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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A

                                (AMENDMENT NO. 1)
                                       TO

     [X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                          FOR QUARTER ENDED MAY 3, 1998


     [ ]    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: 0-8550


                             PCA INTERNATIONAL, INC.
      --------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           NORTH CAROLINA                            56-0888429
     ---------------------------                ---------------------
          (State or other                         (I.R.S. Employer
          jurisdiction of                       Identification No.)
          incorporation or
           organization)


                           815 MATTHEWS-MINT HILL ROAD
                         MATTHEWS, NORTH CAROLINA 28105
                         ------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)


                                 (704) 847-8011
            --------------------------------------------------------
              (Registrant's telephone number, including area code)


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 report), and (2) has been subject to such filing
requirements for the past 90 days.

                                  YES  X    NO
                                      ---      ---

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.


COMMON STOCK, $0.20 PAR VALUE                             7,947,879
-----------------------------------            -------------------------------
              CLASS                              OUTSTANDING AT JUNE 1, 1998

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EXPLANATORY NOTE

         This Quarterly Report on Form 10-Q/A is being filed as Amendment No. 1
to the Registrant's Quarterly Report on Form 10-Q for the quarter ended May 3,
1998 filed with the Securities and Exchange Commission on June 16, 1998, solely
for the purpose of revising Item 2, which follows in its entirety:


                    PCA INTERNATIONAL, INC. AND SUBSIDIARIES


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

         PCA is a holding company engaged through its subsidiaries in the sale
and processing of professional color portraits of children, adults, and
families. As of May 3, 1998, the Company operated 2,034 portrait studios within
Kmart and Wal-Mart discount stores and supercenters in the United States,
Canada, Mexico, Puerto Rico, and South America. The Company also operates an
extensive traveling studio business providing portrait photography services in
approximately 1,400 additional retail locations as well as to church
congregations and other institutions.

         As reported on April 21, 1998, the Company and Jupiter Partners II,
L.P. ("Jupiter") entered into a definitive merger agreement under which between
approximately 95% and 97% of the primary common stock of PCA (excluding certain
shares to be retained by PCA senior management) will be acquired for $26.50 per
share in cash. The transaction, which will be accounted for as a
recapitalization, is valued at approximately $276 million, including refinancing
of existing debt. The merger was approved by the Board of Directors of PCA and
is expected to be completed in mid- to late-summer subject to approval of PCA
shareholders. The merger agreement, which the Company has previously filed in a
Current Report on Form 8-K, filed on April 20, 1998 with the Securities and
Exchange Commission, provides that the Company cannot declare or pay any
dividends prior to closing. The Company will continue to be run by its current
senior management team led by John Grosso, PCA president and chief executive
officer. Jupiter is a New York-based investment firm organized to invest in
management buyouts and growth capital opportunities.

         As a result of the proposed merger, the Company and Jupiter will incur
various costs, currently estimated to be approximately $8 million on a pretax
basis, in connection with consummating the transaction. These costs consist
primarily of professional fees, registration costs, and other expenses. Although
the exact timing, nature and amount of these merger transaction costs are
subject to change, the Company expects that a one-time charge for these costs
will be recorded in the quarter during which the merger is consummated.

         On April 22, 1998, the Company and the members of its Board of
Directors were sued by Harbor Finance Partners, a shareholder of the Company, to
enjoin the merger between the Company and Jupiter, or in the alternative, for
damages. The lawsuit was filed in the Superior Court of Mecklenburg County,
North Carolina. Harbor Finance Partners has alleged that the Company and its
Directors breached their fiduciary duty to the shareholders in connection with
the merger. The Company and the Directors deny these allegations and will defend
the lawsuit vigorously. On May 26, 1998, the Company and the Directors moved to
dismiss the lawsuit on the basis that Harbor Finance Partners had failed to
state a claim for which relief can be granted. A hearing date for that motion to
dismiss has not yet been set by the Court.

         On April 28, 1998, the Company was notified by Kmart that the Company's
license agreements for 75 Kmart studios, which generated approximately $8.0
million in revenue (which represents 8.2% of all Kmart revenue for the period)
and approximately $1.7 million in income from operations for the fiscal year
ended February 1, 1998, would be terminated in 180 days.


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SEASONALITY

         Because of the retail nature of its services and its locations in
discount stores, the Company's business is very seasonal. The Christmas season
accounts for a high percentage of the Company's sales and earnings, and the
Company's fourth fiscal quarter (late October through late January) typically
produces a large percentage of annual sales and annual earnings. The fourth
fiscal quarters of 1997, 1996, and 1995, accounted for approximately 31.2%,
33.2%, and 32.2%, respectively, of sales, and 89.4%, 32.8%, and 64.2%,
respectively, of earnings for those years. Fiscal 1997 fourth quarter earnings
as a percentage of total earnings were out of proportion compared to prior
year's due to significant costs incurred for restructuring the Company's digital
studio operations, which led to operating losses in the first half of the year.
The 1996 fourth quarter earnings would have accounted for 69.5% of annual
earnings before giving effect to a $3.6 million after-tax charge for studio
closure costs. The Company's operations can be adversely affected by inclement
weather, especially during the important fiscal fourth quarter.

RESULTS OF OPERATIONS

         For the first quarter ended May 3, 1998, the Company reported
consolidated sales of $54.7 million, a decrease of 6.9% compared to sales of
$58.7 million reported in the comparable fiscal 1997 quarter. The $4.0 million
sales decline in the 1998 first quarter was due to discontinued and closed
operations in fiscal 1997. During the first half of fiscal 1997, the Company
discontinued its subsidiary's fashion photography business and PCA's pilot pet
portrait operations, and closed 401 underperforming discount store portrait
studios. These operations represented sales of approximately $8.0 million in the
fiscal 1997 first quarter. Excluding sales from these discontinued or closed
operations in the fiscal 1997 first quarter, sales for PCA's 1998 first quarter
increased $4.0 million or 7.8 percent. The $4.0 million sales increase for the
1998 first quarter is due principally to improved sales averages in Wal-Mart
studios which benefited from the conversion to PCA's digital imaging technology.
Portrait studio sales through discount retailers represented $52.9 million or
96.7% of total sales for the fiscal 1998 first quarter. At May 3, 1998, the
Company operated 2,034 portrait studios in discount stores. During the quarter,
the Company opened 12 portrait studios and closed 53 studios, resulting in a net
reduction of 41 studios from the year-end studio count of 2,075.

         The following table presents the percentage of sales represented by the
following line items from the Company's statements of income for the periods
indicated:

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                ---------------------------
                                                MAY 3, 1998     May 4, 1997
                                                -----------     -----------
           <S>                                  <C>             <C>   
           Sales..............................    100.0%          100.0%
           Costs and expenses.................     95.1            94.8
                                                -------         -------    
           Income from operations.............      4.9             5.2
           Interest expense...................      2.3             2.8
                                                -------         -------    
           Income before income taxes.........      2.6             2.4
           Income tax provision...............      1.2             1.3
                                                =======         =======    
           Net income.........................      1.4%            1.1%
                                                =======         =======    
</TABLE>

         Total costs and expenses as a percentage of sales increased to 95.1% in
the 1998 first quarter from 94.8% in the first quarter of fiscal 1997. The 1998
quarter includes costs and expenses of $0.6 million or 1.1% of sales related to
the execution of the merger agreement with Jupiter (noted above). Advertising
and promotional expenses as a percentage of sales decreased to 6.2% for the
fiscal 1998 first quarter from 7.4% in the fiscal 1997 first quarter, reflecting
a less promotional environment in the discount retail segment. Cost of
photographic sales decreased to 35.4% of sales from 37.1% of sales in the
year-ago quarter principally due to cost savings resulting from the completion
of the American Studios, Inc. ("ASI") integration and the conversion of
approximately 600 ASI studios in Wal-Mart to PCA's integrated digital technology
system which lowered production costs per customer. Store commissions and
selling expense as a percentage of sales increased to 34.4% in the 1998 first
quarter versus 32.2% in the 1997 first quarter principally due to increased
labor expense required to operate more traveling studio



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promotions and staffing requirements for additional seven-day studios. General
and administrative expenses increased as a percentage of sales to 18.1% compared
to 17.3% of sales in the fiscal 1997 quarter due to merger costs of $0.6
million.

         Net interest expense for the quarter ended May 3, 1998 was $1.2
million, or 2.3% of sales, as compared to $1.6 million, or 2.8% of sales, in the
fiscal 1997 first quarter. The net interest expense on borrowings decreased as a
result of a lower level of debt. See "Liquidity and Capital Resources".

         The income tax provision for the first quarter of 1998 was $0.7
million. This resulted in an effective tax rate for the 1998 quarter of 45.9%
compared to 55.3% in the first quarter of 1997. The decrease in effective tax
rate for the 1998 period is attributable to using the projected effective annual
tax rate as compared to using the first quarter actual calculated rate in the
same period in the prior year.

         Net income for the first quarter of fiscal 1998 increased 21.0% to $0.8
million or 1.4% of sales as compared to $0.6 million or 1.1% of sales in the
same quarter of the prior year. Diluted earnings per share for the 1998 first
quarter were $0.09 as compared to $0.08 diluted earnings per share in the fiscal
1997 quarter. Net income for the 1998 first quarter includes $0.4 million
tax-effected expense, or $0.04 per diluted share, for previously mentioned
expenses related to the execution of the merger agreement with Jupiter.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operating activities was $1.3 million for the
quarter ended May 3, 1998. The Company's principal sources of working capital
are cash from operations and borrowings under its $15 million revolving line of
credit. Effective May 21, 1998, the Company reduced the available balance of its
revolving line of credit to $15 million from $25 million. At May 3, 1998, the
Company had $11.1 million in cash and cash equivalents and no short-term
borrowings.

         During the quarter, the Company had property additions of $1.8 million,
principally for materials and equipment for the addition of new permanent
portrait studios and the upgrading of certain processing equipment in the
Company's two laboratory and processing facilities. During fiscal 1998, the
Company expects to spend approximately $11.5 million in capital expenditures,
including the opening of new permanent portrait studios, the refurbishment of
existing studios, and the purchase of laboratory equipment.

         If consummated, the Company's proposed merger with Jupiter, as
described previously in the Overview, would have a substantial impact on the
Company's current capital structure. Upon consummation of the merger, the
recapitalized Company would be significantly higher-leveraged in comparison to
its current capital structure and, accordingly, the merger would result in
substantial changes to the Company's debt-to-equity ratio and its related debt
service requirements.

         Shareholders' equity at May 3, 1998 was $45.7 million. Net income
increased shareholders' equity by $0.8 million and dividends paid in the quarter
amounted to $0.6 million. Options exercised in the first quarter of fiscal 1998
increased shareholders' equity by $0.7 million.

         The Company believes, based on its short- and long-term business plans,
that it has the ability to adequately fund its operating and capital expenditure
needs for fiscal 1998 from operations, cash on hand, and its revolving line of
credit.

INFLATION

         Over the past few years, inflation has not had a significant impact on
the Company's financial condition or results of operations.



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                                   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 in the City of Charlotte and State of
North Carolina on the 7th day of July 1998.


                                         PCA INTERNATIONAL, INC.
                                         ------------------------------
                                         (Registrant)



Date:  July 7, 1998                      /s/ John Grosso
                                         ------------------------------
                                         John Grosso
                                         President
                                         (Principal Executive Officer)



Date:  July 7, 1998                      /s/ Bruce A. Fisher
                                         ------------------------------
                                         Bruce A. Fisher
                                         Senior Vice President
                                         (Principal Accounting Officer)