paid in four equal  installments on the last day
of each calendar quarter. A Special Committee of the Board had been appointed in
October 1998 to consider strategic alternatives for the Company and to consider,
negotiate,  or oversee the  negotiation,  and to recommend to the Board, for its
approval, the terms of potential  acquisitions,  if any. In 1999, each member of
the  Special  Committee,  except  Mr.  Ehrlich,  was paid  $9,000 for such extra
service.  Members of the Special  Committee  were  Messrs.  Ehrlich  (Chairman),
Morgan,  O'Shea,  Rosenfeld  and Vigdor.  For 1999,  an aggregate of $194,217 in
meeting fees,  retainers,  and special compensation was paid in cash or in stock
to eight non-employee  directors.  Each non-employee director is also reimbursed
the reasonable expenses incurred in attending the meeting. All directors, except
Messrs. Ehrlich and Strandberg, are non-employee directors.

     Pursuant  to the PSC Inc.  Compensation  Plan for  Non-Employee  Directors,
non-employee  directors  have  the  opportunity  to  receive  payment  of  their
compensation  either in cash or in Common  Shares.  During 1999,  Messrs.  Hess,
O'Shea, Rosenfeld,  Vigdor and Volta received a portion of their compensation in
Common Shares. The directors may also elect to receive their compensation either
currently or on a deferred  basis.  During 1999, no director  chose to defer his
compensation.  If the amount to be deferred would have been payable in cash, the
Company  will credit a Deferral  Account  maintained  for the  director  with an
amount that would  otherwise  have been payable to the director in cash.  If the
amount to be deferred would have been payable in stock,  the Company will credit
units ("Stock Units") to a Unit Account  maintained for the director.  Directors
make  separate  elections  with  respect  to the  manner of the  payment  of the
compensation  and the time of the  payment  of the  compensation.  The number of
Common  Shares  issued or the number of Stock  Units  credited  to a  director's
account  will  equal the cash  amount of the  compensation  divided  by the fair
market  value of one share of stock on the date on which such cash amount  would
otherwise  have been paid.  Stock  Units and  amounts in a Deferral  Account are
fully  vested at all times.  Payment of Stock Units (in full Common  Shares) and
the  amounts in a  Deferral  Account  must be  deferred  at least one year.  The
director  chooses  the date of the  payment,  which may be upon  termination  of
service as a director.  The maximum  number of Common  Shares that may be issued
under the Plan is 50,000 shares.

                                      -13-
<PAGE>

     The Company's  1994 Stock Option Plan (the "1994 Plan")  provides that each
member of the Board of Directors  who is not also an employee or  consultant  of
the  Company  will  automatically  receive on the date of the Annual  Meeting of
Shareholders  a stock  option for 6,500 Common  Shares.  Since the Board in 1999
adopted a policy of reducing by 50% the size of the annual stock  option  grants
to officers and key  employees,  the Board  believed  that this policy should be
applicable to everyone,  and,  accordingly,  the directors voluntarily agreed to
also reduce the size of their annual grants by 50%. Accordingly,  on the date of
the 1999 Annual  Meeting of  Shareholders,  non-employee  director stock options
("NEDSOs") to purchase 3,250 shares were granted to each non-employee  director,
except Mr. Wasserman,  at a purchase price of $10.375 per share, the fair market
value on the date of the grant. Said NEDSOs are exercisable in their entirety on
May 12, 2000 and terminate on May 12, 2004. Mr. Wasserman, elected as a director
for the  first  time at the 1999  Annual  Meeting,  received  a NEDSO  for 6,500
shares. No NEDSOs were granted to Messrs. Ehrlich and Strandberg in 1999.

     In May 1998,  the Board  approved  a new  compensation  agreement  with Mr.
Ehrlich, Chairman of the Board, which was amended in December 1998 and July 1999
(the agreement, as amended, is referred to as the "Ehrlich Agreement") and which
will expire on December 31,  2000.  Pursuant to the Ehrlich  Agreement,  for all
services rendered to the Company as Chairman of the Board and as a consultant in
such  areas  as  strategic   planning,   corporate   development,   mergers  and
acquisitions  and  development  of overseas  markets,  Mr.  Ehrlich will receive
compensation  at the annual rate of $85,000.  In 1999, Mr.  Ehrlich  received an
aggregate  of $85,000  and was also  reimbursed  for  expenses  incurred  in the
performance of his duties.  The Ehrlich Agreement includes  confidentiality  and
non-compete provisions and provides for a severance payment upon the termination
of his position as Chairman of the Board as the result of a change-in-control in
an amount equal to 2.9 times his annual rate of  compensation  to be paid over a
period of three years. Pursuant to the Ehrlich Agreement,  effective as of March
25,  1999,  Mr.  Ehrlich  received  an option for 17,500  Common  Shares,  at an
exercise  price of $8.625  per share  (the Fair  Market  Value of the  Company's
Common  Shares on the date of grant).  This option  replaced the award of 17,500
restricted  shares which would otherwise have been awarded on March 25, 1999 and
represented  a 50%  reduction  in the  size of the  option  grant  to  which  he
otherwise would have been entitled. Of the 17,500 stock options granted, options
for 8,750 shares will vest as follows:  2,188 on March 25, 2000;  2,187 on March
25, 2001;  2,188 on March 25, 2002;  and 2,187 on March 25, 2003.  The remaining
8,750 shares will not vest unless and until certain  performance  levels for the
Company's  Common  Shares are attained - with respect to 2,916  shares,  at such
time as the Fair Market Value of the  Company's  Common Shares equals or exceeds
$11.47 per share for seven  consecutive  days; with respect to 2,917 shares,  at
such as the Fair Market Value of the  Company's  Common Shares equals or exceeds
$13.53 per share for seven consecutive days and with respect to 2,917 shares, at
such time as the Fair Market  Value of the  Company's  Common  Shares  equals or
exceeds  $15.70  per  share  for  seven   consecutive  days.  If  the  specified
performance goals are not reached,  the options will  nevertheless  become fully
exercisable  after  December 1, 2003 in order to maintain  favorable  accounting
treatment.  The  options  will  expire  on March  25,  2004.  In the  event of a
change-in-control  and if Mr. Ehrlich becomes  entitled to receive the severance
payment set forth above, all of the  restrictions on his restricted  shares will
lapse and all of his options will immediately vest.

Compensation Committee Interlocks and Insider Participation

     The  members  of the  Compensation  Committee  consist  of  Messrs.  O'Shea
(Chairman),  Morgan,  Rosenfeld  and Dr.  Volta.  Each member is a  non-employee
director  and does not have any  direct  or  indirect  material  interest  in or
relationship with the Company outside of his position as director.

                                      -14-

<PAGE>


ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Set forth below is information  regarding beneficial ownership of any class
of the Company's  voting shares as of April 24, 2000 (except as otherwise  noted
below) by (i) each entity or person  known by the  Company to be the  beneficial
owner of more  than  five  percent  (5%) of any  class of the  Company's  voting
shares, (ii) each of the Company's directors,  (iii) each of the Company's Named
Executive Officers, and (iv) all directors and executive officers of the Company
as a group.  The  information as to each person and entity has been furnished by
such person and entity,  and,  except as noted,  each person and entity named in
the table has sole voting and investment  power with respect to all shares shown
as beneficially owned by such person or entity.

<TABLE>
<CAPTION>

Certain Beneficial Owners

         Name and Address                                           Shares of Class              Percent of Class
        of Beneficial Owner               Title of Class          Beneficially Owned            Beneficially Owned
------------------------------------    --------------------    ------------------------     -------------------------
<S>                                      <C>                           <C>                             <C>
Dr. Romano Volta (1)                     Series A Preferred              110,000                       100%
  Hydra S.p.A.                           Shares
  Via Massino D'Azeglio 57
  40123 Bologna, Italy                   Common Shares                 1,990,735                       14.65%

L. Michael Hone (2)                      Common Shares                 1,048,805                        8.19%
  502 Brookside Drive
  Andover, MA 01810

Stadium Capital Management, LLC and      Common Shares                   723,300                        6.01%
related parties (3)
  430 Cowper Street - Suite 200
  Palo Alto, CA 94301
------------------------------------

</TABLE>

(1)  Hydra   Investissements  S.A.  ("Hydra   Investissements"),   a  Luxembourg
     corporation, is the record owner of 110,000 Series A Preferred Shares and a
     warrant  ("Warrant")  to  purchase  180,000  Common  Shares.  The  Series A
     Preferred  Shares are  convertible  into  Common  Shares at the rate of one
     Series A Preferred  Share for 12.5 Common Shares  (subject to adjustment in
     certain  circumstances).  As  adjusted  to reflect  the  conversion,  Hydra
     Investissements  owns beneficially  1,375,000 Common Shares. The Warrant is
     currently   exercisable  and   accordingly   Hydra   Investissements   owns
     beneficially 180,000 Common Shares. On its Schedule 13D dated September 22,
     1997,   filed  with  the   Securities   and  Exchange   Commission,   Hydra
     Investissements  reported that it has shared voting and  dispositive  power
     with respect to all of the 1,555,000  Common Shares  beneficially  owned by
     it. Dr.  Volta  directly  owns 425,985  Common  Shares with sole voting and
     dispositive  power and may be deemed to be  beneficial  owner,  with shared
     voting and dispositive  power, of the 1,555,000 Common Shares  beneficially
     owned by Hydra  Investissements  by reason of the ownership by Hydra S.p.A.
     ("Hydra")  of 100% of the capital  stock of Hydra  Investissements  and the
     ownership by Dr. Volta of 50% of the capital stock of Hydra. Dr. Volta also
     beneficially  owns  9,750  Common  Shares  which  are  subject  to  options
     currently exercisable.

(2)  Includes  785,726 shares subject to stock options held by Mr. Hone that are
     currently exercisable.

(3)  Based on Schedule 13G filed on April 20, 2000, the Company has been advised
     that Stadium Capital Management,  LLC, a Delaware limited liability company
     ("SCM"),  has shared voting power and shared dispositive power with respect
     to 723,300 shares;  Stadium Capital  Partners,  L.P., a California  limited
     partnership  ("SCP"),  has shared voting power and shared dispositive power
     with respect to 723,300 shares;  Alexander M. Seaver  ("Seaver") has shared
     voting power and shared  dispositive  power with respect to 723,300  shares
     and Bradley R. Kent ("Kent") has shared voting power and shared dispositive
     power with respect to 723,300  shares.  SCM is an investment  adviser whose
     clients  have the right to receive  or the power to direct  the  receipt of
     dividends  from,  or the  proceeds  from the sale of, the shares.  SCP is a
     client of SCM. Seaver and Kent are the managers of SCM.

                                      -15-
<PAGE>

<TABLE>
<CAPTION>

Security Ownership of Directors and Executive Officers

 Name of Beneficial                                   Common Shares              Percent of Common Shares
       Owner                                       Beneficially Owned               Beneficially Owned
--------------------                               ------------------            ------------------------
<S>                                                 <C>                                  <C>
Jay M. Eastman*                                       128,850 (1)(2)                      1.06%
Robert S. Ehrlich*                                    359,854 (1)(3)                      2.95%
Donald K. Hess*                                        52,420 (1)                          +
Thomas J. Morgan*                                      26,973 (1)                          +
James C. O'Shea*                                       41,970 (1)                          +
Jack E. Rosenfeld*                                     57,246 (1)(4)                       +
Robert C. Strandberg*                                 235,177 (1)(5)                      1.92%
Justin L. Vigdor*                                      36,413 (1)                          +
Romano Volta*                                       1,990,735 (1)(6)                     14.65%
Bert W. Wasserman*                                     53,250 (1)                          +
Linda J. Miller                                         3,611                              +
William L. Parnell, Jr.                                54,995 (1)                          +
Brad R. Reddersen                                      50,611 (1)                          +
William J. Woodard                                    106,810 (1)                          +

All directors and current executive officers as a
group including those named above (26 persons)      3,413,345 (6)(7)                     23.45%
*   Member of the Board of Directors of the Company
+ Less than 1%

</TABLE>

(1)  Includes the following Common Shares subject to acquisition by the exercise
     of stock options which are, or within 60 days after April 24, 2000 will be,
     exercisable  and  are  therefore   deemed  under  Securities  and  Exchange
     Commission  regulations to be beneficially  owned:  Messrs.  Hess,  O'Shea,
     Rosenfeld and Vigdor, 29,250 shares each; Mr. Ehrlich,  153,354 shares; Dr.
     Eastman, 115,328 shares; Messrs. Parnell and Reddersen, 46,250 shares each;
     Mr.  Strandberg,  191,034 shares;  Mr. Woodard,  86,605 shares; Mr. Morgan,
     22,750 shares; Dr. Volta, 9,750 shares.

(2)  Includes  3,121 shares held by Dr.  Eastman's wife and 7,232 shares held by
     his son.

(3)  Includes  15,000 shares held by Ehrlich & Co., 80,000 shares held in the R.
     S.  Ehrlich & Co.  Pension  Plan Trust (the pension plan for Ehrlich & Co.)
     and 50,000  shares held by Red Lion  Enterprises,  Inc. Mr.  Ehrlich is the
     senior  partner in Ehrlich & Co. and may be deemed to be in control of that
     partnership.  Red Lion Enterprises,  Inc. is a corporation  wholly-owned by
     Mr.  Ehrlich  and his  wife.  Accordingly,  Mr.  Ehrlich  may be  deemed to
     beneficially  own the shares owned by Ehrlich & Co., by the R. S. Ehrlich &
     Co.  Pension Plan Trust,  and by Red Lion  Enterprises,  Inc. Also includes
     15,313  restricted  shares  (see  "ITEM  11  -  EXECUTIVE   COMPENSATION  -
     Compensation of Directors").

(4)  Includes  10,000 shares held by Solana Inc.  (Pension  Plan), a corporation
     wholly-owned by Mr. Rosenfeld and his wife. Accordingly,  Mr. Rosenfeld may
     be deemed to beneficially own the shares owned by Solana Inc.

(5)  Includes 32,813 restricted shares (see "ITEM 11 - EXECUTIVE  COMPENSATION -
     Summary Compensation Table" - Footnote (3)).

(6)  See  "ITEM  12 -  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
     MANAGEMENT - Certain Beneficial Owners" - Footnote (1).

(7)  Includes  971,654  shares  subject to  acquisition by the exercise of stock
     options  which  are,  or  within  60 days  after  April  24,  2000 will be,
     exercisable.

                                      -16-
<PAGE>

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Severance Payments

     In fiscal 1999, the Company,  pursuant to a Severance Agreement dated April
30, 1997,  paid L. Michael Hone, the Company's  former Chairman of the Board and
Chief Executive Officer,  who currently owns beneficially more than five percent
of the Company's Common Shares, $232,917 and forgave $166,791 of indebtedness.

     Other Transactions

     In 1999, the Company paid  approximately  $353,000 to Boylan,  Brown, Code,
Vigdor & Wilson, LLP for legal services rendered.  Justin L. Vigdor, a director,
is a member of that firm and Martin S. Weingarten,  Secretary of the Company, is
of counsel to that firm.


                                      -17-
<PAGE>


SIGNATURES

     Pursuant to the  requirements  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.

                                PSC Inc.



DATE:     April 28, 2000        By: /s/ Robert C. Strandberg
                                           Robert C. Strandberg
                                           President and Chief Executive Officer


DATE:     April 28, 2000        By: /s/ William J. Woodard
                                           William J. Woodard
                                           Vice President and
                                           Chief Financial Officer

                                      -18-