<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-Q/A
                                 Amendment No. 1

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

                 For The Quarterly Period Ended November 2, 2002

                          Commission File Number: 21859

                        FACTORY CARD & PARTY 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)

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

                            Factory Card Outlet Corp.
                            -------------------------
                                  (Former Name)

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 _

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No _

The number of shares of the Registrant's Common Stock outstanding as of December
10, 2002 was 1,512,448.

<PAGE>

                        Factory Card & Party Outlet Corp.

                                   Form 10-Q/A

                     For the Quarter Ended November 2, 2002
                                      Index

<TABLE>
<CAPTION>
                                                                                                  Page
<S>                                                                                              <C>
            Explanatory Note                                                                       2

            Cautionary Statement Regarding Forward-Looking Statements                              3

Part I      Financial Information

Item 1      Financial Statements:

            Condensed Consolidated Balance Sheets (Unaudited) - as of November 2, 2002
             (Successor Company) and as of February 2, 2002 (Predecessor Company)                  4

            Condensed Consolidated Statements of Operations (Unaudited) - three
              months ended November 2, 2002, seven months ended November 2, 2002 (Successor
              Company), three months ended November 3, 2001, two months ended April 6, 2002
              (as restated) and nine months ended November 3, 2001 (Predecessor Company)           5

            Condensed Consolidated Statements of Cash Flows (Unaudited) - seven months ended
              November 2, 2002 (Successor Company), two months ended April 6, 2002 (as
              restated) and nine months ended November 3, 2001 (Predecessor Company)               6

            Notes to Condensed Consolidated Financial Statements - (Unaudited)                    7-17

Item 2      Management's Discussion and Analysis of Financial Condition
              And Results of Operations                                                           17-23

Item 3      Quantitative and Qualitative Disclosures About Market Risk                            23

Item 4      Controls and Procedures                                                               24

Part II     Other Information
              Item 1.  Legal Proceedings                                                          24
              Item 2.  Changes in Securities and Use of Proceeds                                  24
              Item 3.  Defaults Upon Senior Securities                                            24
              Item 4.  Submission of Matters to a Vote of Security Holders                        24
              Item 5.  Other Information                                                          24
              Item 6.  Exhibits and Reports on Form 8-K                                          24-26
              Signatures                                                                          27
              Certifications                                                                      28
</TABLE>

                                        1

<PAGE>

                        FACTORY CARD & PARTY OUTLET CORP.

                                EXPLANATORY NOTE

The purpose of this amendment to our Quarterly Report on Form 10-Q is to amend
and restate the reorganization items recorded in the two months ended April 6,
2002 (Predecessor Company) as previously filed in our Quarterly Report on Form
10-Q on December 12, 2002.

Subsequent to the issuance of our condensed consolidated financial statements
for the quarterly period ended May 4, 2002, we determined that our
reorganization items recorded in the two months ended April 6, 2002 (Predecessor
Company) need to be restated. In connection with the reorganization, we issued
1,349,995 shares of our new common stock to certain of the unsecured creditors.
The fair value of these shares was $9.5 million. We initially recorded the
issuance of these shares as a charge to stockholders' equity. We have determined
that the fair value of the shares issued should have also been recorded as a
reorganization item in the Condensed Consolidated Statement of Operations in the
two months ended April 6, 2002. As a result, we have restated our Condensed
Consolidated Statements of Operations and Cash Flows for the two months ended
April 6, 2002 (Predecessor Company). The Condensed Consolidated Statements of
Operations and Cash Flows for the seven months ended November 2, 2002 (Successor
Company) as well as the Condensed Consolidated Balance Sheet at November 2, 2002
(Successor Company) are not affected by the aforementioned restatement.
Additionally, the restatement has no effect on our liquidity or cash position.
See note (10) in the Notes to Condensed Consolidated Financial Statements for
summary of the significant effects of the restatement.

This Quarterly Report on Form 10-Q/A does not reflect events occurring after the
filing of our Quarterly Report on Form 10-Q for the fiscal quarter ended
November 2, 2002, or materially modify or update those disclosures, except as
discussed above.

                                        2

<PAGE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

As used herein, unless the context otherwise requires, the "Company," "we,"
"our" or "us" refers to Factory Card & Party Outlet Corp. and its subsidiaries.

Statements made in this report, and in our other public filings and releases,
which are not historical facts contain "forward-looking" statements (as defined
in the Private Securities Litigation Reform Act of 1995) that involve risks and
uncertainties and are subject to change at any time. These forward-looking
statements may include, but are not limited to, certain statements in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," such as our ability to meet our liquidity needs, scheduled debt and
interest payments and expected future capital expenditure requirements.

The forward-looking statements involve known and unknown risks, uncertainties
and other factors that are, in some cases, beyond our control. You are cautioned
that these statements are not guarantees of future performance and that actual
results and trends in the future may differ materially.

Factors that could cause actual results to differ materially include, but are
not limited to the following:

        .       ability to meet sales plans;
        .       weather and economic conditions;
        .       dependence on key personnel;
        .       competition;
        .       ability to anticipate merchandise trends and consumer demand;
        .       ability to maintain relationships with suppliers;
        .       successful implementation of information systems;
        .       successful handling of merchandise logistics;
        .       inventory shrinkage;
        .       ability to meet future capital needs;
        .       seasonality of business;
        .       governmental regulations; and
        .       other factors both referenced and not referenced in this Form
                10-Q/A.

                                        3

<PAGE>

PART I - FINANCIAL INFORMATION, ITEM 1, FINANCIAL STATEMENTS

                        FACTORY CARD & PARTY OUTLET CORP.
                                 AND SUBSIDIARY

                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                             Successor        Predecessor
                                                                              Company           Company
                                                                          ----------------   ----------------
                                                                            November 2,        February 2,
                                                                                2002              2002
                                                                          ----------------   ----------------
          <S>                                                             <C>                <C>
          ASSETS

          Current assets:
           Cash                                                           $            191   $            182
           Merchandise inventories                                                  52,832             59,496
           Prepaid expenses and other                                                4,116              2,949
                                                                          ----------------   ----------------
            Total current assets                                                    57,139             62,627

          Fixed assets, net                                                          6,548             18,414
          Other assets                                                                 383                258
                                                                          ----------------   ----------------

            Total assets                                                  $         64,070   $         81,299
                                                                          ================   ================

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

          Current liabilities:
            Debt                                                          $         18,875   $              -
            Debtor-in-possession financing                                               -             27,260
            Accounts payable                                                        15,407              8,071
            Accrued expenses                                                         7,741              9,698
            Current portion of long term debt and capital lease
             obligations                                                               407                305
                                                                          ----------------   ----------------
            Total current liabilities                                               42,430             45,334
                                                                          ----------------   ----------------

          Long term debt and capital lease obligations                               5,991                338
          Deferred rent liabilities                                                  1,308                  -
          Liabilities subject to compromise                                              -             54,560
                                                                          ----------------   ----------------

            Total liabilities                                                       49,729            100,232

            Stockholders' equity (deficit)                                          14,341            (18,933)
                                                                          ----------------   ----------------

            Total liabilities and stockholders' equity (deficit)          $         64,070   $         81,299
                                                                          ================   ================
</TABLE>

        See accompanying notes to condensed consolidated financial statements.

                                        4

<PAGE>

                        FACTORY CARD & PARTY OUTLET CORP.
                                 AND SUBSIDIARY

                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Successor     Predecessor    Successor     Predecessor    Predecessor
                                                    Company        Company       Company        Company        Company
                                                  -----------   ------------   -----------   ------------   ------------
                                                     Three         Three         Seven           Two            Nine
                                                    Months        Months        Months         Months          Months
                                                     Ended         Ended         Ended          Ended          Ended
                                                   November       November      November       April 6,       November
                                                   2, 2002        3, 2001       2, 2002          2002          3, 2001
                                                  -----------   ------------   -----------   ------------   ------------
                                                                                                 [as
                                                                                             restated -
                                                                                              see note
                                                                                                (10)]
<S>                                               <C>           <C>            <C>           <C>            <C>
Net sales                                         $    48,942   $     51,480       126,862   $     40,837   $    164,729
Cost of sales                                          32,540         34,665        81,945         26,991        108,609
                                                  -----------   ------------   -----------   ------------   ------------
 Gross profit                                          16,402         16,815        44,917         13,846         56,120

Selling, general and administrative
 expenses                                              15,919         15,872        39,485         12,212         48,794
Depreciation                                              393          1,697           849          1,030          5,194
Reorganization items                                        -          1,711             -        (18,840)         4,334
Interest expense                                          419            666           985            374          2,117
                                                  -----------   ------------   -----------   ------------   ------------
 Income (loss) before income tax expense
  (benefit)                                              (329)        (3,131)        3,598         19,070         (4,319)
Income tax expense (benefit)                             (132)             -         1,428           (360)             -
                                                  -----------   ------------   -----------   ------------   ------------
 Net income (loss)                                $      (197)  $     (3,131)        2,170   $     19,430   $     (4,319)
                                                  ===========   ============   ===========   ============   ============

 Net income (loss) per share - basic              $     (0.14)                 $      1.51
                                                  -----------                  -----------

Weighted average shares outstanding - basic         1,437,448                    1,433,578
                                                  -----------                  -----------

 Net income (loss) per share - diluted            $     (0.14)                 $      1.44
                                                  -----------                  -----------

Weighted average shares outstanding -  diluted      1,437,448                    1,501,830
                                                  -----------                  -----------
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                        5

<PAGE>

                        FACTORY CARD & PARTY OUTLET CORP.
                                 AND SUBSIDIARY

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                           Successor           Predecessor         Predecessor
                                                            Company              Company             Company
                                                        ---------------     -----------------     ---------------
                                                         For the Seven         For the Two         For the Nine
                                                         Months Ended          Months Ended        Months Ended
                                                          November 2,            April 6,           November 3,
                                                             2002                  2002                2001
                                                        ---------------     -----------------     ---------------
                                                                              [as restated -
                                                                              see note (10)]
<S>                                                     <C>                 <C>                   <C>
Cash flows from operating activities:
 Net income (loss)                                      $         2,170     $          19,430     $        (4,319)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Plan of reorganization and fresh start
    adjustments                                                       -               (21,898)                  -
   Depreciation and amortization of fixed assets                    849                 1,030               5,194
   Amortization of deferred financing costs                          57                    26                 508
   Amortization of deferred compensation                             82                     -                   -
   Non cash portion of reorganization items                           -                 1,275               1,447
   Benefit of pre-confirmation net operating
    losses                                                        1,952                     -                   -
   Changes in assets and liabilities:
      Merchandise inventories                                    (1,241)                2,212              (6,097)
      Prepaid expenses and other assets                           1,135                (2,594)               (967)
      Accounts payable                                            4,045                 3,336               3,810
      Accrued expenses                                           (4,793)                2,020                  61
      Deferred rent obligation                                    1,308                     -                   -
      Liabilities subject to compromise                               -                     -                  40
                                                        ---------------     -----------------     ---------------
Net cash provided by (used in) operating activities               5,564                 4,837                (323)
                                                        ---------------     -----------------     ---------------
Net cash used in investing activities - purchase
 of fixed assets, net                                            (1,557)                 (257)               (883)
                                                        ---------------     -----------------     ---------------
Cash flow provided by (used in) financing activities:
 Borrowings                                                     129,827                38,381             174,874
 Repayment of debt                                             (133,695)              (42,898)           (173,569)
 Payment of capital lease obligations                              (311)                  (56)               (184)
 Increase in long term debt                                          77                     -                   -
 Cash received from exercise of management stock
  warrants                                                           97                     -                   -
                                                        ---------------     -----------------     ---------------
Net cash provided by (used in) financing activities              (4,005)               (4,573)              1,121
                                                        ---------------     -----------------     ---------------
Net increase (decrease) in cash                                       2                     7                 (85)
Cash at beginning of period                                         189                   182                 281
                                                        ---------------     -----------------     ---------------
Cash at end of period                                   $           191     $             189     $           196
                                                        ---------------     -----------------     ---------------
Supplemental cash flow information:
 Interest paid                                          $           707     $             334     $         1,689
 Alternative minimum taxes paid                                      37                     -                   -
 Cash paid for reorganization items                               5,582                 1,055               1,472
Supplemental non cash information:
 Stock issued (successor company)                                     -               (10,040)                  -
 Fair value adjustments                                               -                10,406                   -
 Stock retired (predecessor company) and debt
  discharge                                                           -               (22,828)                  -
 Deferred compensation                                              482                   564                   -
 Capital lease obligations                                            -                    56                   -
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                        6

<PAGE>

                        FACTORY CARD & PARTY OUTLET CORP.
                                 AND SUBSIDIARY
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
              (Dollar amounts in thousands, except per share data)

(1)     Chapter 11 Proceedings and Reorganization

        On March 23, 1999 (the "petition date"), Factory Card & Party Outlet
        Corp. and its wholly owned subsidiary, Factory Card Outlet of America
        Ltd. (collectively the "Company"), filed voluntary petitions for relief
        under chapter 11 of title 11 of the United States Code (the "Bankruptcy
        Code") under case numbers 99-685(JCA) and 99-686(JCA) (the "Chapter 11
        Cases"). From that time until March 20, 2002, the Company operated its
        business as a debtor-in-possession subject to the jurisdiction and
        supervision of the United States Bankruptcy Court for the District of
        Delaware (the "Bankruptcy Court"). On March 20, 2002, the Company
        announced that the Bankruptcy Court confirmed the Company's Amended Plan
        of Reorganization (the "Plan of Reorganization") that it filed with the
        Bankruptcy Court on February 5, 2002. On April 9, 2002 (the "Effective
        Date") the Plan of Reorganization became effective and the Company
        successfully emerged from Chapter 11. Certain of the principal
        provisions of the Plan of Reorganization are as follows:

            .   The Company authorized an aggregate of 10,000,000 shares of new
                Common Stock, par value $0.01 per share. The Company's amended
                and restated certificate of incorporation prohibits the transfer
                of any shares of the new Common Stock or any rights to acquire
                shares of the new Common Stock to any person or group that is a
                5% shareholder of Factory Card & Party Outlet Corp.

            .   The common stock of Factory Card & Party Outlet Corp. that was
                outstanding immediately prior to the Plan becoming effective was
                canceled and 74,553 shares of the Company's new Common Stock
                were issued to holders of the canceled common stock at a ratio
                of .00992307034 shares of new Common Stock for each share of
                canceled common stock.

            .   The Company issued 1,349,995 shares of the new Common Stock to
                holders of unsecured claims against the Company, or "General
                Unsecured Creditors."

            .   The Company issued 75,000 shares of the new Common Stock to
                certain members of management, vesting ratably over a four-year
                period, as specified in the Plan, and warrants to purchase an
                aggregate 31,000 shares of the Company's new Common Stock at a
                purchase price of $7.52 per share. On June 7, 2002, 12,900
                warrants were exercised and the remaining 18,100 warrants
                expired.

            .   The Company issued four series of new Warrants, Series A through
                D, to tendering holders of the canceled Common Stock, granting
                such holders the right to purchase an aggregate of 153,467
                additional shares of the new Common Stock. The Series A Warrants
                are exercisable any time prior to April 9, 2006 at a price of
                $11.00 per share. The Series B Warrants are exercisable at any
                time prior to April 9, 2008 at a price of $16.00 per share. The
                Series C Warrants are exercisable any time prior to April 9,
                2010 at a price of $16.00 per share. The Series D Warrants are
                exercisable any time prior to April 9, 2010 at a price of $34.00
                per share.

            .   The Company adopted an employee stock option plan, the 2002
                Stock Option Plan, to

                                        7

<PAGE>

                provide the Company's eligible employees with the opportunity to
                purchase an aggregate 166,667 shares of the Company's new Common
                Stock.

            .   The Company agreed to pay $1,000 to the General Unsecured
                Creditors within 60 days of the Effective Date and agreed to pay
                the General Unsecured Creditors, three years from emergence an
                aggregate of $2,600, less any prepayments, which obligation is
                secured by a subordinated lien on certain of the Company's
                property.

            .   The Company converted an aggregate of $3,130 post petition
                accounts payable into long-term convertible secured subordinated
                notes (the "Trade Conversion Notes") to seven trade vendors and
                suppliers (the "Trade Participants"). The Trade Participants
                each have the right to convert their Trade Conversion Notes in
                whole, or in part, into an aggregate of 29.35% of the new Common
                Stock, at any time between April 9, 2005 (the third anniversary
                of the Plan's Effective Date) and April 9, 2006 (the fourth
                anniversary of such date), subject to adjustments to reflect any
                prepayments made by the Company.

            .   The Company entered into five separate agreements with various
                trade vendors, each dated April 9, 2002, pursuant to which such
                trade vendors agreed to provide the Company with payment terms,
                including extended payment terms and seasonal advances.

(2)     Business and Basis of Presentation

        The Company is a chain of company-owned stores offering an extensive
        selection of party supplies, gifts, greeting cards, giftwrap, and other
        special occasion merchandise at everyday value prices. As of November 2,
        2002, the Company operated 171 stores in 20 states.

        The consolidated unaudited financial statements include the accounts of
        Factory Card & Party Outlet Corp. and its wholly owned subsidiary,
        Factory Card Outlet of America Ltd. These financial statements have been
        prepared by management without audit and should be read in conjunction
        with the consolidated financial statements and notes for the fiscal year
        ended February 2, 2002 included in the Company's Annual Report on Form
        10-K. The operating results for the interim periods are not necessarily
        indicative of the results for the year. All intercompany balances and
        transactions have been eliminated in consolidation. In the opinion of
        management, the accompanying consolidated financial statements reflect
        all normal recurring and certain nonrecurring adjustments necessary for
        a fair presentation of the interim financial statements. In addition,
        certain prior year amounts have been reclassified to conform to the
        current year presentation.

                                        8

<PAGE>

        Fresh Start Accounting

        Pursuant to the guidance provided by the American Institute of Certified
        Public Accountants in Statement of Position 90-7, "Financial Reporting
        by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"),
        the Company adopted fresh-start reporting because holders of existing
        voting shares immediately before filing and confirmation of the plan
        received less than 50% of the voting shares of the emerging entity and
        its reorganization value was less than its post petition liabilities and
        allowed claims.

        As a result of fresh-start reporting, the Company reflected the
        distributions under the Plan of Reorganization in its balance sheet as
        of April 6, 2002 (the effective date of the consummation of the plan for
        accounting purposes). Accordingly, all consolidated financial statements
        for any period prior to April 6, 2002 are referred to as the
        "Predecessor Company" as they reflect the periods prior to the
        implementation of fresh-start reporting and are not comparable to the
        consolidated financial statements for periods after the implementation
        of fresh-start reporting.

        Fresh-start reporting requires that the reorganization value of the
        reorganized debtors be allocated to their assets in conformity with
        Statement of Financial Accounting Standard ("SFAS") No. 141 "Business
        Combinations", for transactions reported on the basis of the purchase
        method. Any reorganization value less than the fair value of the
        specific tangible or identified intangible assets is to be allocated to
        their non-current tangible assets on a pro rata basis after offsetting
        any intangible assets. The reorganized enterprise value of the Company
        on the effective date was established at $42,500 based upon a
        calculation of discounted cash flows under the Company's financial
        projections and trading multiples of comparable companies. The effects
        of the Plan of Reorganization and the application of fresh-start
        accounting on the Company's pre-confirmation consolidated balance sheet
        are as follows:

                                        9

<PAGE>

<TABLE>
<CAPTION>
                                                                                        Fresh
                                                Predecessor         Plan of             Start           Successor
                                               April 6, 2002     Reorganization      Adjustments      April 6, 2002
                                               --------------    --------------     --------------    --------------
<S>                                            <C>               <C>                <C>               <C>
ASSETS

Current assets:
  Cash                                         $          189    $                  $                 $          189
  Merchandise inventories                              56,987                               (5,396)i          51,591
  Prepaid expenses and other                            5,251                                                  5,251
                                               --------------    --------------     --------------    --------------
    Total current assets                               62,427                               (5,396)           57,031

Fixed assets, net                                      17,600                              (11,760)a           5,840
Other assets                                              240               200b                                 440
                                               --------------    --------------     --------------    --------------
    Total assets                               $       80,267    $          200     $      (17,156)   $       63,311
                                               ==============    ==============     ==============    ==============

LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)

Current liabilities:
   Debt                                        $                 $       22,743c    $                 $       22,743
   Debtor-in- possession financing                     22,543           (22,543)c
   Accounts payable                                    11,407            (3,130)d                              8,277
   Accrued expenses                                    12,534                                                 12,534
   Liabilities subject to settlement                                      3,085e                               3,085
                                               --------------    --------------     --------------    --------------
    Total current liabilities                          46,484               155                               46,639
                                               --------------    --------------     --------------    --------------

Long term notes payable and capital leases              1,128             5,504d,h                             6,632
Deferred rent liabilities                                   -             6,750f            (6,750)a               -
Liabilities subject to compromise                      54,056           (54,056)f                                  -
                                               --------------    --------------     --------------    --------------

    Total liabilities                                 101,668           (41,647)            (6,750)           53,271

  Stockholders' equity (deficit)                      (21,401)           41,847g           (10,406)g          10,040
                                               --------------    --------------     --------------    --------------

    Total liabilities & stockholders' equity
     (deficit)                                 $       80,267    $          200     $      (17,156)a  $       63,311
                                               ==============    ==============     ==============    ==============
</TABLE>

    (a)     To reduce the excess of book value over enterprise value.
    (b)     To record $200 of deferred financing costs related to exit
            financing with Wells Fargo Retail Finance LLP. (c) Borrowings
            under new line of credit agreement with Wells Fargo Retail
            Finance, LLP. Existing debtor in possession financing agreement
            was paid in full upon the effective date of the Plan of
            Reorganization.
    (d)     To record the conversion of post-petition accounts payable into
            the $3,130 Trade Conversion Note.
    (e)     To record $1,000 payable due to creditors, $1,700 payable in
            landlord cure amounts, $323 payable in priority claims and $62
            payable in convenience claims. Amounts are to be paid within 60
            days of the Effective Date.
    (f)     To record elimination of pre-petition liabilities subject to
            compromise. Pre-petition liabilities subject to compromise
            included deferred rent liabilities that were not extinguished by
            the Bankruptcy Court.
    (g)     To write-off old equity upon emergence from chapter 11 and to
            adjust the accumulated deficit by the portion of the liabilities
            subject to compromise that is forgiven.
    (h)     To record at fair value the $2,600 creditor agreement.
    (i)     To eliminate the capitalization of certain buying and
            warehousing costs associated with a change in accounting
            principle.

                                       10

<PAGE>

        Management Estimates

        The preparation of financial statements in conformity with accounting
        principles generally accepted in the United States of America requires
        management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period and related disclosures. Significant estimates made as
        of and for the three and seven fiscal month period ended November 2,
        2002, the two fiscal month period ended April 6, 2002 and the three and
        nine fiscal month period ended November 3, 2001 include accruals for
        reorganization items, provision for shrinkage, and the carrying values
        of inventories. Actual results could differ from those estimates.

        Change in Accounting Principle

        Prior to its emergence from bankruptcy, the Company capitalized certain
        buying and warehousing costs as a component of inventory. As of the
        emergence date, the Company discontinued this practice, recording all of
        the aforementioned costs in Cost of Sales. Going forward, the Company
        does not anticipate that the change will have a significant impact on
        periodic earnings.

        New Accounting Pronouncements

        In June 2001, the FASB ("Financial Accounting Standards Board") issued
        SFAS ("Statement of Financial Accounting Standards") No. 142 "Goodwill
        and Other Intangible Assets", which establishes financial accounting and
        reporting for acquired goodwill and other intangible assets and
        supercedes APB Opinion No. 17, "Intangible Assets". The provisions of
        SFAS No. 142 are effective for fiscal years beginning after December 15,
        2001. As the Company does not have goodwill or intangible assets
        recorded in the financial statements, the adoption of SFAS No. 142
        during the first quarter of fiscal 2002 did not have an impact on the
        financial condition or results of operations of the Company.

        In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
        Retirement Obligations", which addresses financial accounting and
        reporting for obligations associated with the retirement of tangible
        long-lived assets and the associated asset retirement costs. The
        standard applies to legal obligations associated with the retirement of
        long-lived assets that result from the acquisition, construction,
        development and (or) normal use of the asset. The Company has adopted
        the provisions of SFAS No. 143 and it did not have a material impact on
        the Company's consolidated financial position or results of operations.

        In August 2001, the FASB issued SFAS No. 144, "Accounting for the
        Impairment or Disposal of Long Lived Assets", which addresses financial
        accounting and reporting for the impairment or disposal of long-lived
        assets and supercedes SFAS No. 121, "Accounting for the Impairment of
        Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", although
        it retains many of the fundamental provisions of that Statement. The
        provisions of SFAS No. 144 are effective for fiscal years beginning
        after December 15, 2001, thereby applying to fiscal 2002. In conjunction
        with fresh-start reporting, the Company recorded a $11,760 adjustment to
        fixed assets to reflect the excess of book value over enterprise value.
        We have adopted the provisions of SFAS No. 144 and it did not have a
        material impact on our consolidated financial position or results of
        operations.

        In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
        Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
        Technical Corrections". Specifically, SFAS 145 rescinds SFAS No. 4,
        "Reporting Gains and Losses from Extinguishment of Debt, an amendment of
        APB Opinion No. 30" and SFAS No. 64, "Extinguishments of Debt Made to
        Satisfy Sinking-Fund Requirements", as these two standards required that
        all gains and losses from the extinguishment of

                                       11

<PAGE>

        debt be aggregated and, if material, classified as an extraordinary
        item. Consequently, such gains and losses will now be classified as
        extraordinary only if they meet the criteria for extraordinary treatment
        set forth in APB Opinion No. 30, "Reporting the Results of Operations -
        Reporting the Effects of Disposal of a Segment of a Business, and
        Extraordinary, Unusual and Infrequently Occurring Events and
        Transactions." SFAS No. 145 also rescinds SFAS No. 44 "Accounting for
        Intangible Assets of Motor Carriers, an amendment of Chapter 5 of ARB
        No. 43 and an interpretation of APB Opinions 17 and 30", because the
        event to which that Statement relates is no longer relevant. SFAS No.
        145 amends SFAS No. 13, "Accounting for Leases", to require that certain
        lease modifications that have economic effects similar to sale-leaseback
        transactions be accounted for in the same manner as such transactions,
        and also makes certain technical corrections to a number of existing
        pronouncements. The Company is required to adopt this statement due to
        the application of fresh-start accounting. The effect of this statement
        on the Company is that the net gain associated with the plan of
        reorganization and fresh-start adjustments is reported as a component of
        operations.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
        Associated with Exit or Disposal Activities." This statement changes the
        timing of recognition for certain exit costs associated with
        restructuring activities, so that certain exit costs would be recognized
        over the period in which the restructuring activities occur. Currently,
        exit costs are recognized when the Company commits to a restructuring
        plan. SFAS No. 146 is effective for exit or disposal activities
        initiated after December 31, 2002 and could result in the Company
        recognizing the cost of future restructuring activities over a period of
        time as opposed to as a single event.

        In September 2002, the FASB issued Emerging Issues Task Force ("EITF")
        02-16 "Accounting by a Customer (Including a Reseller) for Certain
        Consideration Received from a Vendor" which addresses the accounting for
        cash retailers receive from vendors. The EITF concluded cash received
        from a vendor is presumed to be a reduction of purchase price of goods
        unless the vendor receives an identifiable benefit or there is
        reimbursement of a specific incremental identifiable cost. Additionally,
        rebates are to be recorded when it is probable and reasonably estimable
        and allocated to transactions giving rise to the rebate. The Company's
        accounting policies relating to cash received from vendors is consistent
        with the conclusions reached by the EITF.

(3)     Long Term Debt and Capital Lease Obligations

        Pursuant to the Plan of Reorganization, the Company converted $3,130 of
        post petition trade payables into a trade conversion note, which will be
        payable within 4 years of the Effective Date. In addition, the Company
        recorded at fair value a $2,600 extended creditor payment to the general
        unsecured creditors.

                                       12

<PAGE>

        The following table summarizes the components of Long Term Debt and
        Capital Lease Obligations including its current portion at November 2,
        2002.

                                                          November 2,
                                                             2002
                                                        --------------
        Trade conversion note                           $        3,130
        Discounted value of extended creditor payment            2,451
        Financing agreements                                       710
        Capital leases                                             107
                                                        --------------
          Total                                         $        6,398
                                                        ==============

(4)     Debt

        On the Effective Date, obligations relating to the Company's
        debtor-in-possession financing facility were paid in full and the
        Company's secured financing facility with Wells Fargo Retail Finance,
        LLC (the "New Loan Agreement") became effective. The New Loan Agreement,
        which is a line of credit, currently provides up to $40,000 (including
        $10,000 for letters of credit) to fund working capital needs and for
        general corporate purposes. Borrowings under the facility are limited by
        a percent of inventory levels. The Loan Agreement expires on April 8,
        2005 and has a variable interest rate based upon the Prime rate or at
        the Company's option, a variable rate based upon earnings performance
        and the London Interbank Offered Rate ("LIBOR") with a minimum threshold
        of 5.00%. The interest rate on the Company's borrowings was 5.1% at
        November 2, 2002. Borrowings under the Loan Agreement are secured by
        substantially all of the Company's assets. Certain restrictive covenants
        apply, including achievement of specified operating results and
        limitations on the incurrence of additional liens and indebtedness,
        capital expenditures, asset sales and payment of dividends, all of which
        have been met.

(5)     Stockholders' Equity

        The Company has 10,000,000 shares of authorized common stock, par value
        $0.01 per share, 1,512,448 of which were deemed issued and outstanding
        for accounting purposes at November 2, 2002. A total of 1,349,995 shares
        were distributed in the initial distribution of stock to creditors,
        75,000 shares were distributed to certain members of management which
        vest over a 4 year period and 74,553 shares were distributed to former
        equity interests.

        As provided in the Plan of Reorganization, the Company adopted a stock
        option plan, which authorizes the grant of up to 166,667 stock options
        to employees of the Company - 124,900 options with an exercise price of
        $7.52 were outstanding at November 2, 2002.

        The Company also issued four series of new Warrants, Series A through D,
        to tendering holders of the canceled Common Stock, granting such holders
        the right to purchase an aggregate of 153,467 additional shares of the
        new Common Stock. The 38,346 shares of Series A Warrants are exercisable
        any time prior to April 9, 2006 at a price of $11.00 per share. The
        46,256 shares of Series B Warrants are exercisable at any time prior to
        April 9, 2008 at a price of $16.00 per share. The 38,346 shares of
        Series C Warrants are exercisable any time prior to April 9, 2010 at a
        price of $16.00 per share. The 30,519 shares of Series D Warrants are
        exercisable any time prior to April 9, 2010 at a price of $34.00 per
        share.

                                       13

<PAGE>

        Warrants were issued to management to purchase an aggregate 31,000
        shares of the Common Stock at a purchase price of $7.52 per share. On
        June 7, 2002, 12,900 warrants were exercised and the remaining 18,100
        warrants expired.

        As provided in the Plan of Reorganization, the Company entered into a
        Trade Conversion Agreement with certain trade creditors to convert
        $3,130 of accounts payable into long term Trade Conversion Notes. Per
        the agreement, these notes will be payable on the fourth anniversary of
        the Effective Date and contain a conversion feature into common stock
        between the third and fourth anniversary of the Effective Date.

        On April 23, 2002, the Board of Directors approved the non-employee
        Director Stock Option Plan, which authorized the grant of up to 150,000
        common stock options to non-employee members of the Board of Directors -
        70,000 were granted with an exercise price of $7.52.

        A separate Statement of Stockholders' Equity is not required to be
        presented for interim periods. However, comprehensive income equaled net
        income for the periods presented as the Company does not have any
        currency translation adjustments, minimum pension liability adjustments
        or SFAS No. 133 "Accounting for Derivative Instruments and Hedging
        Activities" adjustments.

(6)     Earnings Per Share

        In accordance with SFAS No. 128 "Earnings per Share", earnings per share
        - basic were computed by dividing net income by the weighted average
        number of common shares outstanding during the period. Earnings per
        share - diluted includes, in addition to the above, the effect of
        potentially dilutive securities, if dilutive.

        The reconciliation of earnings per share basic to earnings per share
        diluted is as follows:

<TABLE>
<CAPTION>
                                                              Income (loss)        Shares        Per share
                                                             ---------------    ------------    -----------
        <S>                                                  <C>                   <C>          <C>
        For the three fiscal months ended November 2, 2002:
        Earnings per share - basic:
           Net loss                                          $          (197)      1,437,448    $     (0.14)

        Effect of dilutive securities:
           Stock options and warrants                                                      -
        Earnings per share - diluted:
                                                             ---------------    ------------    -----------
           Net loss                                          $          (197)      1,437,448    $     (0.14)
                                                             ===============    ============    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                 Income            Shares        Per share
                                                             ---------------    ------------    -----------
        <S>                                                  <C>                   <C>          <C>
        For the seven fiscal months ended November 2, 2002:
        Earnings per share - basic:
           Net income                                        $         2,170       1,433,578    $      1.51

        Effect of dilutive securities:
           Stock options and warrants                                                 68,252
        Earnings per share - diluted:
                                                             ---------------    ------------    -----------
           Net income                                        $         2,170       1,501,830    $      1.44
                                                             ===============    ============    ===========
</TABLE>

                                       14

<PAGE>

        The dilutive impact of stock options and warrants was calculated using
        the treasury method. Had the Company reported a profit in the third
        fiscal quarter ended November 2, 2002, the number of average shares
        diluted would have been increased by 67,811 shares. The 153,467 warrants
        issued to old equity and the shares related to the trade conversion
        notes did not meet the criteria for inclusion in the diluted earning per
        share calculation and thus were excluded.

        Per share and share information for the Predecessor Company for all
        periods presented in the Condensed Consolidated Statements of Operations
        have been omitted as such information is not deemed to be meaningful.

(7)     Reorganization Items

        Reorganization Items consisted of professional fees related to legal,
        accounting and consulting services directly attributable to the Plan of
        Reorganization and employee retention bonuses. In addition,
        Reorganization Items include the write-off of old equity upon emergence
        from chapter 11 and the elimination of pre-petition obligations during
        the two-month period ended April 6, 2002. The components of
        Reorganization Items are as follows:

<TABLE>
<CAPTION>
                                           Predecessor        Predecessor        Predecessor
                                             Company            Company            Company
                                         ----------------   ----------------   ---------------
                                            Two months        Three months       Nine months
                                              ended              ended              ended
                                             April 6,          November 3,        November 3,
                                               2002               2001               2001
                                         ----------------   ----------------   ---------------
        <S>                              <C>                <C>                <C>
        Professional fees                $          1,379   $          1,090   $         2,509
        Severance/retention bonus                   1,026                675             1,394
        Closed store expense                          311                (62)              344
        Fresh start adjustments                    10,406                  -                 -
        Forgiveness of debt                       (41,847)                 -                 -
        Unsecured creditors' ownership
         share of reorganized company               9,543                  -                 -
        Other                                         342                  8                87
                                         ----------------   ----------------   ---------------
          Total                          $        (18,840)  $          1,711   $         4,334
                                         ================   ================   ===============
</TABLE>

        The Successor Company has not recorded any Reorganization Items in the
        seven month period ended November 2, 2002.

(8)     Income Taxes

        Since the Company utilized fresh start accounting upon emerging from
        bankruptcy, income tax expense of $1,428 for the seven months ended
        November 2, 2002 is offset by a direct increase in stockholders' equity
        due to the Company's ability to utilize prior period net operating loss
        benefits. Because the Company utilized net operating loss carryforwards,
        we did not pay federal income taxes in the seven months ended November
        2, 2002. The income tax benefit of $360 for the two months ended April
        6, 2002 results from the realization of net operating loss carry backs
        due to the enactment of the Job Creation and Workers Assistance Act of
        2002.

                                       15

<PAGE>

        The Company has recorded a valuation allowance to fully reserve for the
        value of net deferred tax assets that existed upon emergence from
        bankruptcy. These assets include remaining net operating loss
        carryforwards. This allowance on pre-emergence deferred tax assets is
        necessary, as the utilization of the Company's net loss carry forwards
        is dependent upon sufficient future taxable income. In the seven month
        period ended November 2, 2002, the Company has recorded $523 in new
        deferred tax assets related to deferred rent liabilities which is offset
        by a direct increase in stockholders' equity due to the Company's
        ability to utilize prior period net operating loss benefits. The Company
        believes they will realize the benefit of the new deferred tax asset in
        future periods and therefore has not recorded a valuation allowance at
        this time.

(9)     Related Party Transactions

        As described in the Plan of Reorganization, 90% of the new Common Stock
        was distributed to unsecured creditors, five percent was distributed to
        our management and five percent was distributed to old equity
        shareholders. Only one entity has an ownership interest of more than
        10%. There were no purchases from that entity during the quarterly
        period ended November 2, 2002 and no amounts were owed at November 2,
        2002. Management believes transactions with former unsecured creditors,
        as well as other vendors, are deemed to be consummated on terms
        equivalent to those prevailing in an arm's length transaction.

(10)    Restatement of Reorganization Items

        Subsequent to the issuance of the condensed consolidated financial
        statements for the quarterly period ended May 4, 2002, the Company
        determined that reorganization items recorded in the two months ended
        April 6, 2002 (Predecessor Company) need to be restated. In connection
        with the reorganization, 1,349,995 shares of new common stock were
        issued to certain of the unsecured creditors. The fair value of these
        shares was $9,543. The Company initially recorded the issuance of these
        shares as a charge to stockholders' equity. The Company has determined
        that the fair value of the shares issued should have also been recorded
        as a reorganization item in the Condensed Consolidated Statement of
        Operations in the two months ended April 6, 2002. As a result, the
        Condensed Consolidated Statements of Operations and Cash Flows for the
        two months ended April 6, 2002 (Predecessor Company) have been restated
        from the amounts previously recorded. A summary of the effects of the
        restatement is as follows:

<TABLE>
<CAPTION>
                                                        Predecessor        Predecessor
                                                        2002 Company       2002 Company
                                                      ----------------   ----------------
                                                      Two months ended
                                                        April 6, 2002    Two months ended
                                                       [as previously     April 6, 2002
                                                          reported]        [as restated]
                                                      ----------------   ----------------
               <S>                                    <C>                <C>
               Net sales                              $         40,837   $         40,837

               Cost of sales                                    26,991             26,991
                                                      ----------------   ----------------
                  Gross profit                                  13,846             13,846
               Selling, general and administrative
                expenses                                        12,212             12,212
               Depreciation                                      1,030              1,030
               Reorganization items                            (28,383)           (18,840)
               Interest expense                                    374                374
                                                      ----------------   ----------------
                  Income before income tax expense              28,613             19,070
               Income tax expense (benefit)                       (360)              (360)
                                                      ----------------   ----------------
               Net income                             $         28,973   $         19,430
                                                      ================   ================
</TABLE>

        The Condensed Consolidated Statements of Operations and Cash Flows for
        the seven months ended November 2, 2002 (Successor Company) as well as
        the Condensed Consolidated Balance Sheet at November 2, 2002 (Successor
        Company) are not affected by the aforementioned restatement.

                                       16

<PAGE>

        Additionally, the restatement has no effect on the Company's liquidity
        or cash position.

ITEM 2          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                    RESULTS OF OPERATIONS (Dollar amounts in thousands)

        The Company is a chain of company-owned stores offering an extensive
selection of party supplies, gifts, greeting cards, giftwrap and other special
occasion merchandise at everyday value prices. As of November 2, 2002, the
Company operated 171 stores in 20 states.

        On March 23, 1999 the Company filed voluntary petitions for relief under
chapter 11 of title 11 of the United States Code under case numbers 99-685(JCA)
and 99-686(JCA). From that time until March 20, 2002, the Company operated its
business as a debtor-in-possession subject to the jurisdiction and supervision
of the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"). On March 20, 2002, the Company announced that the
Bankruptcy Court confirmed the Company's Amended Plan of Reorganization (the
"Plan of Reorganization") that it filed with the Bankruptcy Court on February 5,
2002. On April 9, 2002 (the "Effective Date") the Plan of Reorganization became
effective and the Company successfully emerged from Chapter 11. See Note (1) to
the Notes to the Condensed Consolidated Financial Statements for a summary of
the principal provisions of the Plan of Reorganization.

Critical Accounting Policies

        Critical Accounting Policies are defined as those that are reflective of
significant judgments and uncertainties and could potentially result in
materially different results under different assumptions and conditions. The
Company has prepared the accompanying financial statements in conformity with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and accompanying notes. Actual results could
differ from those estimates under different assumptions or conditions. The
Company has identified the following critical accounting policies utilized in
the preparation of these financial statements.

Fresh Start Accounting

        As is more fully discussed in Note 2 - "Business and Basis of
Presentation" in our Notes to Condensed Consolidated Financial Statements, the
Company adopted fresh start accounting pursuant to the American Institute of
Certified Public Accountant's Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"), during
the first quarter of fiscal 2002 resulting in a change in the basis of
accounting of our underlying assets and liabilities at the Effective Date.
Accordingly, the Company's financial statements before and after the Effective
Date are not comparable. The operating results for the two months ended April 6,
2002 were significantly impacted by items associated with emerging from
bankruptcy including debt forgiveness, restructuring activities and certain
changes to record the excess of book value over enterprise value. Upon
implementation of fresh start accounting, the Company's total assets and total
liabilities and stockholders' equity were adjusted downward by approximately
$17,000.

Fresh-start Reporting; Factors Affecting Comparability of Financial Information

        Effective April 9, 2002, the Company emerged from Chapter 11 bankruptcy
proceedings and implemented fresh-start accounting. Accordingly, all assets and
liabilities were restated to reflect their respective fair values. The
consolidated financial statements after that date are those of a new reporting
entity and are not comparable to pre-confirmation periods. However, for purposes
of this discussion, the seven month period ended November 2, 2002 (Successor
Company) has been combined with the two month period ended April 6, 2002
(Predecessor Company) and then compared to the nine months ended November 3,
2001. Differences between periods due to fresh-start accounting adjustments are
explained when necessary.

                                       17

<PAGE>

        The lack of comparability in the accompanying unaudited consolidated
financial statements is most apparent in the Company's capital costs (lease,
interest, depreciation and amortization), as well as income taxes, debt
restructuring and reorganization costs.

        As discussed in Note (10) to the Company's Condensed Consolidated
Financial Statements, the Condensed Consolidated Statements of Operations and
Cash Flows for the two months ended April 6, 2002 (Predecessor Company) have
been restated. The following discussion and analysis gives effect to the
restatement.

RESULTS OF OPERATIONS

        The following table sets forth, for the periods indicated, selected
statements of operations data expressed as a percentage of net sales and the
number of stores open at the end of each period. The following table is included
solely for use in comparative analysis of results of operations and to
complement management's discussion and analysis.

<TABLE>
<CAPTION>
                                                                 Three fiscal
                                                Three fiscal        months
                                                months ended        ended          Nine fiscal months ended
                                               --------------   --------------   ----------------------------
                                                                                   Combined
                                                                                   results
                                                 November 2,       November3,      November      November 3,
                                                    2002             2001           2, 2002         2001
                                               --------------   --------------   ------------   -------------
<S>                                                     <C>              <C>            <C>             <C>
Net sales                                               100.0%           100.0%         100.0%          100.0%
Cost of sales                                            66.5             67.3           65.0            65.9
                                               --------------   --------------   ------------   -------------
   Gross profit                                          33.5             32.7           35.0            34.1
Selling, general and administrative expenses             32.5             30.9           30.8            29.6
Depreciation                                              0.8              3.3            1.1             3.2
Reorganization items                                        -              3.3          (11.2)            2.6
Interest expense                                          0.9              1.3            0.8             1.3
                                               --------------   --------------   ------------   -------------
    Income (loss) before income tax expense              (0.7)            (6.1)          13.5            (2.6)
Income tax expense (benefit)                             (0.3)               -            0.6               -
                                               --------------   --------------   ------------   -------------
Net income (loss)                                        (0.4)%           (6.1)%         12.9%           (2.6)%
                                               ==============   ==============   ============   =============
Number of stores open at end of period                    171              173            171             173
</TABLE>

THREE FISCAL MONTHS ENDED NOVEMBER 2, 2002 AND NOVEMBER 3, 2001

        Net Sales. Net sales decreased $2,538 or 4.9% to $48,942 for the three
fiscal month period ended November 2, 2002 ("third quarter of fiscal 2002") from
$51,480 for the three fiscal month period ended November 3, 2001 ("third quarter
of fiscal 2001"). Comparable store sales decreased $2,058 or 4.0% as a result of
a challenging retail environment and weakening consumer confidence. No new
stores opened or closed in either period. However, one store closed in January
2002 and one store closed in June 2002. A closed store's sales are excluded from
the calculation of comparable store sales in the fiscal month of the store
closing.

                                       18

<PAGE>

        Gross Profit. Cost of sales includes merchandise, distribution and
occupancy costs. Gross profit decreased $413 or 2.5%, to $16,402 for the third
quarter of fiscal 2002 from $16,815 for the third quarter of fiscal 2001. As a
percentage of net sales, gross profit was 33.5% for the third quarter of fiscal
2002 compared to 32.7% in the same period in the prior year. The higher gross
profit percentage was the result of improved markdown and inventory shrinkage
offset by increases in occupancy costs.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses include store payroll, advertising, other store
operating and corporate administrative expenses. Selling, general and
administrative expenses increased $47 or 0.3% to $15,919 for the third quarter
of fiscal 2002 from $15,872 for the third quarter of fiscal 2001. As a
percentage of net sales, selling, general and administrative expenses increased
to 32.5% in the third quarter of fiscal 2002 from 30.9% in the third quarter of
fiscal 2001. This fluctuation primarily relates to increases in insurance,
repairs and maintenance and store remodel expenses and the impact of not
leveraging store payroll against decreased sales volume.

        Depreciation expense. Depreciation expense was $393 in the third quarter
of fiscal 2002 compared to $1,697 in the third quarter of fiscal 2001. This
decrease relates to the fresh-start adjustment on fixed assets of $11,760
whereby the Company adjusted for the excess of book value over enterprise value.

        Interest Expense. Interest expense was $419 in the third quarter of
fiscal 2002 compared to $666 in the third quarter of fiscal 2001. This decrease
relates to lower borrowing levels coupled with lower effective interest rates.

        Reorganization Items, net. The Company did not record any Reorganization
costs in the third quarter of fiscal 2002. As previously discussed, the Company
successfully emerged from bankruptcy on April 9, 2002. Reorganization costs in
the third quarter of fiscal 2001 totaled $1,711. These costs include
professional fees and other costs related to the Company's reorganization.

        Income taxes. Income tax benefit of $132 for the third quarter of fiscal
2002 is offset by a direct decrease to stockholders' equity.

NINE FISCAL MONTHS ENDED NOVEMBER 2, 2002 AND NOVEMBER 3, 2001

        Net Sales. Net sales increased $2,970 or 1.8%, to $167,699 for the nine
fiscal month period ended November 2, 2002 from $164,729 for the nine fiscal
month period ended November 3, 2001. Comparable store sales increased $4,573 or
2.8%. A better merchandise assortment in the basic party and gift categories
translated into improved sales. No new stores opened in either period, one store
closed in the nine fiscal month period ended November 2, 2002 and two stores
closed in the nine fiscal month period ended November 3, 2001. A closed store's
sales are excluded from the calculation of comparable store sales in the fiscal
month of the store closing.

        Gross Profit. Cost of sales includes merchandise, distribution and
occupancy costs. Gross profit increased $2,643 or 4.7%, to $58,763 for the nine
fiscal month period ended November 2, 2002 from $56,120 for the nine fiscal
month period ended November 3, 2001. As a percentage of net sales, gross profit
was 35.0% for the nine fiscal month period ended November 2, 2002 compared to
34.1% in the same period in the prior year. The higher gross profit percentage
relates to improved inventory shrinkage and markdown experience.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses include store payroll, advertising, other store
operating and corporate administrative expenses. Selling, general and
administrative expenses increased $2,903 or 5.9%, to $51,697 for the nine fiscal
month period ended November 2, 2002 from $48,794 for the nine fiscal month
period ended November 3, 2001. As a percentage

                                       19

<PAGE>

of net sales, selling, general and administrative expenses increased to 30.8% in
the nine fiscal month period ended November 2, 2002 from 29.6% in the nine
fiscal month period ended November 3, 2001. This fluctuation relates primarily
to increases in store payroll, insurance and advertising of $782, $1,085 and
$148, respectively.

        Depreciation expense. Depreciation expense was $1,879 in the nine fiscal
month period ended November 2, 2002 compared to $5,194 in the nine fiscal month
period ended November 3, 2001. This decrease relates to the fresh-start
adjustment of $11,760 on fixed assets whereby the Company adjusted for the
excess of book value over enterprise value.

        Interest Expense. Interest expense was $1,359 in the nine fiscal month
period ended November 2, 2002 compared to $2,117 in the nine fiscal month period
ended November 3, 2001. This decrease relates to lower effective interest rates
and decreases in borrowing levels.

        Reorganization Items, net. Reorganization Items fluctuated $23,174 for
the nine fiscal month period ended November 2, 2002 from $4,334 for the nine
fiscal month period ended November 3, 2001. The change relates to the gain
related to the discharge of indebtedness that resulted from the forgiveness of
certain liabilities in accordance with the Company's Plan of Reorganization and
fresh-start adjustments. The major components of Reorganization Items are as
follows:

                                                   Nine Months      Nine Months
                                                 ended November   Ended November
                                                     2, 2002         3, 2001
                                                 --------------   --------------
        Professional fees                        $        1,379   $        2,509
        Severance/retention bonus                         1,026            1,394
        Closed store expense                                311              344
        Fresh start adjustments                          10,406                -
        Forgiveness of debt                             (41,847)               -

        Unsecured creditors' ownership share of
         reorganized Company                              9,543                -
        Other                                               342               87
                                                 --------------   --------------
         Total                                   $      (18,840)  $        4,334
                                                 ==============   ==============

The Successor Company has not recorded any Reorganization Items in the seven
month period ended November 2, 2002.

        Income Taxes. Income tax expense of $1,428 for the seven fiscal month
period ended November 2, 2002 is offset by a direct increase in stockholders'
equity due to the Company's ability to utilize prior period net operating loss
benefits. The income tax benefit of $360 for the two months ended April 6, 2002
results from the realization of net operating loss carry backs due to the
enactment of the Job Creation and Workers Assistance Act of 2002.

LIQUIDITY AND CAPITAL RESOURCES

        The Company's uses of capital for the remainder of fiscal 2002 are
expected to include working capital for operating expenses and satisfaction of
current liabilities, expenditures related to maintaining and refurbishing
existing stores and interest payments on outstanding borrowings.

        On April 9, 2002, obligations relating to the Company's
debtor-in-possession financing facility were paid in full and the Company's
secured financing facility with Wells Fargo Retail Finance, LLC (the "New Loan
Agreement") became effective. The New Loan Agreement, which is a line of credit,
currently provides up to $40,000 (including $10,000 for letters of credit) to
fund working capital needs and for general corporate

                                       20

<PAGE>

purposes. Borrowings under the facility are limited by a percent of inventory
levels. The New Loan Agreement expires on April 8, 2005 and has a variable
interest rate based upon the Prime rate or at the Company's option, a variable
rate based upon earnings performance and the London Interbank Offered Rate
("LIBOR") with a minimum threshold of 5.00%. The interest rate on the Company's
borrowings was 5.1% at November 2, 2002. Borrowings under the New Loan Agreement
are secured by substantially all of the Company's assets.

        The New Loan Agreement contains certain restrictive covenants, which,
among other things, require the Company to maintain certain inventory levels and
achieve specified operating results. The restrictive covenants also limit the
Company's capital expenditures, asset sales and dividends and the ability of the
Company to grant liens and incur additional indebtedness.

        Pursuant to the Plan of Reorganization, the Company converted $3,130 of
post petition trade payables into a trade conversion note, which will be payable
within 4 years of the Effective Date. In addition, the Company recorded at fair
value the $2,600 extended creditor payment payable to the general unsecured
creditors. Management intends to pay down the trade conversion note within three
years of the Effective Date.

        As of November 2, 2002, the Company had $18,875 in borrowings
outstanding under the New Loan Agreement and had utilized approximately $1,626
under the New Loan Agreement to issue letters of credit.

The following table sets forth certain consolidated statements of cash flows:

<TABLE>
<CAPTION>
                                                  Nine months ended   Nine months ended
                                                   November 2, 2002    November 3, 2001
                                                  -----------------   -----------------
<S>                                               <C>                 <C>
Cash provided by (used in) operating activities   $          10,401   $            (323)
                                                  -----------------   -----------------
Cash used in investing activities                 $          (1,814)  $            (883)
                                                  -----------------   -----------------
Cash provided by (used in) financing activities   $          (8,578)  $           1,121
                                                  -----------------   -----------------
</TABLE>

        At November 2, 2002 the Company's working capital was $14,709. Net cash
provided by operating activities for the nine fiscal month period ended November
2, 2002 was $10,401 compared to $323 of net cash used in operating activities
during the nine fiscal month period ended November 3, 2001. The fluctuation is
related improved operating results and to decreases in inventory and increases
in accounts payable coupled with the Company's ability to utilize
pre-confirmation net operating losses in the 7 fiscal month period ended
November 2, 2002.

        Net cash used in investing activities during the nine fiscal month
period ended November 2, 2002 and the nine fiscal month period ended November 3,
2001 was $1,814 and $883, respectively. Net cash used in investing activities
was primarily for capital expenditures for computer equipment, store remodeling
and warehouse equipment for the distribution center.

        Net cash used in financing activities during the nine fiscal month
period ended November 2, 2002 was $8,578 compared to $1,121 net cash provided by
financing activities during the nine fiscal month period ended November 3, 2001.
Amounts are attributable to the level of borrowings and repayments.

        The Company does not intend to pay cash dividends in the foreseeable
future and under its current Loan Agreement is restricted from paying dividends
on its capital stock.

                                       21

<PAGE>

        The Company's ability to make scheduled payments of principal of, or to
pay the interest on, or to refinance, indebtedness or to fund planned capital
expenditures, will depend upon future performance, which, in turn, is subject to
general economic, financial, competitive and other factors that are beyond the
Company's control. Based upon current levels of operation and anticipated
growth, the Company believes that future cash flow from operations, together
with available borrowings under the New Loan Agreement, will be adequate to meet
anticipated requirements for capital expenditures, working capital, interest
payments and scheduled principal payments. There can be no assurance that the
Company's business will continue to generate sufficient cash flow from
operations in the future to service the Company's debt and make necessary
capital expenditures after satisfying certain liabilities arising in the
ordinary course of business. If unable to do so, the Company may be required to
refinance all or a portion of its existing debt, sell assets or obtain
additional financing. There can be no assurance that any refinancing would be
available or that any sales of assets or additional financing could be obtained.

Seasonality

        The Company's business is highly seasonal, with operating results
varying from quarter to quarter. The Company historically experienced higher
sales during the second and fourth fiscal quarters due to increased demand by
customers for the Company's products attributable to special occasions and
holiday seasons during these periods. The Company's fiscal 2002 quarters are as
defined as follows: first fiscal quarter is February 3, 2002 to May 4, 2002,
second fiscal quarter is May 5, 2002 to August 3, 2002, third fiscal quarter is
August 4, 2002 to November 2, 2002 and fourth fiscal quarter is November 3, 2002
to February 1, 2003.

New Accounting Pronouncements

        In June 2001, the FASB ("Financial Accounting Standards Board") issued
SFAS ("Statement of Financial Accounting Standards") No. 142 "Goodwill and Other
Intangible Assets", which establishes financial accounting and reporting for
acquired goodwill and other intangible assets and supercedes APB Opinion No. 17,
"Intangible Assets". The provisions of SFAS No. 142 are effective for fiscal
years beginning after December 15, 2001. As the Company does not have goodwill
or intangible assets recorded in the financial statements, the adoption of SFAS
No. 142 during the first quarter of fiscal 2002 did not have an impact on the
financial condition or results of operations of the Company.

        In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations", which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The standard applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) normal use of the asset. The
Company has adopted the provisions of SFAS No. 143 and it did not have a
material impact on the Company's consolidated financial position or results of
operations.

        In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long Lived Assets", which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of", although it retains many of the
fundamental provisions of that Statement. The provisions of SFAS No. 144 are
effective for fiscal years beginning after December 15, 2001, thereby applying
to fiscal 2002. In conjunction with fresh-start reporting, the Company recorded
a $11,760 adjustment to fixed assets to reflect the excess of book value over
enterprise value. We have adopted the provisions of SFAS No. 144 and it did not
have a material impact on our consolidated financial position or results of
operations.

        In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64,

                                       22

<PAGE>

Amendment of FASB Statement No. 13, and Technical Corrections". Specifically,
SFAS 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of
Debt, an amendment of APB Opinion No. 30" and SFAS No. 64, "Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements", as these two standards required
that all gains and losses from the extinguishment of debt be aggregated and, if
material, classified as an extraordinary item. Consequently, such gains and
losses will now be classified as extraordinary only if they meet the criteria
for extraordinary treatment set forth in APB Opinion No. 30, "Reporting the
Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." SFAS No. 145 also rescinds SFAS No. 44 "Accounting for Intangible
Assets of Motor Carriers, an amendment of Chapter 5 of ARB No. 43 and an
interpretation of APB Opinions 17 and 30", because the event to which that
Statement relates is no longer relevant. SFAS No. 145 amends SFAS No. 13,
"Accounting for Leases", to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions be accounted for in the
same manner as such transactions, and also makes certain technical corrections
to a number of existing pronouncements. The Company is required to adopt this
statement due to the application of fresh-start accounting. The effect of this
statement on the Company is that the net gain associated with the plan of
reorganization and fresh-start adjustments is reported as a component of
operations.

        In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement changes the timing
of recognition for certain exit costs associated with restructuring activities,
so that certain exit costs would be recognized over the period in which the
restructuring activities occur. Currently, exit costs are recognized when the
Company commits to a restructuring plan. SFAS No. 146 is effective for exit or
disposal activities initiated after December 31, 2002 and could result in the
Company recognizing the cost of future restructuring activities over a period of
time as opposed to as a single event.

        In September 2002, the FASB issued Emerging Issues Task Force ("EITF")
02-16 "Accounting by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor" which addresses the accounting for cash retailers
receive from vendors. The EITF concluded cash received from a vendor is presumed
to be a reduction of purchase price of goods unless the vendor receives an
identifiable benefit or there is reimbursement of a specific incremental
identifiable cost. Additionally, rebates are to be recorded when it is probable
and reasonably estimable and allocated to transactions giving rise to the
rebate. The Company's accounting policies relating to cash received from vendors
is consistent with the conclusions reached by the EITF.

ITEM 3          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

        The Company is subject to market risks from changes in interest rates.
As of November 2, 2002, the interest rate on the Company's revolving credit
facilities, which represents a significant portion of the Company's outstanding
debt, is variable based upon earnings performance, the London Interbank Offered
Rate ("LIBOR") and the prime rate. A hypothetical 10 percent increase to the
average interest rate under the credit facilities applied to the average
outstanding balance during the two months ended April 6, 2002 and the seven
months ended November 2, 2002 would not have had a material impact on our
financial position or results of operations.

                                       23

<PAGE>

ITEM 4.         CONTROLS AND PROCEDURES

        (a) Evaluation of disclosure controls and procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Quarterly
Report on Form 10-Q/A, the Company's principal executive officer and principal
financial officer have concluded that the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

        (b) Changes in internal controls. There were no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

        The Company from time to time is involved in routine litigation
incidental to the conduct of its business. The Company is not aware of any
material existing or threatened litigation to which it is or may be a party.

Item 2. Changes in Securities

        On June 7, 2002, the Company issued 12,900 shares of Common Stock upon
exercise of warrants previously issued to management. The Company received the
exercise price of $7.52 per share. Exemption from registration is claimed
pursuant to Section 4(2) of the Securities Act of 1933, as amended, no public
sale having been involved.

Item 3. Defaults Upon Senior Securities

        None

Item 4. Submission of Matters to a Vote of Security Holders

        None

Item 5. Other Information

        None

Item 6. Exhibits and reports on Form 8-K

        (a) Exhibits

        Exhibit 3.1 (1) Certificate on Incorporation of Factory Card & Party
        Outlet Corp.

        Exhibit 3.2 (1) Bylaws of Factory Card & Party Outlet Corp.

        Exhibit 4.1 (1) Warrant Agreement, dated April 9, 2002, between Factory
        Card & Party Outlet and Wells Fargo Bank Minnesota, N.A.

                                       24

<PAGE>

        Exhibit 4.2 (1) Form of New Management Warrant, dated April 9, 2002.

        Exhibit 4.3 (1) Schedule of New Management Warrants (pursuant to
        Instruction 2 of Item 601).

        Exhibit 4.4 (1) Trade Conversion Note of Factory Card & Party Outlet
        Corp. and Factory Card Outlet of America Ltd., dated April 9, 2002, for
        the benefit of CSS Industries, Inc.

        Exhibit 4.5 (1) Schedule of Trade Conversion Notes (pursuant to
        Instruction 2 of Item 601).

        Exhibit 4.6 (1) Trade Conversion Agreement, dated as of April 9, 2002,
        among Factory Card & Party Outlet Corp., Factory Card Outlet of America.
        Ltd., Amscan, Inc., Creative Expressions Group, Inc., Images and
        Editions Limited, Unique Industries, Inc., CSS Industries, Inc., P.S.
        Greetings, Inc., and Maryland Plastics, Inc.

        Exhibit 10.1 (1) Loan and Security Agreement, dated as of April 9, 2002,
        among Factory Card Outlet of America, Ltd., as borrower, the lenders
        thereto as Wells Fargo Retail Finance, LLC, as arranger, collateral
        agent and administrative agent.

        Exhibit 10.2 (1) Security Agreement, dated April 9, 2002, among Factory
        Card & Party Outlet Corp. and Factory Card Outlet of America, Ltd., in
        favor of William Kaye, as Collateral Trustee.

        Exhibit 10.3 (1) Form of Factory Card & Party Outlet Corp. 2002 Stock
        Incentive Plan.

        Exhibit 10.4 (1) Trade Vendor Supply Agreement, dated April 9, 2002,
        between Factory Card & Party Outlet Corp., Factory Card Outlet of
        America, Ltd and Maryland Plastics.

        Exhibit 10.5 (1) Schedule of Trade Vendor Supply Agreements (pursuant to
        Instruction 2 of Item 601).

        Exhibit 10.6 (1) Employment Agreement, dated as of April 9, 2002,
        between Factory Card Outlet of America, Ltd and James D. Constantine.

        Exhibit 10.7 (1) Employment Agreement, dated as of April 9, 2002,
        between Factory Card Outlet of America, Ltd and Timothy F. Gower.

        Exhibit 10.8 (1) Employment Agreement, dated as of April 9, 2002,
        between Factory Card Outlet of America, Ltd and Gary W. Rada.

        Exhibit 10.9 (2) Form of Factory Card & Party Outlet Corp. 2002 Non-
        Employee Directors Stock Option Plan.

        Exhibit 10.10 (2) First Amendment to the Factory Card & Party Outlet
        Corp. 2002 Stock Incentive Plan.

        Exhibit 10.11 (2) Second Amendment to the Factory Card & Party Outlet
        Corp. 2002 Stock Option Plan.

        Exhibit 99.1 Independent Accountants' Report from Deloitte & Touche,
        LLP.

                                       25

<PAGE>

        Exhibit 99.2 Acknowledgement of Awareness Letter from Deloitte & Touche,
        LLP dated December 9, 2002 (March 5, 2003 as to the effect of the
        restatement described in Note 10) Concerning Unaudited Interim Financial
        Information.

        Exhibit 99.3 Certifications under Section 906 of the Sarbanes-Oxley Act
        of 2002.

        NOTES

        (1) Incorporated by reference to the Company's Current Report on Form
        8-K as filed on April 23, 2002

        (2) Incorporated by reference to the Company's Current Report on Form
        10-Q as filed on June 18, 2002.

        (b) Reports on 8-K

        Current Report on Form 8-K filed on September 16, 2002 to report the
        certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
        18 U.S.C. Section 1350, of the President and Chief Operating Officer and
        Executive Vice President and Chief Financial and Administrative Officer
        for Factory Card & Party Outlet's quarterly period ended August 3, 2002.

                                       26

<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.

                        FACTORY CARD & PARTY OUTLET CORP.

Dated: April 30, 2002       By: /s/ Gary W. Rada
                                ------------------------------------------
                                     Gary W. Rada
                                     President and Chief Executive Officer

Dated: April 30, 2002       By: /s/ James D. Constantine
                                ------------------------------------------
                                     James D. Constantine
                                     Executive Vice President and Chief
                                      Financial and Administrative Officer
                                     [Principal Accounting Officer]

                                       27

<PAGE>


CERTIFICATIONS

I, Gary W. Rada, President and Chief Executive Officer of Factory Card & Party
Outlet Corp., certify that:

1.      I have reviewed this quarterly report, as amended, on Form
        10-Q/A of Factory Card & Party Outlet Corp.;

2.      Based on my knowledge, this quarterly report, as amended, does not
        contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the
        circumstances under which such statements were made, not misleading with
        respect to the period covered by this quarterly report, as amended; and

3.      Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, as amended, fairly
        present in all material respects the financial condition, results of
        operations and cash flows of the registrant as of, and for, the periods
        presented in this quarterly report, as amended.

4.      The registrant's other certifying officers and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        we have:

        a)      designed such disclosure controls and procedures to ensure that
                material information relating to the registrant, including its
                consolidated subsidiaries, is made known to us by others within
                those entities, particularly during the period in which this
                quarterly report, as amended, is being prepared;

        b)      evaluated the effectiveness of the registrant's disclosure
                controls and procedures as of a date within 90 days prior to the
                filing date of this quarterly report, as amended, (the
                "Evaluation Date"); and

        c)      presented in this quarterly report, as amended, our conclusions
                about the effectiveness of the disclosure controls and
                procedures based on our evaluation as of the Evaluation Date;

5.      The registrant's other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrant's auditors and the
        audit committee of registrant's board of directors (or persons
        performing the equivalent functions):

        a)      all significant deficiencies in the design or operation of
                internal controls which could adversely affect the registrant's
                ability to record, process, summarize and report financial data
                and have identified for the registrant's auditors any material
                weaknesses in internal controls; and

        b)      any fraud, whether or not material, that involves management or
                other employees who have a significant role in the registrant's
                internal controls; and

6.      The registrant's other certifying officers and I have indicated in this
        quarterly report, as amended, whether or not there were significant
        changes in internal controls or in other factors that could
        significantly affect internal controls subsequent to the date of our
        most recent evaluation, including any corrective actions with regard to
        significant deficiencies and material weaknesses.

Date:  April 30, 2003

                                        /s/ Gary W. Rada
                                        -------------------------------------
                                        Gary W. Rada
                                        President and Chief Operating Officer

                                       28

<PAGE>



I, James D. Constantine, Executive Vice President and Chief Financial and
Administrative Officer of Factory Card & Party Outlet Corp., certify that:

1.      I have reviewed this quarterly report, as amended, on Form
        10-Q/A of Factory Card & Party Outlet Corp.;

2.      Based on my knowledge, this quarterly report, as amended, does not
        contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the
        circumstances under which such statements were made, not misleading with
        respect to the period covered by this quarterly report, as amended, and

3.      Based on my knowledge, the financial statements, and other financial
        information included in this quarterly report, as amended, fairly
        present in all material respects the financial condition, results of
        operations and cash flows of the registrant as of, and for, the periods
        presented in this quarterly report, as amended.

4.      The registrant's other certifying officers and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        we have:

        a)      designed such disclosure controls and procedures to ensure that
                material information relating to the registrant, including its
                consolidated subsidiaries, is made known to us by others within
                those entities, particularly during the period in which this
                quarterly report, as amended, is being prepared;

        b)      evaluated the effectiveness of the registrant's disclosure
                controls and procedures as of a date within 90 days prior to the
                filing date of this quarterly report, as amended (the
                "Evaluation Date"); and

        c)      presented in this quarterly report, as amended, our conclusions
                about the effectiveness of the disclosure controls and
                procedures based on our evaluation as of the Evaluation Date;

5.      The registrant's other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrant's auditors and the
        audit committee of registrant's board of directors (or persons
        performing the equivalent functions):

        a)      all significant deficiencies in the design or operation of
                internal controls which could adversely affect the registrant's
                ability to record, process, summarize and report financial data
                and have identified for the registrant's auditors any material
                weaknesses in internal controls; and

        b)      any fraud, whether or not material, that involves management or
                other employees who have a significant role in the registrant's
                internal controls; and

6.      The registrant's other certifying officers and I have indicated in this
        quarterly report, as amended, whether or not there were significant
        changes in internal controls or in other factors that could
        significantly affect internal controls subsequent to the date of our
        most recent evaluation, including any corrective actions with regard to
        significant deficiencies and material weaknesses.

Date:  April 30, 2003

                                        /s/ James D. Constantine
                                        -------------------------------------
                                        James D. Constantine
                                        Executive Vice President and Chief
                                         Financial and Administrative Officer