Transaction of Business

    The Annual Meeting of Shareholders of PCA International, Inc.
(Nasdaq: PCAI) was held at 10:00 a.m. on Wednesday, May 28, 1997.  At the
meeting, shareholders approved the re-election of nine directors to hold
office for a one-year term.  The directors are R. Stuart Dickson, Peter B.
Foreman, George Friedman, Donald P. Greenberg, John Grosso, Charlotte H.
Mason, Joseph H. Reich, Albert F. Sloan, and Stanley Tulchin.  Shareholders
also approved an amendment to the Company's Amended and Restated 1996 Omnibus
Long-Term Compensation Plan and ratification of the selection of KPMG Peat
Marwick LLP as independent auditors.

                           Annual Meeting Highlights

    Chairman's Remarks

    Chairman Joseph H. Reich, addressing investors, local business leaders,
and employees at the annual meeting, reviewed the Company's 1996 achievements
and discussed PCA's strategies to increase shareholder value.
    Mr. Reich stated the Company's major achievement in 1996 was diversifying
its retail partnerships with the acquisition of American Studios, Wal-Mart's
portrait provider in the United States and Mexico.  With the acquisition of
American Studios, PCA operates the largest number of retail portrait studios
in North America, and is the dominant portrait provider in the discount retail
segment.  The acquisition strengthens PCA's industry position, expands the
Company's distribution channels, and sets the course for increased growth
through new customer acquisition and studio expansion, both domestically and
internationally.
   According to Reich, PCA is well positioned with two premier retail
distribution channels to achieve strong growth in earnings and cash flow as
the Company focuses on its business strengths:

    (1)   PCA's broad geographic presence in North America and favorable
penetration in key markets is unparalleled in the industry.  Its dominant
position in the discount retail market provides a dynamic platform for
establishing relationships with a growing base of customers and creating
traffic-building alliances with consumer products companies who market heavily
to the segment.

    (2)   PCA's exclusive digital studio technology has set the standard in
the industry and positively changed customers' portrait experiences.  PCA's
goal is to leverage its technology and expertise over the Wal-Mart
distribution channel.  The Company's digital studio conversion of more than
850 Wal-Mart studios operated by American Studios will not only improve the
value-equation for Wal-Mart customers but also deliver measurable value to
shareholders in terms of increased customer sales, cash flows, and improved
studio operating margin.

    Mr. Reich concluded by stating the Company's primary objectives in 1997
are to realize the many benefits of this business combination and to increase
shareholder value through managing PCA's growth and financial resources.

    President's Remarks

    John Grosso, PCA's president and chief executive officer reported better
than expected results for PCA's 1997 first quarter.  Mr. Grosso stated that
due to favorable earnings results and positive operating trends, PCA's Board
of Directors authorized a $10 million prepayment of the Company's 5-Year Term
Loan and approved the reinstatement of a $0.07 per share quarterly
cash dividend.
    "The Company is ahead of schedule in its merger-related initiatives aimed
at realizing the synergies from the integration of American Studios,
leveraging the advantages of PCA's digital imaging systems over a growing Wal-
Mart customer base, improving sales and operating performance at the studio
level, and expanding PCA's geographic presence, both domestically and
internationally," stated Grosso.
    Mr. Grosso went on to discuss the status of the conversion of 850 Wal-Mart
portrait studios operated by American Studio to PCA's digital imaging
technology.  The Company plans to complete the studio conversion process and
train over 1,000 field personnel in PCA's customer-centered sales approach by
early July, with Grand Re-Openings scheduled at 850 Wal-Mart stores for the
July/August time frame. With the conversion completed in the second quarter,
the Company will be well positioned to harvest the benefits of its digitally-
enhanced Wal-Mart distribution channel during the busy 1997 fall and holiday
season and beyond.
    In conclusion, Mr. Grosso noted that this May marks the 30th anniversary
of PCA's incorporation, "PCA's corporate values of enthusiasm for creating
quality portraits and our commitment to technological innovation were evident
from the earliest entrepreneurial beginnings of this Company and continue to
drive us to be agents of positive change in this industry."
    PCA International, Inc. is the largest operator of discount retail
portrait photography studios in North America. The Company operates more than
2,000 permanent portrait studios within Kmart, Wal-Mart, and PETsMART stores
and supercenters. PCA also operates traveling promotions in more than 1,350
Wal-Mart locations and offers on-site photography services to churches, day
care facilities, and other institutions. The Company's studios are located
throughout the United States, Canada, Mexico, Puerto Rico and in South
America.

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