<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED). For the fiscal year ended December 31, 1998.
TRANSACTION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED). For the transaction period from
to .
Commission file number: 21859.
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Factory Card Outlet of America Ltd. Incentive Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Factory Card Outlet Corp.
2727 Diehl Road
Naperville, Illinois 60137-2371
<PAGE>
Required Information
--------------------
Item 4
------
In lieu of the financial statements required by Item 1-3, the Plan is
submitting financial statements prepared in accordance with the financial
reporting requirements of ERISA for the years ended December 31, 1998 and
December 31, 1997.
2
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan administrators have duly caused this annual report to be signed on
behalf of the Plan by the undersigned, thereunto duly authorized.
Date: June 29, 1999 FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
By: /s/ Matthew Ellis
------------------
Matthew Ellis
Plan Administrator
By: /s/ Glen J. Franchi
--------------------
Glen J. Franchi
Plan Administrator
By: /s/ Carol A. Travis
--------------------
Carol A. Travis
Plan Administrator
3
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
<TABLE>
<CAPTION>
TABLE OF CONTENTS
==========================================================================================
Page(s)
<S> <C> <C>
Independent Auditors' Report......................................... 5
Statements of Net Assets Available for Plan Participants............. 6
Statements of Changes in Net Assets Available for Plan Participants.. 7
Notes to Financial Statements........................................ 8-14
Schedule
--------
Item 27a--Schedule of Assets Held for Investment Purposes............ 1 15
Item 27d--Schedule of Reportable Transactions........................ 2 16
</TABLE>
4
<PAGE>
Independent Auditors' Report
The Retirement Committee
Factory Card Outlet of America Ltd.
Incentive Savings Plan:
We have audited the accompanying statements of net assets available for plan
participants of Factory Card Outlet of America Ltd. Incentive Savings Plan
(the Plan) as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for plan participants for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan participants of the
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for plan participants for the years then ended in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Chicago, Illinois
June 28, 1999
5
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
Statements of Net Assets Available for Plan Participants
December 31, 1998 and 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ - 169,387
Factory Card Outlet Corp. Common Stock 36,516 55,587
Investments:
Bank One, Chicago NA pooled investment
funds, at fair value:
Income fund - 528,428
Equity fund - 997,370
Guaranteed principal fund - 517,188
Franklin Templeton investment funds,
at fair value:
Stable value fund 611,763 -
U.S. government securities fund 604,564 -
Mutual qualified fund 112,065 -
Equity fund 1,351,220 -
Balance sheet investment fund 93,299 -
Foreign fund 36,532 -
Conservative target fund 24,639 -
Moderate target fund 44,461 -
Growth target fund 44,683 -
Receivables:
Participant loans 93,163 110,664
Employer contributions 15,965 11,918
Employee contributions 58,933 42,662
Accrued income - 3,854
---------- ---------
Total assets 3,127,803 2,437,058
Liabilities - refund of excess employee contributions - (2,026)
- ----------------------------------------------------------------------------------------------
Net assets available for plan participants $3,127,803 2,435,032
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Participants
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net investment income $ 352,331 45,437
Net appreciation (depreciation)
in market value of investments (143,904) 215,859
Interest income on participant loans 6,419 6,753
- ---------------------------------------------------------------------------------------------------------------
214,846 268,049
Contributions:
Employer 207,592 138,191
Employee 750,407 499,120
Rollover 49,636 62,460
- ---------------------------------------------------------------------------------------------------------------
Total additions 1,222,481 967,820
- ---------------------------------------------------------------------------------------------------------------
Deductions from net assets attributed to:
Vested benefits of terminated participants (512,635) (116,219)
Refund of excess employee contributions (348) (2,026)
Hardship withdrawals (16,727) (1,603)
- ---------------------------------------------------------------------------------------------------------------
Total deductions (529,710) (119,848)
- ---------------------------------------------------------------------------------------------------------------
Net increase 692,771 847,972
Net assets available for plan participants:
Beginning of year 2,435,032 1,587,060
- ---------------------------------------------------------------------------------------------------------------
End of year $3,127,803 2,435,032
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
FACTORY CARD OUTLET OF AMERICA, LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) Description of the Plan
The following brief description of the Factory Card Outlet of America Ltd.
Incentive Savings Plan (the Plan) is provided for general information
purposes only. Participants should refer to the Plan agreement for more
complete information.
The Plan is a defined contribution plan sponsored by Factory Card Outlet of
America Ltd. (the Company) for all eligible employees, as defined in the
Plan agreement. The Plan as adopted by the Company is a profit sharing plan
with a cash or deferred savings feature. The Plan is administered by the
Company and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). Franklin Templeton Trust Company serves as
the Plan's trustee and investment manager.
Each participant is 100% vested in his or her salary reduction
contribution, the Company's discretionary matching contributions, and
actual earnings thereon at all times. Vesting in the Company's
discretionary base contribution is based on years of continuous service. A
participant is 100% vested after five years of credited service or upon
death, disability, or the attainment of normal retirement age. Payments are
generally made on a lump-sum basis upon termination.
Upon satisfaction of certain conditions and approval of the plan
administrator, participants may request and receive loans of up to 50% of
their vested contribution account balance. Such loans bear interest at the
prime rate in effect at the time of issuance plus one percent and are
repaid through payroll deductions.
A participant's retirement account is credited with the Company's
discretionary matching and base contributions, the salary reduction
contribution, and allocations of forfeitures and plan earnings. Allocations
are based upon participant earnings and account balances as defined.
Participants are also able to rollover balances from other qualified plans.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's account.
Forfeitures become available for allocation when a terminated participant
incurs five consecutive one-year breaks in service, as defined in the Plan,
or receives a distribution of the vested portion of the discretionary base
contribution account. The non-vested portion of amounts which are forfeited
are allocated among the remaining participants in the Plan. As of the last
day of each plan year, forfeitures are allocated among active participants
in the ratio of each participant's compensation during the year to the
total plan compensation during the year.
(2) Summary of Significant Accounting Policies
A summary of the Plan's significant accounting policies, which have been
consistently applied in the preparation of the accompanying financial
statements on the accrual basis of accounting, is as follows:
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of net assets available for
plan participants and disclosure of commitments at the date of the
financial statements and the changes in net assets available for plan
participants during the reporting periods. Actual results could differ from
those estimates.
8
<PAGE>
FACTORY CARD OUTLET OF AMERICA, LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
Investments
Investments are stated at market value. Changes in the market value of
securities held are reported as unrealized appreciation or depreciation in
market value of investments in the accompanying statements of changes in
net assets available for plan participants. Purchases and sales of
investments are recorded on a trade-date basis.
Participant loans are valued at the outstanding principal balance.
Participants may direct his or her contributions in 5% increments in any of
the following investment options: Factory Card Outlet Corp. common stock,
Franklin Templeton Stable Value Fund, Franklin Templeton U.S. Government
Securities Fund, Franklin Templeton Equity Fund, Franklin Templeton Balance
Sheet Investment Fund, Franklin Templeton Mutual Qualified Fund, Franklin
Templeton Foreign Fund, Franklin Templeton Conservative Target Fund,
Franklin Templeton Moderate Target Fund, and the Franklin Templeton Growth
Target Fund.
Prior to April 1, 1998, the Plan was administered by Bank One Chicago NA
and offered four alternative investment options - the income fund, the
equity fund, the guaranteed principal fund, and the Factory Card Outlet
Corp. common stock fund. Participants could direct that their salary
reduction contributions and their appropriate share of Company
contributions be invested in one or all of these funds in increments of one
percent (1%).
Contributions
The Plan provides for employee contributions from eligible participants
electing to enter into a Salary Reduction Agreement with the Company. Under
this feature of the Plan, a participant may elect to contribute a
percentage of compensation ranging between one percent (1%) and thirteen
percent (13%) in increments of one percent (1%).
The Company makes a discretionary matching contribution to the Plan and the
Retirement Committee allocates this contribution to the separate
participant accounts. Only those participants who have made salary
reduction contributions and have completed 1,000 hours of service will
receive this allocation. The Company allocated the discretionary matching
contribution to an individual participant's account at the rate of 33% of
the first six percent (6%) of a participant's salary reduction contribution
in 1998 and 1997.
A discretionary base contribution may be made by the Company only if it has
current or accumulated net profits. The Company determines the amount, if
any, and the Retirement Committee allocates this contribution to the
accounts of participants who were employed by the Company on the last day
of the Plan year. The base contribution is allocated in proportion to each
participant's compensation for the Plan year in relation to the total
compensation of all participants for the Plan year. No base contribution
was made in 1998 or 1997.
Rollover contributions result from participants transferring funds from
unrelated retirement plans.
Income Tax Status
The Plan obtained a favorable determination letter in April 1994, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan Administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
The Plan Administrator is not aware of any activity or transactions that
may adversely affect the qualified status of the Plan.
9
<PAGE>
FACTORY CARD OUTLET OF AMERICA, LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
Administrative Expenses
All expenses pertaining to the operation of the Plan are paid by the
Company and are not charged against the assets or income of the Plan. In
addition, various administrative, legal, and accounting services are
performed by Company personnel on behalf of the Plan. No charges are made
to the Plan for these services. Investment expenses are charged against the
Plan's income.
Cash and Cash Equivalents
Cash equivalents consist principally of highly liquid government securities
with original maturities of three months or less.
(3) Contributions Receivable
Amounts receivable from employer and employees as of December 31, 1998 and
1997 represent contributions related to December payroll. These
contributions were received by the Plan in January of the following year.
(4) Plan Termination
While the Company has not expressed any intent to terminate the Plan or to
discontinue contributions, it is free to do so at any time, subject to the
provisions set forth in ERISA. Should the Plan be terminated at some future
time, all participants become 100% vested in benefits earned as of the
termination date.
10
<PAGE>
FACTORY CARD OUTLET OF AMERICA, LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(5) Investments
Investments at fair value which represent 5% or more of the Plan's net
assets at December 31, 1998 and 1997 are separately identified below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Bank One Chicago NA pooled investment funds:
Income fund $ - 528,428
Equity fund - 997,370
Guaranteed principal fund - 517,188
Franklin Templeton investment funds:
Stable value fund 611,763 -
U.S. government securities fund 604,564 -
Equity fund 1,351,220 -
- --------------------------------------------------------------------------------
Total $2,567,547 2,042,986
- --------------------------------------------------------------------------------
</TABLE>
During 1998 and 1997, the plan's investments (including investments
bought, sold, and held during the year) appreciated (depreciated) as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Bank One Chicago NA funds:
Income fund $ - 3,781
Equity fund - 200,397
Guaranteed principal fund - 26,830
Factory Card Outlet common stock (106,409) (15,149)
Franklin Templeton investment funds:
U.S. government securities fund 2,342 -
Mutual qualified fund (6,879) -
Equity fund (22,137) -
Balance sheet investment fund (4,582) -
Foreign fund (3,037) -
Conservative target fund (641) -
Moderate target fund (1,165) -
Growth target fund (1,396) -
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
in market value of investments $(143,904) 215,859
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INVENTIVE SAVINGS PLAN
Notes to Financial Statements
<TABLE>
<CAPTION>
(6) Summary of Net Assets and Changes in Net Assets by Fund
A summary of changes in net assets by fund type for the year ended December 31, 1998 is as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
----------- Bank One ------------ Factory Card ------ Franklin Templeton --------
Guaranteed Outlet Corp. Mutual
Income Equity Principal common Stable Value US Gov Sec Qualified
fund fund fund stock fund fund fund fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income $ 15,683 157,234 13,263 17,015 17,219 24,088 8,980
Net appreciation (depreciation) in
market value of investments (106,409) 2,342 (6,879)
Interest income on participant loans 606 1,011 983 151 887 259 605
Contributions:
Employer 9,737 20,793 13,164 15,017 17,076 15,686 26,797
Employee 35,323 73,751 46,529 54,926 60,863 54,673 97,662
Rollovers 1,670 11,787 1,298 3,430 12,825 5,359 54
- ------------------------------------------------------------------------------------------------------------------------------------
Total additions 63,019 264,576 75,237 (15,870) 108,870 102,407 127,219
- ------------------------------------------------------------------------------------------------------------------------------------
Deductions from net assets:
Vested benefits of
terminated participants (18,659) (60,025) (53,781) (4,119) (90,674) (86,354) (7,279)
Refund of excess
employee contributions (13) (313) (22) - - - -
Hardship withdrawals (3,335) (5,675) (4,314) (476) (629) (482) (302)
- ------------------------------------------------------------------------------------------------------------------------------------
Total deductions (22,007) (66,013) (58,117) (4,595) (91,303) (86,836) (7,581)
- ------------------------------------------------------------------------------------------------------------------------------------
Interfund transfers (377) (18,507) (118) 803 6,802 1,576 4,983
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase 40,635 180,056 17,002 (19,662) 24,369 17,147 124,621
Transfer in/(out) of plan (594,488) (1,308,655) (595,225) - 595,225 594,488 -
Net assets available for plan participants:
Beginning of year 553,853 1,128,599 578,223 62,406 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $ - - - 42,744 619,594 611,635 124,621
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------------- Franklin Templeton ----------------------------------
Temp Conservative Moderate Growth
Equity Bal Sht Inv Foreign Target Target Target Participant
fund fund fund fund fund fund loans Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income 87,737 3,872 2,679 956 1,555 2,050 - 352,331
Net appreciation (depreciation) in
market value of investments (22,137) (4,582) (3,037) (641) (1,165) (1,396) - (143,904)
Interest income on participant loans 574 618 162 78 336 149 - 6,419
Contributions:
Employer 33,908 20,525 8,813 5,886 10,840 9,350 - 207,592
Employee 121,384 77,778 30,949 21,586 37,611 37,372 - 750,407
Rollovers 3,807 3,834 1,518 523 523 3,008 - 49,636
- ------------------------------------------------------------------------------------------------------------------------------------
Total additions 225,273 102,045 41,084 28,388 49,700 50,533 - 1,222,481
- ------------------------------------------------------------------------------------------------------------------------------------
Deductions from net assets:
Vested benefits of
terminated participants (156,898) (2,824) (2,287) (1,531) (1,531) (2,284) (24,389) (512,635)
Refund of excess
employee contributions - - - - - - - (348)
Hardship withdrawals (387) (294) - (278) (275) (280) - (16,727)
- ------------------------------------------------------------------------------------------------------------------------------------
Total deductions (157,285) (3,118) (2,287) (1,809) (1,806) (2,564) (24,389) (529,710)
- ------------------------------------------------------------------------------------------------------------------------------------
Interfund transfers (10,624) 4,139 948 995 2,057 1,722 5,601 -
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase 57,364 103,066 39,745 27,574 49,951 49,691 (18,788) 692,771
Transfer in/(out) of plan 1,308,655 - - - - - - -
Net assets available for plan participant
Beginning of year - - - - - - 111,951 2,435,032
- ------------------------------------------------------------------------------------------------------------------------------------
End of year 1,366,019 103,066 39,745 27,574 49,951 49,691 93,163 3,127,803
====================================================================================================================================
</TABLE>
12
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(6) Summary of Net Assets and Changes
in Net Assets by Fund (continued)
A summary of changes in net assets by fund type for the year ended
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Factory Card
Guaranteed Outlet Corp.
Income Equity principal Participant common
fund fund fund loans stock fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income $ 30,783 14,205 449 -- -- 45,437
Net appreciation (depreciation) in
market value of investments 3,782 200,397 26,830 -- (15,149) 215,859
Interest income on participant loans 739 536 5,478 -- -- 6,753
Contributions:
Employer 29,119 60,480 42,750 -- 5,842 138,191
Employee 104,586 219,623 153,626 -- 21,284 499,120
Rollover 20,234 30,727 6,774 -- 4,724 62,460
- -----------------------------------------------------------------------------------------------------------------------------------
Total additions 189,460 526,068 235,911 -- 16,701 967,820
- -----------------------------------------------------------------------------------------------------------------------------------
Deductions from net assets attributed to:
Vested benefits of
terminated participants (28,022) (53,336) (34,451) -- (411) (116,219)
Refund of excess
employee contributions (168) (1,587) (271) -- -- (2,026)
Hardship withdrawals (181) (187) (1,042) -- (193) (1,603)
- -----------------------------------------------------------------------------------------------------------------------------------
Total deductions (28,371) (55,110) (35,764) -- (604) (119,848)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund transfers 16,139 (22,411) (26,309) (17) 32,598 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase 177,228 448,547 173,838 (17) 48,696 847,972
Net assets available for plan participants:
Beginning of year 376,843 680,152 404,387 111,968 13,710 1,587,060
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $ 554,071 1,128,699 578,225 111,951 62,406 2,435,032
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(7) Reconciliation to Form 5500
The financial information provided in line 31g of the Plan's Form 5500
includes an accrual for benefits payable to participants. This accrual was
$0 and $73,503 at December 31, 1998 and 1997, respectively.
13
<PAGE>
FACTORY CARD OUTLET OF AMERICA, LTD.
INCENTIVE SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(8) Subsequent Events-Chapter 11 Filings
On March 23, 1999, the Company filed a petition for reorganization under
chapter 11 of title 11 of the United States Code an is operating as a debtor
in possession under jurisdiction of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"). In general, the results,
performance or achievements of the Company and its stores and the value of
the Company's common stack are dependent upon a number of factors including,
without limitation, the following: effects resulting from the commencement
and completion of the chapter 11 proceedings; 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; governmental regulations;
ability to complete corrective action necessary to address Year 2000 issues;
the continued listing of the Company's common stock on the NASDAQ National
Market; and other factors. In addition, on May 6, 1999, the Company
announced that it received affirmation that NASDAQ's staff had determined to
delist the Company's common stock from the NASDAQ National Market. NASDAQ
said the determination was based on the potential impact of the Company's
pending chapter 11 cases on the Company's shareholders. The Company has
requested a delisting hearing before NASDAQ's Listing Qualifications Panel.
The hearing is scheduled for July 1, 1999. The Company's common stock will
continue to be listed on the NASDAQ's National Market, although trading
continues to be halted until the hearing process is completed. As a result
of the chapter 11 filings, additional contributions to the Factory Card
Outlet Corp. common stock fund have been suspended.
14
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
Schedule 1
----------
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Description Cost Market
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Factory Card Outlet Common Stock $ 124,369 36,516
Franklin Templeton investment funds,
at fair value:
Stable value fund 611,763 611,763
U.S. government securities fund 602,277 604,564
Mutual qualified fund 118,640 112,065
Equity fund 1,366,476 1,351,220
Balance sheet investment fund 97,549 93,299
Foreign fund 39,157 36,532
Conservative target fund 25,261 24,639
Moderate target fund 45,575 44,461
Growth target fund 45,985 44,683
Participant loans 93,163 93,163
- -------------------------------------------------------------------------------------------
$ 3,170,215 3,052,905
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying independent auditors' report.
15
<PAGE>
FACTORY CARD OUTLET OF AMERICA LTD.
INCENTIVE SAVINGS PLAN
Item 27d--Schedule of Reportable Transactions Schedule 2
----------
December 31, 1998
<TABLE>
<CAPTION>
====================================================================================================================================
Current value
Purchase Selling Cost of (as of date Net
price price investment of transaction) gain (loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Factory Card Outlet Common Stock Fund
Series of purchases $ 133,877 -- 133,877 133,877 --
Bank One investment funds:
Equity Fund
Series of purchases $ 1,392,747 -- 1,392,747 1,392,747 --
Series of sales $ -- 1,449,340 1,449,340 1,449,340 --
Income Fund
Series of purchases $ 614,327 -- 614,327 614,327 --
Series of sales $ -- 641,942 641,942 641,942 --
Guaranteed Principle Fund
Series of purchases $ 697,986 -- 697,986 697,986 --
Series of sales $ -- 716,152 716,152 716,152 --
Equity Fund $ -- 256,377 223,743 256,377 32,634
Equity Fund $ -- 217,802 183,126 217,802 34,676
Equity Fund $ -- 137,757 116,676 137,757 21,081
Equity Fund $ -- 203,691 159,337 203,691 44,355
Equity Fund $ -- 257,050 210,656 257,050 46,394
Equity Fund $ -- 190,456 151,276 190,456 39,180
Income Fund $ -- 120,558 120,186 120,558 371
Income Fund $ -- 216,440 215,662 216,440 778
Guaranteed Principle Fund $ -- 351,953 351,952 351,953 1
Franklin Templeton investment funds:
Stable Value Fund
Series of purchases $ 703,669 -- 703,669 703,669 --
====================================================================================================================================
</TABLE>
See accompanying independent auditors' report.
16
<PAGE>
EXHIBIT 23
Consent of KPMG LLP
-------------------
The Board of Directors
Factory Card Outlet Corp.:
We consent to incorporation by reference in Registration Statement #333-30437 on
Form S-8 of Factory Card Outlet Corp. of our report dated June 28, 1999,
relating to the statements of net assets available for plan participants of the
Factory Card Outlet of America Ltd. Incentive Savings Plan as of December 31,
1998 and 1997 and the related statements of changes in net assets available for
plan participants for the years then ended, which report appears in the Form 11-
K of the Factory Card Outlet of America Ltd. Incentive Savings Plan for the year
ended December 31, 1998.
/s/ KPMG LLP
June 28, 1999
Chicago, Illinois
