COMPENSATION COMMITTEE REPORT 2005

COMPENSATION COMMITTEE REPORT

                  The Compensation Committee advises the Board of Directors on
issues concerning the Company's compensation philosophy, the compensation of
executive officers and other individuals compensated by the Company, and sets
the compensation for the Section 16 Executive Officers (the "executive
officers"). The Compensation Committee is responsible for the administration of
the Company's 2003 Long Term Incentive and Share Award Plan under which stock
options, share appreciation rights, restricted shares, restricted share units,
performance shares, performance units, dividend equivalents, and other
share-based awards ("Awards") may be made to Directors, consultants, executive
officers and employees of the Company and its subsidiaries. In addition, the
Compensation Committee administers the Section 16 Executive Officers Bonus Plan
and the Company's Sharing Success Program under which annual bonus compensation
may be awarded. The Board of Directors has authorized a Secondary Committee of
the Compensation Committee to also review Awards for all of the Company's
employees other than its executive officers.


                  The Compensation Committee believes that the compensation
programs for the Company's executive officers should reflect the Company's
performance and the value created for the Company's stockholders. In addition,
the compensation programs should support the short-term and long-term strategic
goals and values of the Company and should reward individual contribution to the
Company's success. The Company is engaged in a very competitive industry, and
the Company's success depends upon its ability to attract and retain qualified
executives through the competitive compensation packages it offers to such
individuals.

                  General Compensation Policy. The fundamental policy of the
Compensation Committee is to provide the Company's executive officers with
competitive compensation opportunities based upon their contribution to the
development and financial success of the Company and their personal performance.
It is the Compensation Committee's philosophy that a portion of each executive
officer's compensation should be contingent upon the Company's performance, as
well as, upon such executive officer's own level of performance. Accordingly,
the compensation package for each executive officer should be comprised of two
elements: (i) base salary and bonus which reflects experience and individual and
Company performance and is designed to be competitive with salary levels in the
industry, and (ii) long-term incentive Awards which strengthen the mutuality of
interests between the executive officers and the Company's stockholders.

                  Factors. The principal factors which the Compensation
Committee considers in reviewing the components of each executive officer's
compensation package are summarized below. The Compensation Committee may,
however, in its discretion apply other factors with respect to executive
compensation for future years.

                  o Base Salary. The suggested base salary for each executive
officer is determined on the basis of the following factors: experience,
personal performance, the salary levels in effect for comparable positions
within and outside the industry and internal base salary comparability
considerations. The weight given to each of these factors shall differ from
individual to individual as the Compensation Committee deems appropriate and
subject to any applicable employment agreements.

                  o Bonus. The bonus for the executive officers is based upon a
combination of primarily the Company's financial performance, as well as, their
individual performances. For certain other executive officers, consideration is
also given to performance of the specific areas of the Company under the
executive officer's direct control. This balance supports the accomplishment of
the Company's overall financial objectives and rewards the individual
contributions of our executive officers.

                  o Long-Term Incentive Compensation. Long-term incentives are
provided through grants of Awards, which in Fiscal 2005 was in the form of stock
options and restricted stock. For Fiscal 2006, it is anticipated that long-term
incentives will continue to be provided through a combination of grants of stock
options and/or restricted stock. The grants are designed to align the interests
of each executive officer with those of the stockholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the Company.

                  Each stock option grant allows the individual to acquire
shares of the Company's Common Stock at a fixed price per share over a specified
period of time. Each option generally becomes exercisable in installments over a
fixed period, contingent upon the executive officer's continued employment with
the Company. Accordingly, the option grant will provide a return to the
executive officer only if the executive officer remains employed by the Company
during the vesting period, and then only if the market price of the underlying
shares appreciates.

                  Each restricted share grant allows the individual to acquire
shares of the Company's Common Stock over a specified period of time without
payment. As in the case of the option grant, the restricted share grant will
provide a return to the executive officer only if the executive officer remains
employed by the Company during the vesting period.

                  The grant of an Award is set at a level intended to create a
meaningful incentive based on the executive officer's current position with the
Company, the base salary associated with that position, the size of comparable
awards made to individuals in similar positions within the industry, the
individual's potential for increased responsibility and promotion over the
applicable term of the Award and the individual's personal performance in recent
periods. The Compensation Committee also intends to consider the number of
Awards held by the executive officer in order to maintain an appropriate level
of incentive for that individual. However, the Compensation Committee may use
its discretion in granting Awards to the Company's executive officers.

                  CEO Compensation. In July 1999, the Board of Directors
approved the Employment Agreement between the Company and James F. McCann, its
Chairman of the Board and Chief Executive Officer, which established his initial
base annual salary and eligibility to participate in the Company's stock
incentive plans and other bonus or benefits plans, and which is discussed in
further detail under "Employment Agreements". The Board determined it to be in
the best interests of the Company to enter into the Employment Agreement with
Mr. McCann as of such date. The Compensation Committee believes that the
compensation paid to Mr. McCann for Fiscal 2005 was fair and reasonable. In
determining the total compensation for Mr. McCann, and that such compensation
was fair and reasonable in Fiscal 2005, a number of factors were taken into
account. These factors included: the key role Mr. McCann has performed with the
Company from its inception; the benefit to the Company in assuring the retention
of his services; the performance of the Company during Fiscal 2005; the
competitive market conditions for executive compensation; and the objective
evaluation of Mr. McCann's performance of his duties as Chairman of the Board
and Chief Executive Officer.

                  Compliance with Internal Revenue Code Section 162(m). As a
result of Section 162(m) of the Internal Revenue Code of 1986 ("Section
162(m)"), as amended, which was enacted into law in 1993, the Company will not
be allowed a federal income tax deduction for compensation paid to certain
executive officers, to the extent that compensation exceeds $1 million per
officer in any one year. This limitation will apply to all compensation paid to
the covered executive officers, which is not considered to be performance based.
Compensation which qualifies as performance-based compensation will not have to
be taken into account for purposes of this limitation. The 2003 Long Term
Incentive and Share Award Plan and the Section 16 Executive Officers Bonus Plan
contain certain provisions which are intended to ensure that any compensation
deemed paid in connection with the granting of Awards or bonus compensation will
qualify as performance-based compensation.

                  The Compensation Committee does not expect that the
non-performance based compensation to be paid to any of the Company's executive
officers for Fiscal 2005 will be subject to the deduction limitations of Section
162(m). The Compensation Committee has recommended that Mr. McCann receive, and
Mr. McCann has accepted, a base salary of $975,000 for Fiscal 2006 in order to
enable the Company to comply with Section 162(m). Further, in accordance with
issued Treasury Regulations relating to the $1 million limitation, the Committee
may in the future determine to restructure one or more components of the
compensation paid to the executive officers so as to qualify those components as
performance-based compensation that will not be subject to the $1 million
limitation.

THE COMPENSATION COMMITTEE

Jeffrey C. Walker, Chairman
Mary Lou Quinlan
John J. Conefry, Jr


-- Proxy Statement October 2005