<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-K/A
                              AMENDMENT NUMBER 1

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                For The Fiscal Year Ended February 3, 2001 OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                              For the Year Ended

                         Commission File Number: 21859

                           FACTORY CARD OUTLET CORP.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

             DELAWARE                                 36-3652087
             --------                                 ----------
  (State or other jurisdiction of      (I.R.S. Employer Identification Number)
  incorporation or organization)

                               2727 Diehl Road,
                          Naperville, IL  60563-2371
              (Address of principal executive offices) (Zip Code)

                                (630) 579-2000
             (Registrant's telephone number, including area code)

       Securities registered pursuant to Section 12(b) of the Act:  None

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.01 par value
                               (Title of Class)

Indicate by check mark whether this 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 [_]

The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of March 27, 2001 was approximately $79,688, computed on the basis
of the last reported bid price per share ($0.02) of such stock on the Over the
Counter Bulletin Board system. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

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]

The number of shares of the Registrant's Common Stock outstanding as of March
27, 2001 was 7,503,098.
<PAGE>

                           Factory Card Outlet Corp.
                (Debtor in possession effective March 23, 1999)
                         Annual Report on Form 10-K/A
                              Amendment Number 1
                               TABLE OF CONTENTS

                                   PART III

<TABLE>
<S>                                                                <C>
Item 10   Directors and Executive Officers of the Registrant       Page  1
Item 11   Executive Officers Compensation                          Page  4
Item 12   Security Ownership of Certain Beneficial Owners          Page  8
             and Management
Item 13   Certain Transactions                                     Page  9
</TABLE>
<PAGE>

The undersigned registrant hereby amends its Form 10-K for the fiscal year ended
February 3, 2001, as follows:

PART III, Items 10 - 13 are hereby amended as follows:


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

     The Company's Restated By-Laws currently provide for four directors. The
names of the four directors, their ages, the respective years in which each
first became a director of the Company, and their respective principal
occupations during the past five years are as follows:

Name                  Age  Position With The Company              Director Since
----                  ---  -------------------------              --------------

William E. Freeman     58  Chairman of the Board of Directors,
                            President and Chief Executive Officer      1989
J. Bayard Kelly        69  Director                                    1989
Gerald L. Gitner       56  Director                                    2000
Laurie M. Shahon       49  Director                                    2000


     William E. Freeman has been Chairman of the Board of Directors since March
2000 and President and Chief Executive Officer since October 1999. He is a co-
founder of the Company and has been a director of the Company since forming the
investor group that acquired it in July 1989. Mr. Freeman was Chairman of the
Board of Directors of the Company from April 1994 to April 1997. From May 1994
to October 1995, he was Chief Executive Officer of the Company's operating
subsidiary, and from May 1994 to September 1996, he was Chief Executive Officer
of the Company. From 1989 to 1994, he was President of the Company. Since 1989,
he has been involved in private venture capital financing and has also performed
various management consulting assignments, primarily involving the marketing and
distribution of consumer products. Prior to his appointment as President and
Chief Executive Officer in October 1999, he was a member of the Compensation
Committee.

     J. Bayard Kelly has been a Director since 1989. Since October 1995, Mr.
Kelly has served as a merchandise consultant to the Company's operating
subsidiary, and is the Company's Chairman Emeritus. Mr. Kelly was the founder of
the Company's operating subsidiary and its President from 1989 to 1995.

     Gerald L. Gitner has been a Director since November 2000 and is a member of
the Compensation Committee and the Audit Committee. Mr. Gitner is currently the
Chairman of D.G. Associates, Inc., a consulting services firm. He is the
Chairman of the Board and Chairman of the Executive Committee of the Board of
TWA, Inc. He has also served in various other capacities with TWA, including
Chief Executive Officer. Mr. Gitner has also served as the Co-Chairman of Global
Aircraft Leasing Ltd. In addition, Mr. Gitner has served as the Chairman and
Chief Executive Officer of Pan American World Services and the Vice-Chairman of
Pan American World Airways, Inc. Prior to that, Mr. Gitner served as the
President of People Express Airlines, Inc., a company he co-founded.


     Laurie M. Shahon has been a Director since November 2000 and is a member of
the Compensation

                                       1
<PAGE>

Committee and the Audit Committee. Ms. Shahon is the President of the Wilton
Capital Group, a firm she founded in 1994 to make private direct investments in
venture capital companies and medium sized buyouts, which focuses on retailing
and consumer products. Prior to founding Wilton Capital, Ms. Shahon was a
Managing Director at `21' International Holdings, a private holding company.
While there, she also served as Vice Chairman and Chief Operating Officer of
Color Tile, a 700 store flooring chain. Prior to joining `21' International
Holdings, Ms. Shahon was an investment banker at Morgan Stanley and Salomon
Brothers. Ms. Shahon is a member of the Board of Directors of One Price Clothing
Stores, Homeland Holdings and Safelite.


Executive Officers

     Listed below are the names, present titles, and ages of all executive
officers of the Company except for Mr. Freeman and the positions held by such
persons in the last five years. For such information with respect to Mr.
Freeman, see "Board of Directors" above. Each executive officer holds office
until his successor is elected or appointed or until his death, resignation or
removal.

     Glen J. Franchi, 47, has been Executive Vice President and Treasurer of the
Company since March 1995. He has been the Chief Operating Officer of the
Company's operating subsidiary since November 1990. Prior to joining the
Company, from 1977 to 1989, he held various management and senior financial
positions with Carson Pirie Scott Co., a chain of retail department stores.

     James D. Constantine, 48, has been Senior Vice President and Chief
Financial Officer since February 2000. Prior to joining the Company, he was
Senior Assistant Treasurer for Sears, Roebuck and Co. and held various
managerial positions from 1981 to 1999. From 1974 to 1981 he held various
managerial positions with Deloitte & Touche LLP.

     Carol A. Travis, 50, has been with the Company since it was originally
founded in 1985, serving as Secretary of the Company since May 1994 and as Vice
President since June 1994. She has been a Vice President of the Company's
operating subsidiary since August 1987 and has responsibilities for store
training and investor relations.

     Gary W. Rada, 47, has been Executive Vice President since October 1999.
From January 1998 to October 1999, he served as Senior Vice President and
General Merchandise Manager. From 1997 to 1998, he served as the Vice President
of General Merchandise for Bruno's, a Birmingham, Alabama supermarket and drug
chain. Prior to joining Bruno's, he spent 25 years in various management and
merchandising positions with American Stores, which is now owned by Albertons.
His last position at American Stores was Vice President of Buying and
Merchandising for Jewel Food Stores, headquartered in Chicago, Illinois.

     Timothy F. Gower, 50, has been Senior Vice President, Retail Store
Operations since October 1999. From April 1998 to October 1999, he served as
Vice President, Retail Store Operations. Prior to that, from August 1997 to
March 1998, he served as Vice President of Store Operations for Zellers Inc.,
Canada's largest discount store chain. Prior to joining Zellers, he held various
store operations positions with Office Max and F&M SuperDrug Stores.


     Robert Krentzman, 52, has been Vice President, Information Technology since
September 1995.  From March 1994 to September 1995, he served as Director of
Management Information Systems.  From 1990 to

                                       2
<PAGE>

1994, he was Director, Management Information Systems, for Reader's Market, a
division of Waldenbooks.

     Joseph M. Cabon, 54, has been Vice President, Distribution since April
1995. From December 1993 to January 1995, he was employed as a consultant in
retail distribution. From October 1992 to December 1993, he was Vice President,
Logistics for One Price Clothing, a specialty retailer.

     William A. Beyerl, 49, has been Vice President, Human Resources since
December 1999. From June 1999 to December 1999 he served as Director of Human
Resources. From September 1997 to June 1999, he served as Director of Store
Operations. From 1991 to 1997, he served as Director of Human Resources for
Today's Man, a specialty menswear retailer on the East Coast. Prior to joining
Today's Man, he held various management positions with Bradlees Department
Stores and Gimbel's Department Stores.

Section 16 Reporting

     Section 16(a) of the Exchange Act requires the company's officers and
directors, and persons who own more than 10% of the Company's outstanding common
stock ("Common Stock"), to file reports of ownership and changes in ownership of
such securities with the Securities and Exchange Commission (the "SEC").
Officers, directors and greater-than-10% beneficial owners are required to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely upon a review of the copies of the forms furnished to the Company, and/or
written representations from certain reporting persons that no other reports
were required, the Company believes that all Section 16(a) filing requirements
applicable to its officers, directors and 10% beneficial owners during or with
respect to the year ended February 3, 2001 were met.

                                       3
<PAGE>

ITEM 11.  EXECUTIVE OFFICERS COMPENSATION

     Summary Compensation Table. The following table sets forth the compensation
earned by the Company's President and Chief Executive Officer and each of the
other four most highly compensated officers of the Company and its operating
subsidiary (collectively, the "Named Executive Officers") for services rendered
in all capacities to the Company during the twelve-month periods ended February
3, 2001 (a 53-week period), January 29, 2000 (a 52-week period) and January 30,
1999 (a 52-week period).

<TABLE>
<CAPTION>
 ===================================================================================================================================
                                                                  Annual Compensation
                                                                  -------------------
------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Position                        Fiscal           Salary      Bonus          Comp.          All Other
---------------------------                        ------           ------      ------         -----          ---------
                                                   Year                         (1)(2)         Awards       Compensation
                                                   ----                         ------         ------       ------------
                                                                                             Securities
                                                                                             Underlying          (3)
                                                                                             Option/SARs        ----
                                                                                                (#)(2)
                                                                                                ------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>                       <C>              <C>
William E. Freeman(4)............................          2000     $  265,000  79,500                -            67,652
 President and Chief Executive Officer                     1999         81,835  14,524                -             5,299
                                                           1998              -       -                -                 -
------------------------------------------------------------------------------------------------------------------------------------
Glen J. Franchi..................................          2000        239,657  60,480                -             4,724
  Executive Vice President and Treasurer                   1999        200,000  31,512                -             8,948
                                                           1998        200,000  24,617                -            10,845
------------------------------------------------------------------------------------------------------------------------------------
Gary W. Rada(5)..................................          2000        239,501  58,080                -             1,643
 Executive Vice President, General                         1999        221,535  35,912                -             3,811
 Merchandise Manager                                       1998        210,000  60,000           20,000           101,650
------------------------------------------------------------------------------------------------------------------------------------
Timothy F. Gower(6)..............................          2000        173,812  42,240                -             3,475
 Senior Vice President, Retail Store Operations            1999        163,075  25,435                -             3,790
                                                           1998        113,655  10,000           15,000            66,784
------------------------------------------------------------------------------------------------------------------------------------
James D. Constantine(7)..........................          2000        172,240  45,600                -             1,315
 Senior Vice President and Chief Financial                 1999              -       -                -                 -
  Officer                                                  1998              -       -                -                 -
====================================================================================================================================
</TABLE>

(1)  The amounts shown in the bonus column represent payments under the
     Company's Management Incentive Plan.

(2)  Bonuses are paid and stock options are generally granted after the end of
     each fiscal year based on performance during such year. Accordingly, bonus
     payments and option grants are reported in this table for the year to which
     they relate, instead of the year in which they are paid or granted.

(3)  "All Other Compensation" consists of life insurance, payments to the
     executive's account pursuant to the Company's Savings Plan, automobile
     allowances, and reimbursement of relocation and living expenses.

(4)  Mr. Freeman was elected President and Chief Executive Officer in October
     1999.

(5)  Mr. Rada joined the Company in January 1998.

(6)  Mr. Gower joined the Company in April 1998.

(7)  Mr. Constantine joined the Company in February 1999.

                                       4
<PAGE>

Option Grants, Exercises And Holdings

     Twelve-month Period Ended February 3, 2001 Option Grants. There have been
no options granted to the Named Executive Officers during the twelve-month
period ended February 3, 2001.

     Twelve-month Period Ended February 3, 2001 Option Exercises And Holdings.
The following table sets forth certain information regarding options held at
February 3, 2001. No Named Executive Officer exercised any options during this
period.

      Aggregate Options Exercised In Last Fiscal Year And Fiscal Year-end Option
                                     Values

<TABLE>
<CAPTION>
====================================================================================================================================
                   Name                                   Number of  Securities                Value of Unexercised
                   ----                                        Underlying                     In-The Money Options at
                                                         Unexercised Options at                    2/3/01($)(1)
                                                               2/3/01 (#)                          ------------
                                                               ----------
                                                     -------------------------------------------------------------------------------
                                                     Exercisable     Unexerciseable       Exercisable        Unexercisable
                                                     ------------    ---------------      ------------       --------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>                  <C>                <C>
William E. Freeman...........................             100,320                  -                 -                    -
------------------------------------------------------------------------------------------------------------------------------------
Glen J. Franchi..............................              77,913              1,875                 -                    -
------------------------------------------------------------------------------------------------------------------------------------
Gary W. Rada.................................              15,000              5,000                 -                    -
------------------------------------------------------------------------------------------------------------------------------------
Timothy F. Gower.............................               7,500              7,500                 -                    -
------------------------------------------------------------------------------------------------------------------------------------
James D. Constantine.........................                   -                  -                 -                    -
====================================================================================================================================
</TABLE>

(1)  Represents the difference between the per share exercise price and the
     closing price of the Common Stock on February 3, 2001 ($ 0.02).


Employee Benefit Programs

     The Company believes that fostering an ownership culture encourages
superior performance by the Company's management and key store employees. To
that end, the Company has adopted a program to provide to officers, employees,
consultants, sponsors and directors of the Company equity incentives that are
designed to create such an ownership culture and to encourage these officers,
employees and directors to remain with Company. The components of such program
are as follows:

     1996 Employee Stock Purchase Plan. The Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors and
approved by the Company's stockholders in November 1996. The Purchase Plan has a
term of ten years and is administered by the Compensation Committee of the Board
of Directors. Not more than 1,000,000 shares of Common Stock shall be made
available for purchase under the Purchase Plan. The Purchase Plan is intended to
qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"), and is designed to be implemented through consecutive calendar quarter
offering periods during its term. Under the Purchase Plan, any employee who is
employed by the Company for at least 20 hours per week and more than five months
in any calendar year, and who has worked for the Company for at least 1,000
hours as of the first day of the offering period, is eligible to participate in
the Purchase Plan; however, such 1,000 hour requirement does not apply to any
employee employed on the date of the Company's initial public offering in
December 1996. An eligible employee may purchase shares of Common Stock from the
Company through payroll deductions of up to 10% of compensation (including all
base straight time, gross earnings, overtime and shift premiums, sales
commissions, incentive compensation and bonuses, but excluding other
compensation) at a price per share equal to 90% of the fair market value (as
defined in the Purchase Plan) of the Common Stock as of the last day of any
offering period. For each employee, the aggregate total of all payroll
deductions accumulated under the Purchase Plan during any offering period may
not exceed $5,500. Each offering period begins on the first

                                       5
<PAGE>

trading day after the end of the preceding offering period and continues until
the last trading day of that calendar quarter. An eligible employee may withdraw
from the Purchase Plan by providing written notice of the withdrawal to the
Company. Upon written notice of withdrawal, or whenever an employee ceases to
meet the eligibility requirements for the Purchase Plan, the employee's credited
payroll deductions and other payments that have not been used to exercise
options under the Purchase Plan will be paid to the employee at the end of the
offering period. An employee's withdrawal from the Purchase Plan will not affect
the employee's eligibility to participate in the Purchase Plan in subsequent
offering periods. The Purchase Plan may be amended or terminated by the Board of
Directors, provided that approval of stockholders will be obtained to the extent
that applicable law (including, without limitation, the Securities Exchange Act
of 1934, as amended, and the Code) so requires.

     1989 Stock Option Plan. The Company's 1989 Stock Option Plan (the "1989
Option Plan") was adopted by the Board of Directors and approved by the
Company's stockholders in July 1989 and has been amended from time to time
solely to reserve additional shares for future awards. At May 25, 1999, a total
of 139,357 shares of Common Stock were reserved for future issuance under the
1989 Option Plan. The 1989 Option Plan is administered by the Compensation
Committee. Under the 1989 Option Plan, options may be granted to employees,
consultants and directors. Only employees may receive incentive stock options,
which are intended to qualify for certain favorable tax treatment. The exercise
price of incentive stock options under the 1989 Option Plan must equal the fair
market value (as defined in the 1989 Option Plan) of the Common Stock on the
date of grant. Options granted under the 1989 Option Plan generally vest on an
annual basis over three or four years, and must be exercised within ten years.
The 1989 Option Plan terminated in July 1999.

     On March 26, 2001, the Company and the Creditors' Committee appointed in
its Chapter 11 case entered into agreement, subject to confirmation by the
bankruptcy Court, on a Plan of Reorganization of Factory Card Outlet Corp. with
Factory Card Holdings, Inc ("FCH"). The agreement would provide the Company with
funding to enable it to emerge from Chapter 11. The Plan of Reorganization does
not contemplate holders of the Company's outstanding common stock receiving any
distribution because the Plan of Reorganization would not result in creditors
recovering the full amount of their claims. Consequently, the existing stock and
all stock option plans would be cancelled if the Plan of Reorganization is
confirmed.

     Incentive Savings Plan. The Company has in effect an Incentive Savings Plan
(the "Savings Plan"), which is a tax-qualified defined contribution plan for
employees meeting certain eligibility requirements. The Savings Plan permits
employees to elect to contribute up to 13% of their compensation to the Savings
Plan. The Company makes a matching contribution of one-third of the
participant's before-tax contribution for each calendar year, up to the lesser
of 6% of such participant's compensation for such calendar year, or the
statutory maximum (adjusted annually). Participant's contributions, as well as
the Company's matching contributions, to the Incentive Savings Plan vest
immediately. Benefits are generally distributed after termination of employment
in the form of a lump sum.

                                       6
<PAGE>

Director Compensation

     Pursuant to the Company's 1997 Outside Director Stock Option Plan approved
by the stockholders in November 1997, directors who are not officers, employees
or consultants of the Company may be granted options for the purchase of the
Company's common stock at an exercise price not less than 100% of the fair
market value of a share of Common Stock on the date of grant. The number of
shares of Common Stock reserved in the 1997 Outside Director Stock Option Plan
is 250,000, subject to certain adjustments. The Company granted 160,000 options
in November 1997 to eligible directors which become exercisable at the rate of
8.33% per quarter through November 2000. Directors who are not officers,
employees or consultants of the Company are reimbursed for travel to each Board
of Directors meeting at which they are present as well as their reasonable
expenses in connection with the performance of their duties. In addition,
effective November 2000, each director will receive an annual retainer of
$25,000, payable quarterly, plus $750 for each Board or Committee meeting
attended.

                                       7
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Beneficial Ownership Of Common Stock

     The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of May 25, 2001 by (i) each person known to the
Company to beneficially own 5% or more of the Common Stock, (ii) each of the
Directors and the chief executive officer and other named executive officers and
(iii) all executive officers and directors of the Company as a group. The number
of shares of Common Stock shown as owned below assumes the exercise of all
currently exercisable options held by the applicable person or group, and the
percentage shown assumes the exercise of such options and assumes that no
options held by others are exercised. Unless otherwise indicated below, the
persons named below have sole voting and investment power with respect to the
number of shares set forth opposite their respective names. For purposes of the
following table, each person's "beneficial ownership" of the Company's Common
Stock has been determined in accordance with the rules of the Securities and
Exchange Commission ("SEC").

<TABLE>
<CAPTION>
                                                                 Number                Percentage
                                                               Of Shares                Of Shares
                                                              Beneficially            Beneficially
Name Of Beneficial Holder                                        Owned                    Owned
-------------------------                                     ------------             ------------
<S>                                                           <C>                      <C>
Garlen Investments Limited(1).......................             1,131,708                   15.1%
 c/o Jarir Investments
 Post Office Box 3196, Riyadh 11471, Saudi Arabia

Ronald L. Chez(2)...................................             1,027,800                   13.7%
 c/o Schuyler, Roche & Zwirner
 130 East Randolph Street
 Chicago, Illinois 60601

Allstate Insurance Company(3).......................               873,356                   11.6%
 3075 Sanders Road/Allstate Plaza
 Northbrook, IL 60062

Jasmine Trustees Ltd................................               381,398                    5.1%
 Post Office Box 675
 Vine Street Chambers
 Vine Street, ST. Helier
 Jersey, Channel Islands United Kingdom

William E. Freeman(4)...............................               223,610                    3.0%
J. Bayard Kelly(5)..................................               102,667                    1.4%
Gerald L. Gitner(6).................................                 4,016                      *
Laurie M. Shahon....................................                     0                    0.0%
Glen J. Franchi(7)..................................                80,015                    1.1%
Gary W. Rada(8).....................................                25,250                      *
Timothy F. Gower(9).................................                11,250                      *
James D. Constantine................................                     0                    0.0%
All directors and executive officers
 as a group (12 persons)(10)........................               514,318                    6.9%

</TABLE>

                                       8
<PAGE>

*    Less than 1%.

(1)  Garlen Investments Limited is beneficially owned by Mandataria Fiduciary
     Limited, as trustee of a trust for the benefit of Muhammad Abdul Rahman Al-
     Agil, Nasser Abdul Rahman Al-Agil, Abdullah Abdul Rahman Al-Agil,
     Abdulkarim Abdul Rahman Al-Agil and Abdulsalam Abdul Rahman Al-Agil.

(2)  Based on Amendment No. 3 to the Schedule 13D filed with the SEC on June 14,
     1999.

(3)  Allstate Insurance Company is the beneficial owner of 873,356 shares of the
     Common Stock which are held by the following owners of record: Allstate
     Insurance Company - 560,552, Allstate Life Insurance Company - 225,498,
     Continental Trust Company as Trustee for the Allstate Retirement Plan -
     49,878 and Continental Trust Company as Trustee for the Agents Pension
     Plan - 37,428.

(4)  Includes options to purchase 100,320 shares that are exercisable within 60
     days of May 25, 2001.

(5)  Includes options to purchase 43,644 shares that are exercisable within 60
     days of May 25, 2001. All the Common Stock and options to purchase Common
     Stock are held in the Revocable Living Trust for J. Bayard Kelly, of which
     Mr. Kelly is the beneficial owner.

(6)  Includes options to purchase 4,016 shares that are exercisable within 60
     days of May 25, 2001.

(7)  Includes options to purchase 77,913 shares that are exercisable within 60
     days of May 25, 2001.

(8)  Includes options to purchase 15,000 shares that are exercisable within 60
     days of May 25, 2001.

(9)  Includes options to purchase 11,250 shares that are exercisable within 60
     days of May 25, 2000.

(10) Includes options to purchase 316,827 shares that are exercisable within 60
     days of May 25, 2001.


ITEM 13.  CERTAIN TRANSACTIONS

Compensation Committee Interlocks And Insider Participation In Compensation
Decisions

     In the 12 month period ended February 3, 2001, the Compensation Committee
of the Company was comprised of William E. Freeman, former Director Robert C.
Blattberg, former Director James L. Nouss, Gerald L. Gitner and Laurie M.
Shahon. Mr. Blattberg and Mr. Nouss resigned from the board in March 2000 and
June 2000, respectively. Mr. Gitner and Ms. Shahon have been members of the
Committee since November 2000.


                                       9
<PAGE>

Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized on May 31,
2001.


                                          FACTORY CARD OUTLET CORP.


                                          By:   /s/ James D. Constantine
                                                ---------------------------
                                                James D. Constantine
                                                Senior Vice President and
                                                Chief Financial Officer

                                       10