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| Delaware(State or other jurisdiction of incorporation or organization) 1706 Washington Ave., St. Louis, Missouri(Address of principal executive offices) | 43-1256674(I.R.S. Employer Identification No.) 63103(Zip Code) |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|

| Registrant’s telephone number, including area code: 314/231-1575 |
|------------------------------------------------------------------------|

| Securities registered pursuant to Section 12(b) of the Act:  |
|-------------------------------------------------------------------|
| Title of each classCommon Stock, par value $0.40 per share        | Name of each exchange on which registeredNew York Stock Exchange |

| Securities registered pursuant to Section 12(g) of the Act: None  |
|------------------------------------------------------------------------|

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| PART I.       |   | FINANCIAL INFORMATION |   | Page                                                                    |
|---------------|--------|-----------------------|--------|-------------------------------------------------------------------------|
|          |   |                  |   |                                                                    |
|          |   | Item 1.               |   | Financial Statements:                                                   |   |   |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Balance Sheets                                     |   |   |
|          |   |                  |   | November 13, 2010 (Unaudited) and February 6, 2010                      |   | 1 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statements of Operations (Unaudited)               |   |   |
|          |   |                  |   | 16 and 40 Weeks Ended November 13, 2010 and November 14, 2009           |   | 3 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statement of Changes in Stockholders'              |   |   |
|          |   |                  |   | Equity (Unaudited) 40 Weeks Ended November 13, 2010                     |   | 4 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statements of Cash Flow (Unaudited)                |   |   |
|          |   |                  |   | 40 Weeks Ended November 13, 2010 and November 14, 2009                  |   | 5 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Notes to Interim Consolidated Financial Statements (Unaudited)          |   | 7 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 2.               |   | Management's Discussion and Analysis of Financial Condition and Results |   |   |
|          |   |                  |   | of Operations                                                           |   | 17 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 3.               |   | Quantitative and Qualitative Disclosures about Market Risk              |   | 25 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 4.               |   | Controls and Procedures                                                 |   | 26 |
|          |   |                  |   |                                                                    |   |   |
| PART II.      |   | OTHER INFORMATION     |   |                                                                    |
|          |   |                  |   |                                                                    |
|          |   | Item 6.               |   | Exhibits                                                                |   | 26 |
|          |   |                  |
| SIGNATURES    |   |                  |   | 27                                                                      |
|          |   |                  |
| EXHIBIT INDEX |   |                  |   | 28                                                                      |

| PART I. |   | FINANCIAL INFORMATION |
|---------|--------|-----------------------|

| Item 1. |   | Financial Statements |
|---------|--------|----------------------|

Balance 

| in thousands                                    |   | November 13, 2010 |    |   |             |   |
|-------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|                                            |   | (Unaudited)       |    |   | February 6, 2010 |   |
| ASSETS                                          |   |              |    |   |             |   |
| Current assets:                                 |   |              |    |   |             |   |
| Cash and cash equivalents                       |   | $                 | 9,631   |   |             | $      | 18,913 |   |
| Accounts receivable:                            |   |              |    |   |             |   |   |   |
| Trade                                           |   |              | 9,334   |   |             |   | 5,960 |   |
| Other                                           |   |              | 573     |   |             |   | 880 |   |
| Inventories                                     |   |              | 8,957   |   |             |   | 7,465 |   |
| Prepaid expenses and other current assets       |   |              | 7,897   |   |             |   | 5,396 |   |
| Refundable income taxes                         |   |              | 772     |   |             |   | 1,350 |   |
| Deferred tax assets                             |   |              | 7,859   |   |             |   | 7,253 |   |
| Assets held for sale                            |   |              | 1,066   |   |             |   | 6,338 |   |
|                                            |   |              |    |   |             |   |   |   |
| Total current assets                            |   |              | 46,089  |   |             |   | 53,555 |   |
|                                            |   |              |    |   |             |   |   |   |
| Property and equipment:                         |   |              |    |   |             |   |   |   |
| Land                                            |   |              | 2,185   |   |             |   | 2,185 |   |
| Buildings and building improvements             |   |              | 25,346  |   |             |   | 25,289 |   |
| Leasehold improvements                          |   |              | 4,832   |   |             |   | 4,491 |   |
| Photographic, sales and manufacturing equipment |   |              | 173,578 |   |             |   | 168,371 |   |
| Property not in use (see Note 4)                |   |              | 2,983   |   |             |   | - |   |
| Total                                           |   |              | 208,924 |   |             |   | 200,336 |   |
| Less accumulated depreciation and amortization  |   |              | 172,775 |   |             |   | 166,167 |   |
| Property and equipment, net                     |   |              | 36,149  |   |             |   | 34,169 |   |
|                                            |   |              |    |   |             |   |   |   |
| Prepaid debt fees                               |   |              | 1,967   |   |             |   | 2,237 |   |
| Goodwill                                        |   |              | 21,845  |   |             |   | 21,720 |   |
| Intangible assets, net                          |   |              | 37,521  |   |             |   | 38,660 |   |
| Deferred tax assets                             |   |              | 11,273  |   |             |   | 7,701 |   |
| Other assets                                    |   |              | 9,484   |   |             |   | 8,549 |   |
|                                            |   |              |    |   |             |   |   |   |
| TOTAL ASSETS                                    |   | $                 | 164,328 |   |             | $      | 166,591 |   |
|                                            |   |              |    |   |             |   |   |   |

| in thousands, except share and per share data                                                        |   | November 13, 2010 |    |   |             |   |
|------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|
|                                                                                                 |   | (Unaudited)       |    |   | February 6, 2010 |   |
| LIABILITIES                                                                                          |   |              |    |   |             |   |
| Current liabilities:                                                                                 |   |              |    |   |             |   |
|      Current maturities of long-term debt                                        |   | $                 | -       |   |             | $      | 19,686 |    |
|      Accounts payable                                                            |   |              | 9,745   |   |             |   | 4,390 |   |
|      Accrued employment costs                                                    |   |              | 10,875  |   |             |   | 9,878 |   |
|      Customer deposit liability                                                  |   |              | 17,029  |   |             |   | 11,528 |   |
|      Sales taxes payable                                                         |   |              | 3,874   |   |             |   | 3,929 |   |
|      Accrued advertising expenses                                                |   |              | 2,997   |   |             |   | 1,062 |   |
|      Accrued expenses and other liabilities                                      |   |              | 10,733  |   |             |   | 12,170 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
|      Total current liabilities                                                   |   |              | 55,253  |   |             |   | 62,643 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
| Long-term debt, less current maturities                                                              |   |              | 68,000  |   |             |   | 57,855 |   |
| Accrued pension plan obligations                                                                     |   |              | 17,396  |   |             |   | 17,724 |   |
| Other liabilities                                                                                    |   |              | 17,957  |   |             |   | 18,181 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
|      Total liabilities                                                           |   |              | 158,606 |   |             |   | 156,403 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
| CONTINGENCIES (see Note 11)                                                                          |   |              |    |   |             |   |   |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                 |   |              |    |   |             |   |   |   |
| Preferred stock, no par value, 1,000,000 shares authorized; no shares outstanding                    |   |              | -       |   |             |   | - |   |
| Preferred stock, Series A, no par value, 200,000 shares authorized; no shares outstanding            |   |              | -       |   |             |   | - |   |
| Common stock, $0.40 par value, 50,000,000 shares authorized; 9,446,431 and 9,184,081                 |   |              |    |   |             |   |   |   |
|      shares outstanding at November 13, 2010, and February 6, 2010, respectively |   |              | 3,779   |   |             |   | 3,674 |   |
| Additional paid-in capital                                                                           |   |              | 30,804  |   |             |   | 29,017 |   |
| Retained earnings                                                                                    |   |              | 33,741  |   |             |   | 41,516 |   |
| Accumulated other comprehensive loss                                                                 |   |              | (14,551 | )      |             |   | (14,887 | ) |
|                                                                                                 |   |              | 53,773  |   |             |   | 59,320 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
| Treasury stock - at cost, 2,133,566 and 2,175,591 shares at November 13, 2010,                       |   |              |    |   |             |   |   |   |
|      and February 6, 2010, respectively                                          |   |              | (48,051 | )      |             |   | (49,132 | ) |
|                                                                                                 |   |              |    |   |             |   |   |   |
| Total stockholders' equity                                                                           |   |              | 5,722   |   |             |   | 10,188 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                           |   | $                 | 164,328 |   |             | $      | 166,591 |   |
|                                                                                                 |   |              |    |   |             |   |   |   |

Statements

| in thousands, except share and per share data                                 |   | 16 Weeks Ended    |      |   | 40 Weeks Ended    |   |
|-------------------------------------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                                                          |   | November 13, 2010 |      |   | November 14, 2009 |   |   | November 13, 2010 |   |   | November 14, 2009 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |
| Net sales                                                                     |   | $                 | 106,174   |   |              | $      | 107,286 |   |   | $ | 278,086 |   |   | $ | 282,130 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Cost and expenses:                                                            |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of sales (exclusive of depreciation and amortization shown below) |   |              | 7,516     |   |              |   | 8,032 |   |   |   | 19,882 |   |   |   | 21,643 |   |
|   Selling, general and administrative expenses                           |   |              | 102,220   |   |              |   | 99,940 |   |   |   | 244,920 |   |   |   | 245,480 |   |
|   Depreciation and amortization                                          |   |              | 5,267     |   |              |   | 6,320 |   |   |   | 14,088 |   |   |   | 17,913 |   |
|   Other charges and impairments                                          |   |              | 3,645     |   |              |   | 1,144 |   |   |   | 2,889 |   |   |   | 3,751 |   |
|                                                                          |   |              | 118,648   |   |              |   | 115,436 |   |   |   | 281,779 |   |   |   | 288,787 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                          |   |              | (12,474   | )      |              |   | (8,150 | ) |   |   | (3,693 | ) |   |   | (6,657 | ) |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                              |   |              | 892       |   |              |   | 2,479 |   |   |   | 3,225 |   |   |   | 5,694 |   |
| Interest income                                                               |   |              | 9         |   |              |   | 67 |   |   |   | 16 |   |   |   | 103 |   |
| Other income, net                                                             |   |              | 170       |   |              |   | 236 |   |   |   | 829 |   |   |   | 253 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income tax benefit                                                |   |              | (13,187   | )      |              |   | (10,326 | ) |   |   | (6,073 | ) |   |   | (11,995 | ) |
| Income tax benefit                                                            |   |              | (5,474    | )      |              |   | (3,524 | ) |   |   | (3,082 | ) |   |   | (4,094 | ) |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                      |   | $                 | (7,713    | )      |              | $      | (6,802 | ) |   | $ | (2,991 | ) |   | $ | (7,901 | ) |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE                                                     |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share - diluted                                           |   | $                 | (1.05     | )      |              | $      | (0.97 | ) |   | $ | (0.41 | ) |   | $ | (1.13 | ) |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share - basic                                             |   | $                 | (1.05     | )      |              | $      | (0.97 | ) |   | $ | (0.41 | ) |   | $ | (1.13 | ) |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                       |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   shares outstanding - diluted                                           |   |              | 7,312,019 |   |              |   | 7,003,832 |   |   |   | 7,271,226 |   |   |   | 6,987,746 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                       |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   shares outstanding - basic                                             |   |              | 7,312,019 |   |              |   | 7,003,832 |   |   |   | 7,271,226 |   |   |   | 6,987,746 |   |
|                                                                          |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |

Changes

| in thousands, except share and per share data             |   |   |   |   |       |   |   |     |   |   | Accumulated   |   |   |     |    |   |   |   |
|-----------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|---------------|--------|--------|----------|---------|--------|--------|--------|
|                                                      |   |   |   |   | Additional |   |   |     |   |   | other         |   |   | Treasury |    |   |   |   |
|                                                      |   | Common |   |   | paid-in    |   |   | Retained |   |   | comprehensive |   |   | stock,   |    |   |   |   |
|                                                      |   | stock  |   |   | capital    |   |   | earnings |   |   | loss          |   |   | at cost  |    |   | Total  |   |
|                                                      |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |
| Balance at February 6, 2010                               |   | $      | 3,674  |   |       | $      | 29,017 |     |   | $      | 41,516        |   |   | $        | (14,887 | )      |   | $      | (49,132 | ) |   | $ | 10,188 |   |
|                                                      |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Net loss                                                  |   |   | -      |   |       |   | -      |     |   |   | (2,991        | )      |   |     | -       |   |   |   | - |   |   |   | (2,991 | ) |
| Total other comprehensive income, net of tax effect       |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
| (consisting of foreign exchange impact)                   |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |     | 336     |   |   |   | - |   |   |   | 336 |   |
| Total comprehensive loss                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   | (2,655 | ) |
| Surrender of employee shares for taxes                    |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |     | -       |   |   |   | (183 | ) |   |   | (183 | ) |
| Issuance of common stock and restricted stock awards,     |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
| net of forfeitures (314,340 shares)                       |   |   | 105    |   |       |   | (507   | )        |   |   | -             |   |   |     | -       |   |   |   | 1,264 |   |   |   | 862 |   |
| Stock-based compensation recognized                       |   |   | -      |   |       |   | 2,274  |     |   |   | -             |   |   |     | -       |   |   |   | - |   |   |   | 2,274 |   |
| Increased tax benefit related to stock-based compensation |   |   | -      |   |       |   | 20     |     |   |   | -             |   |   |     | -       |   |   |   | - |   |   |   | 20 |   |
| Dividends ($0.66 per common share)                        |   |   | -      |   |       |   | -      |     |   |   | (4,784        | )      |   |     | -       |   |   |   | - |   |   |   | (4,784 | ) |
|                                                      |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Balance at November 13, 2010                              |   | $      | 3,779  |   |       | $      | 30,804 |     |   | $      | 33,741        |   |   | $        | (14,551 | )      |   | $      | (48,051 | ) |   | $ | 5,722 |   |
|                                                      |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |

Cash

| in thousands                                                                              |   | 40 Weeks Ended    |   |
|-------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                      |   | November 13, 2010 |   |   | November 14, 2009 |   |
| Reconciliation of net loss to cash flows provided by (used in) operating activities:      |   |              |   |   |   |   |
|                                                                                      |   |              |   |   |   |   |
| Net loss                                                                                  |   | $                 | (2,991 | ) |   | $ | (7,901 | ) |
|                                                                                      |   |              |   |   |   |   |   |   |
| Adjustments for items not requiring (providing) cash:                                     |   |              |   |   |   |   |   |   |
|      Depreciation and amortization                                    |   |              | 14,088 |   |   |   | 17,913 |   |
|      Amortization of prepaid debt fees                                |   |              | 772    |   |   |   | 742 |   |
|      Loss from extinguishment of debt                                 |   |              | 1,052  |   |   |   | - |   |
|      Stock-based compensation expense                                 |   |              | 2,274  |   |   |   | 818 |   |
|      (Gain) loss on sale of assets held for sale                      |   |              | (1,655 | ) |   |   | 59 |   |
|      Loss on disposition of property and equipment                    |   |              | 122    |   |   |   | 917 |   |
|      Impairment of assets held for sale                               |   |              | 1,871  |   |   |   | 300 |   |
|      Deferred income tax provision                                    |   |              | (4,418 | ) |   |   | (4,451 | ) |
|      Change in interest rate swap                                     |   |              | (2,033 | ) |   |   | (878 | ) |
|      Pension, supplemental retirement plan and profit sharing expense |   |              | 1,527  |   |   |   | 680 |   |
|      Other                                                            |   |              | (9     | ) |   |   | 39 |   |
|                                                                                      |   |              |   |   |   |   |   |   |
| Increase (decrease) in cash flow from operating assets and liabilities:                   |   |              |   |   |   |   |   |   |
|      Accounts receivable                                              |   |              | (3,006 | ) |   |   | (4,527 | ) |
|      Inventories                                                      |   |              | (1,419 | ) |   |   | (1,097 | ) |
|      Prepaid expenses and other current assets                        |   |              | (2,008 | ) |   |   | (6,212 | ) |
|      Accounts payable                                                 |   |              | 4,957  |   |   |   | (163 | ) |
|      Contribution to pension plan                                     |   |              | (1,270 | ) |   |   | (1,245 | ) |
|      Accrued expenses and other liabilities                           |   |              | 2,739  |   |   |   | (646 | )  |
|      Income taxes payable                                             |   |              | 564    |   |   |   | (98 | ) |
|      Deferred revenues and related costs                              |   |              | 5,033  |   |   |   | 6,078 |   |
|      Other                                                            |   |              | (242   | ) |   |   | (186 | ) |
|                                                                                      |   |              |   |   |   |   |   |   |
|      Cash flows provided by operating activities                      |   |              | 15,948 |   |   |   | 142 |   |
|                                                                                      |   |              |   |   |   |   |   |   |

| in thousands                                                                                       |   | 40 Weeks Ended    |    |
|----------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                               |   | November 13, 2010 |    |   | November 14, 2009 |   |
|                                                                                               |   |              |    |   |   |   |
| Cash flows provided by operating activities                                                        |   |              | 15,948  |   |   |   | 142 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
| Cash flows used in financing activities:                                                           |   |              |    |   |   |   |   |   |
|      Repayment of long-term debt                                               |   |              | (77,541 | ) |   |   | (8,270 | ) |
|      Borrowings under revolving  credit facility                     |   |              | 94,136  |   |   |   | - |   |
|      Repayments on revolving credit facility                                   |   |              | (26,136 | ) |   |   | - |   |
|      Payment of debt issuance costs                                            |   |              | (1,554  | ) |   |   | (943 | ) |
|      Cash dividends                                                            |   |              | (4,784  | ) |   |   | (3,337 | ) |
|      Other                                                                     |   |              | (35     | ) |   |   | (13 | ) |
|                                                                                               |   |              |    |   |   |   |   |   |
|      Cash flows used in financing activities                                   |   |              | (15,914 | ) |   |   | (12,563 | ) |
|                                                                                               |   |              |    |   |   |   |   |   |
| Cash flows (used in) provided by investing activities:                                             |   |              |    |   |   |   |   |   |
|      Additions to property and equipment                                       |   |              | (12,128 | ) |   |   | (4,508 | ) |
|      Proceeds from sale of assets held for sale                                |   |              | 3,120   |   |   |   | 985 |   |
|      Other                                                                     |   |              | 72      |   |   |   | 471 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
|      Cash flows used in investing activities                                   |   |              | (8,936  | ) |   |   | (3,052 | ) |
|                                                                                               |   |              |    |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                       |   |              | (380    | ) |   |   | 94 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                                          |   |              | (9,282  | ) |   |   | (15,379 | ) |
|                                                                                               |   |              |    |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                   |   |              | 18,913  |   |   |   | 23,665 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                         |   | $                 | 9,631   |   |   | $ | 8,286 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
| Supplemental cash flow information:                                                                |   |              |    |   |   |   |   |   |
|      Interest paid                                                             |   | $                 | 4,902   |   |   | $ | 5,487 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
|      Income taxes paid, net                                                    |   | $                 | 718     |   |   | $ | 440 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
| Supplemental non-cash financing activities:                                                        |   |              |    |   |   |   |   |   |
|      Issuance of treasury stock under the Employee Profit Sharing Plan         |   | $                 | 733     |   |   | $ | 594 |   |
|                                                                                               |   |              |    |   |   |   |   |   |
|      Issuance of restricted stock and stock options to employees and directors |   | $                 | 3,379   |   |   | $ | 800 |   |
|                                                                                               |   |              |    |   |   |   |   |   |

Notes

| NOTE 1   - | DESCRIPTION OF BUSINESS AND INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|---------------------------|-----------------------------------------------------------------------|

| NOTE 2   - | NEW LICENSE AGREEMENT |
|---------------------------|-----------------------|

| NOTE 3  - | INVENTORIES |
|---------------------|-------------|

| in thousands                              |   | November 13, 2010 |   |   | February 6, 2010 |   |
|-------------------------------------------|--------|-------------------|--------|--------|------------------|--------|
|                                      |   |              |   |   |             |   |
| Raw materials - film, paper and chemicals |   | $                 | 2,309  |   |             | $      | 2,181 |   |
| Portraits in process                      |   |              | 1,572  |   |             |   | 1,138 |   |
| Finished portraits pending delivery       |   |              | 155    |   |             |   | 91 |   |
| Frames and accessories                    |   |              | 286    |   |             |   | 258 |   |
| Studio supplies                           |   |              | 3,448  |   |             |   | 2,840 |   |
| Equipment repair parts and supplies       |   |              | 718    |   |             |   | 650 |   |
| Other                                     |   |              | 469    |   |             |   | 307 |   |
|                                      |   |              |   |   |             |   |   |   |
| Total                                     |   | $                 | 8,957  |   |             | $      | 7,465 |   |
|                                      |   |              |   |   |             |   |   |   |

| NOTE 4  - | ASSETS HELD FOR SALE |
|---------------------|----------------------|

| in thousands                                    |   | November 13, 2010 |   |   | February 6, 2010 |   |
|-------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|
|                                            |   |              |   |   |             |   |
| Land                                            |   | $                 | 417    |   |             | $      | 2,203 |   |
| Buildings and building improvements             |   |              | 641    |   |             |   | 4,135 |   |
| Photographic, sales and manufacturing equipment |   |              | 8      |   |             |   | - |   |
|                                            |   |              |   |   |             |   |   |   |
| Assets held for sale                            |   | $                 | 1,066  |   |             | $      | 6,338 |   |
|                                            |   |              |   |   |             |   |   |   |

| NOTE 5  - | GOODWILL AND INTANGIBLE ASSETS |
|---------------------|--------------------------------|

| in thousands                           |   | November 13, 2010 |   |   | February 6, 2010 |   |
|----------------------------------------|--------|-------------------|--------|--------|------------------|--------|
|                                   |   |              |   |   |             |   |
| PCA acquisition                        |   | $                 | 21,227 |   |             | $      | 21,227 |   |
|                                   |   |              |   |   |             |   |   |   |
| Goodwill from prior acquisitions       |   |              | 512    |   |             |   | 512 |   |
|                                   |   |              |   |   |             |   |   |   |
| Translation impact on foreign balances |   |              | 106    |   |             |   | (19 | ) |
|                                   |   | $                 | 21,845 |   |             | $      | 21,720 |   |
|                                   |   |              |   |   |             |   |   |   |

| in thousands            |   | Net Balance  |   |   |        |   |   |         |   |   | Translation      |   |   | Net Balance |   |
|-------------------------|--------|--------------|--------|--------|-------------|--------|--------|--------------|--------|--------|------------------|--------|--------|-------------|--------|
|                    |   | at Beginning |   |   |        |   |   | Accumulated  |   |   | Impact of        |   |   | at End of   |   |
|                    |   | of Period    |   |   | Acquisition |   |   | Amortization |   |   | Foreign Balances |   |   | Period      |   |
|                    |   |         |   |   |        |   |   |         |   |   |             |   |   |        |   |
| Acquired host agreement |   | $            | 38,238 |   |        | $      | -      |         |   | $      | (1,574           | )      |   | $           | 385    |   |   | $ | 37,049 |   |
| Acquired customer lists |   |         | 422    |   |        |   | 257    |         |   |   | (218             | )      |   |        | 11     |   |   |   | 472 |   |
|                    |   | $            | 38,660 |   |        | $      | 257    |         |   | $      | (1,792           | )      |   | $           | 396    |   |   | $ | 37,521 |   |
|                    |   |         |   |   |        |   |   |         |   |   |             |   |   |        |   |   |   |   |   |   |

| NOTE 6  - | OTHER ASSETS AND OTHER LIABILITIES |
|---------------------|------------------------------------|

| NOTE 7  - | BORROWINGS |
|---------------------|------------|

| NOTE 8  - | STOCK-BASED COMPENSATION PLANS |
|---------------------|--------------------------------|

|                                     |   |   |    |   |             |   |   | Weighted-Average      |   |
|------------------------------------------|--------|--------|---------|--------|------------------|--------|--------|-----------------------|--------|
|                                     |   |   |    |   | Weighted-Average |   |   | Remaining Contractual |   |
|                                     |   | Shares |    |   | Exercise Price   |   |   | Life (Years)          |   |
| Options outstanding, beginning of period |   |   | 217,500 |   |             | $      | 13.04  |                  |   |   |   |
| Forfeited                                |   |   | (25,000 | )      |             |   | 12.21  |                  |   |   |   |
|                                     |   |   |    |   |             |   |   |                  |   |   |   |
| Options outstanding, end of period       |   |   | 192,500 |   |             | $      | 13.15  |                  |   |   | 6.23 |   |
|                                     |   |   |    |   |             |   |   |                  |   |   |   |   |

| Award Recipient                            |   | Compensation                         |   | Shares Awarded                                                                                                                            |   | Grant Date |   | Vesting Date |
|--------------------------------------------|--------|--------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------------|
|                                       |   |                                 |   |                                                                                                                                      |   |       |   |         |
| Board of Directors Members                 |   | Director Annual Retainers            |   |                     16,017            |   | 2/12/2010  |   | 2/5/2011     |
| Chairman of the Board                      |   | Retention - Q1                       |   |                       3,823 |   | 2/19/2010  |   | 5/1/2010     |
| Executive Management                       |   | Retention - Long-term Incentive Plan |   |                     67,000            |   | 3/12/2010  |   | (1)          |
| Certain Management Members                 |   | Retention - Long-term Incentive Plan |   |                     22,000            |   | 3/29/2010  |   | (1)          |
| Executive Management and Certain Employees |   | 2009 Performance                     |   |                     88,806            |   | 3/29/2010  |   | 2/5/2011     |
| Board of Directors Members                 |   | Director Annual Retainers            |   |                     21,356            |   | 4/15/2010  |   | 2/5/2011     |
| Executive Chairman of the Board            |   | Retention - Long-term Incentive Plan |   |                     17,162            |   | 4/19/2010  |   | (2)          |
| Senior Vice President, Operations          |   | Retention - Long-term Incentive Plan |   |  4,000                                                                                                                               |   | 11/01/2010 |   | (3)          |

|                      (1) |   Vest in 25% increments on the last day of the fiscal year over a four-year period commencing on February 5, 2011.                                                         |
|------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     (2)       | Vest in 25% increments on the last day of the fiscal year over a four-year period commencing on February 5, 2011, or earlier upon certain acceleration events.    |
|                     (3)       | Vest in 25% increments on the last day of the fiscal year over a four-year period commencing on February 4, 2012.                                                                |

|                                     |   | 40 Weeks Ended November 13, 2010 |      |
|------------------------------------------|--------|----------------------------------|-----------|
|                                     |   |                             |      |   | Weighted-Average |   |
|                                     |   | Shares                           |      |   | Grant-Date Value |   |
| Nonvested stock, beginning of period     |   |                             | 528       |   |   | $ | 18.95 |   |
| Granted                                  |   |                             | 240,164   |   |   |   | 14.07 |   |
| Vested                                   |   |                             | (3,823    | ) |   |   | 14.05 |   |
| Forfeited                                |   |                             | (15,263   | ) |   |   | 13.49 |   |
| Nonvested stock, end of period           |   |                             | 221,606   |   |   | $ | 14.08 |   |
|                                     |   |                             |      |   |   |   |   |   |
| Stock-based compensation expense related |   |                             |      |   |   |   |   |   |
| to nonvested stock                       |   | $                                | 1,764,306 |   |   |   |   |   |
|                                     |   |                             |      |   |   |   |   |   |

| NOTE 9 - | EMPLOYEE BENEFIT PLANS |
|---------------|------------------------|

| in thousands                              |   | 16 Weeks Ended    |   |   | 16 Weeks Ended               |   |
|-------------------------------------------|--------|-------------------|--------|--------|------------------------------|--------|
|                                      |   | Pension Plan      |   |   | Supplemental Retirement Plan |   |
|                                      |   | November 13, 2010 |   |   | November 14, 2009            |   |   | November 13, 2010 |   |   | November 14, 2009 |   |
| Components of net periodic benefit costs: |   |              |   |   |                         |   |   |   |   |   |   |   |
| Service cost                              |   | $                 | -      |   |                         | $      | - |   |   | $ | - |   |   | $ | - |   |
| Interest cost                             |   |              | 954    |   |                         |   | 951 |   |   |   | 24 |   |   |   | 26 |   |
| Expected return on plan assets            |   |              | (953   | )      |                         |   | (967 | ) |   |   | - |   |   |   | - |   |
| Amortization of prior service cost        |   |              | -      |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of net loss (gain)           |   |              | 376    |   |                         |   | 78 |   |   |   | (24 | ) |   |   | (47 | ) |
|                                      |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                 |   | $                 | 377    |   |                         | $      | 62 |   |   | $ | - |   |   | $ | (21 | ) |
|                                      |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |

| in thousands                              |   | 40 Weeks Ended    |   |   | 40 Weeks Ended               |   |
|-------------------------------------------|--------|-------------------|--------|--------|------------------------------|--------|
|                                      |   | Pension Plan      |   |   | Supplemental Retirement Plan |   |
|                                      |   | November 13, 2010 |   |   | November 14, 2009            |   |   | November 13, 2010 |   |   | November 14, 2009 |   |
| Components of net periodic benefit costs: |   |              |   |   |                         |   |   |   |   |   |   |   |
| Service cost                              |   | $                 | -      |   |                         | $      | - |   |   | $ | - |   |   | $ | - |   |
| Interest cost                             |   |              | 2,384  |   |                         |   | 2,378 |   |   |   | 61 |   |   |   | 65 |   |
| Expected return on plan assets            |   |              | (2,383 | )      |                         |   | (2,418 | ) |   |   | - |   |   |   | - |   |
| Amortization of prior service cost        |   |              | -      |   |                         |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of net loss (gain)           |   |              | 941    |   |                         |   | 196 |   |   |   | (60 | ) |   |   | (116 | ) |
|                                      |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                 |   | $                 | 942    |   |                         | $      | 156 |   |   | $ | 1 |   |   | $ | (51 | ) |
|                                      |   |              |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |

| NOTE 10  - | INCOME TAXES |
|----------------------|--------------|

| ·  | Unrecognized tax benefits were approximately $2.2 million and $2.7 million at November 13, 2010, and February 6, 2010, respectively.  The decrease in unrecognized tax benefits of approximately $500,000 results from the recognition of certain tax benefits due to statute closure.  Within the next 12 months, the Company anticipates the recognition of substantially all remaining uncertain tax benefits due to additional statute closure.  Recognition of these uncertain tax benefits will affect the tax rate.  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | The Company recognizes interest expense and penalties related to the above-unrecognized tax benefits within income tax expense.  Due to the nature of the unrecognized tax benefits, the Company had $29,000 and $21,000 accrued interest and penalties as of November 13, 2010, and February 6, 2010, respectively.                                                                                                                                                                                                                       |
| ·  | The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, many states, and Mexican and Canadian jurisdictions.  The Company is generally no longer subject to U.S. federal income tax examination for the years prior to 2005 and 2006.  The tax years 2005 and 2008 are currently under examination.  There are currently no ongoing examinations by state taxing authorities.                                                                                                            |

| During the third quarter of 2010, the Company determined that certain undistributed earnings of one foreign wholly-owned subsidiary would be remitted to the U.S. in the foreseeable future.  These earnings were previously considered permanently reinvested in the business and a deferred tax liability related to undistributed earnings was not recognized.  The tax effect of the remittance to be made in the foreseeable future has been fully offset by the reduction of a valuation allowance previously recognized against certain deferred tax assets that can be utilized when the remittance is made. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 11   - | COMMITMENTS AND CONTINGENCIES |
|----------------------------|-------------------------------|

| Item 2. |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|--------|---------------------------------------------------------------------------------------------|

|                                             |                          | November 13, 2010                                                                                                                                                                |                                                                                                                                                                  | November 14, 2009                                                                                                                                                                                 |
|--------------------------------------------------|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Within Sears stores:                             |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
|                                             | United States and Puerto Rico |                                                                                                                                                                             |                            862 |                                                                                                                                                                                              | 873 |
|                                             | Canada                        |                                                                                                                                                                             |                            110 |                                                                                                                                                                                              | 110 |
|                                             |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
| Within Walmart stores:                           |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
|                                             | United States and Puerto Rico |                                                                                                                                                                             |                         1,535                 |                                                                                                                                                                                              | 1,552 |
|                                             | Canada                        |                                                                                                                                                                             |                            259 |                                                                                                                                                                                              | 259 |
|                                             | Mexico                        |                                                                                                                                                                             |                            104 |                                                                                                                                                                                              | 115 |
|                                             |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
| Within Babies "R" Us stores in the United States |                          |                            150            |                                                                                                                                                                  |                                 - |
|                                             |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
| Locations not within above host stores           |                          |                              57 |                                                                                                                                                                  | 29                                                                                                                                                                                                |
|                                             |                          |                                                                                                                                                                             |                                                                                                                                                                  |                                                                                                                                                                                              |
| Total                                            |                          |                         3,077                            |                                                                                                                                                                  | 2,938                                                                                                                                                                                             |
|                                             |

| in thousands, except share and per share data                                       |   | 16 Weeks Ended    |      |   | 40 Weeks Ended    |   |
|-------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                                                                |   | November 13, 2010 |      |   | November 14, 2009 |   |   | November 13, 2010 |   |   | November 14, 2009 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |
| Net sales                                                                           |   | $                 | 106,174   |   |              | $      | 107,286 |   |   | $ | 278,086 |   |   | $ | 282,130 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Cost and expenses:                                                                  |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Cost of sales (exclusive of depreciation and amortization shown below) |   |              | 7,516     |   |              |   | 8,032 |   |   |   | 19,882 |   |   |   | 21,643 |   |
|    Selling, general and administrative expenses                           |   |              | 102,220   |   |              |   | 99,940 |   |   |   | 244,920 |   |   |   | 245,480 |   |
|    Depreciation and amortization                                          |   |              | 5,267     |   |              |   | 6,320 |   |   |   | 14,088 |   |   |   | 17,913 |   |
|    Other charges and impairments                                          |   |              | 3,645     |   |              |   | 1,144 |   |   |   | 2,889 |   |   |   | 3,751 |   |
|                                                                                |   |              | 118,648   |   |              |   | 115,436 |   |   |   | 281,779 |   |   |   | 288,787 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                                |   |              | (12,474   | )      |              |   | (8,150 | ) |   |   | (3,693 | ) |   |   | (6,657 | ) |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                    |   |              | 892       |   |              |   | 2,479 |   |   |   | 3,225 |   |   |   | 5,694 |   |
| Interest income                                                                     |   |              | 9         |   |              |   | 67 |   |   |   | 16 |   |   |   | 103 |   |
| Other income, net                                                                   |   |              | 170       |   |              |   | 236 |   |   |   | 829 |   |   |   | 253 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income tax benefit                                                      |   |              | (13,187   | )      |              |   | (10,326 | ) |   |   | (6,073 | ) |   |   | (11,995 | ) |
| Income tax benefit                                                                  |   |              | (5,474    | )      |              |   | (3,524 | ) |   |   | (3,082 | ) |   |   | (4,094 | ) |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                            |   | $                 | (7,713    | )      |              | $      | (6,802 | ) |   | $ | (2,991 | ) |   | $ | (7,901 | ) |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE                                                           |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share - diluted                                                 |   | $                 | (1.05     | )      |              | $      | (0.97 | ) |   | $ | (0.41 | ) |   | $ | (1.13 | ) |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share - basic                                                   |   | $                 | (1.05     | )      |              | $      | (0.97 | ) |   | $ | (0.41 | ) |   | $ | (1.13 | ) |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                             |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    shares outstanding - diluted                                           |   |              | 7,312,019 |   |              |   | 7,003,832 |   |   |   | 7,271,226 |   |   |   | 6,987,746 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                             |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    shares outstanding - basic                                             |   |              | 7,312,019 |   |              |   | 7,003,832 |   |   |   | 7,271,226 |   |   |   | 6,987,746 |   |
|                                                                                |   |              |      |   |              |   |   |   |   |   |   |   |   |   |   |   |

| ● | Net sales for the third quarter of fiscal 2010 decreased $1.1 million, or 1%, to $106.2 million from the $107.3 million reported in the fiscal 2009 third quarter.  Excluding the positive impacts of net store openings ($7.2 million), net revenue recognition change ($1.0 million), foreign currency translation ($800,000), and other items totaling $500,000, comparable same-store sales decreased approximately 10%. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Cost of sales, excluding depreciation and amortization expense, declined to $7.5 million in the third quarter of 2010, from $8.0 million in the third quarter of 2009 due to lower overall production levels as well as continuing productivity improvements. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Selling, general and administrative (SG&A) expense increased to $102.2 million in the third quarter of 2010 from $99.9 million in the prior-year quarter, primarily due to the inclusion of costs associated with the newly opened Kiddie Kandids studios, as well as a special commission adjustment arising from certain contractual undertakings under the host agreement, employee insurance as a result of unfavorable claim activity and worker’s compensation due to loss experience adjustments.  These increases were offset in part by reductions in SPS and PMPS studio employment costs from improved scheduling, selected operating hour reductions and studio closures, a decline in host commission expense due to lower sales levels and reduced advertising costs. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Depreciation and amortization expense was $5.3 million in the third quarter of 2010, compared with $6.3 million in the third quarter of 2009.  Depreciation expense decreased as a result of the full depreciation of certain assets acquired in connection with the 2007 acquisition of PCA and the closure of certain PMPS locations during fiscal years 2009 and 2010. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ● | In the third quarter of 2010, the Company recognized $3.6 million in other charges and impairments, compared with $1.1 million in the third quarter of 2009.  The current quarter charges include a downward adjustment to the carrying value of a large facility previously classified as “held for sale” and the write-off of debt fees related to the Company’s former credit facility as a result of its new revolving credit facility.  The prior-year charge primarily related to lab closures. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Net sales for the first three quarters of fiscal 2010 decreased $4.0 million, or 1%, to $278.1 million from the $282.1 million reported in the fiscal 2009 first three quarters.  Excluding the positive impacts of net store openings ($7.6 million), foreign currency translation ($4.0 million), revenue deferral related to the Company’s loyalty programs ($1.1 million), net revenue recognition change ($1.0 million), E-Commerce ($900,000) and other items totaling $500,000, comparable same-store sales decreased approximately 7%. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Cost of sales, excluding depreciation and amortization expense, declined to $19.9 million in the first three quarters of 2010, from $21.6 million in the first three quarters of 2009.  The decrease is principally attributable to lower overall manufacturing production levels, improved product mix and increased productivity from lab consolidations. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Selling, general and administrative (SG&A) expense declined to $244.9 million in the first three quarters of 2010 from $245.5 million in the first three quarters of 2009, primarily due to reductions in studio employment costs from improved scheduling, selected operating hour reductions and studio closures, a decline in host commission expense due to lower sales levels and reduced advertising costs.  Partially offsetting these declines were increases in employment expense related to the Kiddie Kandids operations in the first three quarters of 2010, amortization expense as a result of larger stock bonuses awarded coupled with a higher stock price value in the current year compared to the prior year, worker’s compensation due to loss experience adjustments, pension expense due to changes in the discount rates and employee insurance as a result of unfavorable claim activity as well as a special commission adjustment arising from certain contractual undertakings under the host agreement. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Depreciation and amortization expense was $14.1 million in the first three quarters of 2010, compared with $17.9 million in the first three quarters of 2009.  Depreciation expense decreased as a result of the full depreciation of certain assets acquired in connection with the 2005 digital conversion of SPS and 2007 acquisition of PCA and the closure of certain PMPS locations during fiscal years 2009 and 2010. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In the first three quarters of 2010, the Company recognized $2.9 million in other charges and impairments, compared with $3.8 million in the first three quarters of 2009.  The current year charges primarily include a downward adjustment to the carrying value of a large facility previously classified as “held for sale”, costs related to the Kiddie Kandids operations and the write-off of debt fees related to the Company’s former credit facility as a result of its new revolving credit facility.  These charges were offset in part by a gain on sale of the Brampton, Ontario facility and an early termination fee received from Walmart in relation to certain early PMPS store closures.  The prior year charge primarily related to lab closures, proxy contest fees and litigation costs. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| in thousands                            |   | 40 Weeks Ended    |    |
|-----------------------------------------|--------|-------------------|---------|
|                                    |   | November 13, 2010 |    |   | November 14, 2009 |   |
| Net cash (used in) provided by:         |   |              |    |   |   |   |
| Operating activities                    |   | $                 | 15,948  |   |   | $ | 142 |   |
| Financing activities                    |   |              | (15,914 | ) |   |   | (12,563 | ) |
| Investing activities                    |   |              | (8,936  | ) |   |   | (3,052 | ) |
| Effect of exchange rate changes on cash |   |              | (380    | ) |   |   | 94 |   |
| Net decrease in cash                    |   | $                 | (9,282  | ) |   | $ | (15,379 | ) |
|                                    |   |              |    |   |   |   |   |   |

| Item 3. |   | Quantitative and Qualitative Disclosures About Market Risk |
|---------|--------|------------------------------------------------------------|

| Item 4. |   | Controls and Procedures |
|---------|--------|-------------------------|

| a)   | Evaluation of Disclosure Controls and Procedures |
|----------------|--------------------------------------------------|

| b)   | Changes in Internal Control Over Financial Reporting |
|----------------|------------------------------------------------------|

| Item 6. |   | Exhibits |
|---------|--------|----------|

SIGNATURES

EXHIBIT

| EXHIBIT |   |                                                                                                                     |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------|
| NUMBER  |   | DESCRIPTION                                                                                                              |
|    |   |                                                                                                                     |
| 10.51   |   | Form of LTIP Restricted Stock Award Agreement, filed within this Form 10-Q as Exhibit 10.51.                        |
|    |   |                                                                                                                     |
| 11.1    |   | Computation of Per Common Share Loss - Diluted - for the 16 and 40 weeks ended November 13, 2010, and November 14, 2009. |
|    |   |                                                                                                                     |
| 11.2    |   | Computation of Per Common Share Loss - Basic - for the 16 and 40 weeks ended November 13, 2010, and November 14, 2009.   |
|    |   |                                                                                                                     |
| 31.1    |   | Certification Pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934 by the Chief Executive Officer.   |
|    |   |                                                                                                                     |
| 31.2    |   | Certification Pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934 by the Chief Financial Officer.   |
|    |   |                                                                                                                     |
| 32.0    |   | Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   |
|    |   | by the Chief Executive Officer and the Chief Financial Officer.                                                          |
|    |   |                                                                                                                     |