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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                                     |   |   |
|          |   |                  |   | July 24, 2010 (Unaudited) and February 6, 2010                          |   | 1 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statements of Operations (Unaudited)               |   |   |
|          |   |                  |   | 12 and 24 Weeks Ended July 24, 2010 and July 25, 2009                   |   | 3 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statement of Changes in Stockholders'              |   |   |
|          |   |                  |   | Equity (Unaudited) 24 Weeks Ended July 24, 2010                         |   | 4 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Interim Consolidated Statements of Cash Flow (Unaudited)                |   |   |
|          |   |                  |   | 24 Weeks Ended July 24, 2010 and July 25, 2009                          |   | 5 |
|          |   |                  |   |                                                                    |   |   |
|          |   |                  |   | Notes to Interim Consolidated Financial Statements (Unaudited)          |   | 7 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 2.               |   | Management's Discussion and Analysis of Financial Condition and Results |   |   |
|          |   |                  |   | of Operations                                                           |   | 15 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 3.               |   | Quantitative and Qualitative Disclosures about Market Risk              |   | 23 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 4.               |   | Controls and Procedures                                                 |   | 24 |
|          |   |                  |   |                                                                    |   |   |
| PART II.      |   | OTHER INFORMATION     |   |                                                                    |
|          |   |                  |   |                                                                    |
|          |   | Item 1.               |   | Legal Proceedings                                                       |   | 24 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 5.               |   | Other Information                                                       |   | 24 |
|          |   |                  |   |                                                                    |   |   |
|          |   | Item 6.               |   | Exhibits                                                                |   | 25 |
|          |   |                  |
| SIGNATURES    |   |                  |   | 26                                                                      |
|          |   |                  |
| EXHIBIT INDEX |   |                  |   | 27                                                                      |

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

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

Balance

| in thousands                                                                       |   | July 24, 2010 |    |   |             |   |
|------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                               |   | (Unaudited)   |    |   | February 6, 2010 |   |
| ASSETS                                                                             |   |          |    |   |             |   |
| Current assets:                                                                    |   |          |    |   |             |   |
|      Cash and cash equivalents                                 |   | $             | 7,961   |   |             | $      | 18,913 |   |
|      Accounts receivable:                                      |   |          |    |   |             |   |   |   |
|           Trade                       |   |          | 6,229   |   |             |   | 5,960 |   |
|           Other                       |   |          | 1,507   |   |             |   | 880 |   |
|      Inventories                                               |   |          | 7,734   |   |             |   | 7,465 |   |
|      Prepaid expenses and other current assets                 |   |          | 4,867   |   |             |   | 5,396 |   |
|      Refundable income taxes                                   |   |          | 1,010   |   |             |   | 1,350 |   |
|      Deferred tax assets                                       |   |          | 5,751   |   |             |   | 7,253 |   |
|      Assets held for sale                                      |   |          | 5,970   |   |             |   | 6,338 |   |
|                                                                               |   |          |    |   |             |   |   |   |
|      Total current assets                                      |   |          | 41,029  |   |             |   | 53,555 |   |
|                                                                               |   |          |    |   |             |   |   |   |
| Property and equipment:                                                            |   |          |    |   |             |   |   |   |
|      Land                                                      |   |          | 2,185   |   |             |   | 2,185 |   |
|      Buildings and building improvements                       |   |          | 25,355  |   |             |   | 25,289 |   |
|      Leasehold improvements                                    |   |          | 5,187   |   |             |   | 4,491 |   |
|      Photographic, sales and manufacturing equipment           |   |          | 170,988 |   |             |   | 168,371 |   |
|           Total                       |   |          | 203,715 |   |             |   | 200,336 |   |
|      Less accumulated depreciation and amortization            |   |          | 170,367 |   |             |   | 166,167 |   |
|           Property and equipment, net |   |          | 33,348  |   |             |   | 34,169 |   |
|                                                                               |   |          |    |   |             |   |   |   |
| Prepaid debt fees                                                                  |   |          | 1,678   |   |             |   | 2,237 |   |
| Goodwill                                                                           |   |          | 21,788  |   |             |   | 21,720 |   |
| Intangible assets, net                                                             |   |          | 38,088  |   |             |   | 38,660 |   |
| Deferred tax assets                                                                |   |          | 7,920   |   |             |   | 7,701 |   |
| Other assets                                                                       |   |          | 8,671   |   |             |   | 8,549 |   |
|                                                                               |   |          |    |   |             |   |   |   |
|      TOTAL ASSETS                                              |   | $             | 152,522 |   |             | $      | 166,591 |   |
|                                                                               |   |          |    |   |             |   |   |   |

| in thousands, except share and per share data                                                                 |   | July 24, 2010 |    |   |             |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                                          |   | (Unaudited)   |    |   | February 6, 2010 |   |
| LIABILITIES                                                                                                   |   |          |    |   |             |   |
| Current liabilities:                                                                                          |   |          |    |   |             |   |
|      Current maturities of long-term debt                                                 |   | $             | 10,000  |   |             | $      | 19,686 |   |
|      Accounts payable                                                                     |   |          | 5,043   |   |             |   | 4,390 |   |
|      Accrued employment costs                                                             |   |          | 8,307   |   |             |   | 9,878 |   |
|      Customer deposit liability                                                           |   |          | 12,172  |   |             |   | 11,528 |   |
|      Sales taxes payable                                                                  |   |          | 2,221   |   |             |   | 3,929 |   |
|      Accrued advertising expenses                                                         |   |          | 1,854   |   |             |   | 1,062 |   |
|      Accrued expenses and other liabilities                                               |   |          | 9,747   |   |             |   | 12,170 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |
|      Total current liabilities                                                            |   |          | 49,344  |   |             |   | 62,643 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |
| Long-term debt, less current maturities                                                                       |   |          | 53,985  |   |             |   | 57,855 |   |
| Accrued pension plan obligations                                                                              |   |          | 17,589  |   |             |   | 17,724 |   |
| Other liabilities                                                                                             |   |          | 17,343  |   |             |   | 18,181 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |
|      Total liabilities                                                                    |   |          | 138,261 |   |             |   | 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; 9,457,694 and 9,184,081                          |   |          |    |   |             |   |   |   |
|      shares outstanding at July 24, 2010, and February 6, 2010, respectively              |   |          | 3,783   |   |             |   | 3,674 |   |
| Additional paid-in capital                                                                                    |   |          | 29,991  |   |             |   | 29,017 |   |
| Retained earnings                                                                                             |   |          | 43,286  |   |             |   | 41,516 |   |
| Accumulated other comprehensive loss                                                                          |   |          | (14,748 | )      |             |   | (14,887 | ) |
|                                                                                                          |   |          | 62,312  |   |             |   | 59,320 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |
| Treasury stock - at cost, 2,133,566 and 2,175,591 shares at July 24, 2010, and February 6, 2010, respectively |   |          | (48,051 | )      |             |   | (49,132 | ) |
|                                                                                                          |   |          |    |   |             |   |   |   |
|      Total stockholders' equity                                                           |   |          | 14,261  |   |             |   | 10,188 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |
|      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           |   | $             | 152,522 |   |             | $      | 166,591 |   |
|                                                                                                          |   |          |    |   |             |   |   |   |

Statements

| in thousands, except share and per share data                                                   |   | 12 Weeks Ended |      |   | 24 Weeks Ended |   |
|-------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|----------------|--------|
|                                                                                            |   | July 24, 2010  |      |   | July 25, 2009  |   |   | July 24, 2010 |   |   | July 25, 2009 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |
| Net sales                                                                                       |   | $              | 76,414    |   |           | $      | 81,377 |   |   | $ | 171,913 |   |   | $ | 174,844 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Cost and expenses:                                                                              |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |      |
|      Cost of sales (exclusive of depreciation and amortization shown below) |   |           | 5,844     |   |           |   | 6,605 |   |   |   | 12,366 |   |   |   | 13,610 |   |
|      Selling, general and administrative expenses                           |   |           | 68,880    |   |           |   | 70,435 |   |   |   | 142,701 |   |   |   | 145,543 |   |
|      Depreciation and amortization                                          |   |           | 4,355     |   |           |   | 5,552 |   |   |   | 8,820 |   |   |   | 11,591 |   |
|      Other charges and impairments                                          |   |           | (1,052    | )      |           |   | 2,187 |   |   |   | (756 | ) |   |   | 2,607 |   |
|                                                                                            |   |           | 78,027    |   |           |   | 84,779 |   |   |   | 163,131 |   |   |   | 173,351 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from operations                                                                   |   |           | (1,613    | )      |           |   | (3,402 | ) |   |   | 8,782 |   |   |   | 1,493 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                |   |           | 1,073     |   |           |   | 1,825 |   |   |   | 2,333 |   |   |   | 3,219 |   |
| Interest income                                                                                 |   |           | -         |   |           |   | 15 |   |   |   | 7 |   |   |   | 41 |   |
| Other income (expense), net                                                                     |   |           | (51       | )      |           |   | 7 |   |   |   | 658 |   |   |   | 16 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income tax provision (benefit)                                             |   |           | (2,737    | )      |           |   | (5,205 | ) |   |   | 7,114 |   |   |   | (1,669 | ) |
| Income tax provision (benefit)                                                                  |   |           | (920      | )      |           |   | (1,776 | ) |   |   | 2,391 |   |   |   | (570 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                                                               |   | $              | (1,817    | )      |           | $      | (3,429 | ) |   | $ | 4,723 |   |   | $ | (1,099 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) PER COMMON SHARE                                                              |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - diluted                                                    |   | $              | (0.25     | )      |           | $      | (0.49 | ) |   | $ | 0.65 |   |   | $ | (0.16 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic                                                      |   | $              | (0.25     | )      |           | $      | (0.49 | ) |   | $ | 0.65 |   |   | $ | (0.16 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                                         |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      shares outstanding - diluted                                           |   |           | 7,318,746 |   |           |   | 7,005,244 |   |   |   | 7,249,318 |   |   |   | 6,977,021 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                                         |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      shares outstanding - basic                                             |   |           | 7,318,746 |   |           |   | 7,005,244 |   |   |   | 7,244,031 |   |   |   | 6,977,021 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |

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 income                                                           |   |   | -      |   |       |   | -      |     |   |   | 4,723         |   |   |     | -       |   |   |   | - |   |   |   | 4,723 |   |
| Total other comprehensive income, net of tax effect (consisting |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
|    of foreign exchange impact)                             |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |     | 139     |   |   |   | - |   |   |   | 139 |   |
|                                                                 |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
|      Total comprehensive income                  |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   | 4,862 |   |
| Surrender of employee shares for taxes                               |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |     | -       |   |   |   | (183 | ) |   |   | (183 | ) |
| Issuance of common stock and restricted stock awards, net of         |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
|   forfeitures (329,603 shares)                                  |   |   | 109    |   |       |   | (511   | )   |   |   | -             |   |   |     | -       |   |   |   | 1,264 |   |   |   | 862 |   |
| Stock-based compensation recognized                                  |   |   | -      |   |       |   | 1,465  |     |   |   | -             |   |   |     | -       |   |   |   | - |   |   |   | 1,465 |   |
| Increased tax benefit related to stock-based compensation            |   |   | -      |   |       |   | 20     |     |   |   | -             |   |   |     | -       |   |   |   | - |   |   |   | 20 |   |
| Dividends ($0.41 per common share)                                   |   |   | -      |   |       |   | -      |     |   |   | (2,953        | )      |   |     | -       |   |   |   | - |   |   |   | (2,953 | ) |
|                                                                 |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Balance at July 24, 2010                                             |   | $      | 3,783  |   |       | $      | 29,991 |     |   | $      | 43,286        |   |   | $        | (14,748 | )      |   | $      | (48,051 | ) |   | $ | 14,261 |   |
|                                                                 |   |   |   |   |       |   |   |     |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |   |

Cash

| in thousands                                                                                  |   | 24 Weeks Ended |   |
|-----------------------------------------------------------------------------------------------|--------|----------------|--------|
|                                                                                          |   | July 24, 2010  |   |   | July 25, 2009 |   |
| Reconciliation of net income (loss) to cash flows provided by (used in) operating activities: |   |           |   |   |   |   |
|                                                                                          |   |           |   |   |   |   |
| Net income (loss)                                                                             |   | $              | 4,723  |   |   | $ | (1,099 | ) |
|                                                                                          |   |           |   |   |   |   |   |   |
| Adjustments for items not requiring (providing) cash:                                         |   |           |   |   |   |   |   |   |
|      Depreciation and amortization                                        |   |           | 8,820  |   |   |   | 11,591 |   |
|      Amortization of prepaid debt fees                                    |   |           | 559    |   |   |   | 428 |   |
|      Stock-based compensation expense                                     |   |           | 1,465  |   |   |   | 490 |   |
|      (Gain) loss on sale of assets held for sale                          |   |           | (1,645 | ) |   |   | 50 |   |
|      Loss on disposition of property and equipment                        |   |           | 84     |   |   |   | 184 |   |
|      Deferred income tax provision                                        |   |           | 1,398  |   |   |   | (537 | ) |
|      Change in interest rate swap                                         |   |           | (1,382 | ) |   |   | (555 | ) |
|      Pension, supplemental retirement plan and profit sharing expense     |   |           | 916    |   |   |   | 403 |   |
|      Other                                                                |   |           | (3     | ) |   |   | - |   |
|                                                                                          |   |           |   |   |   |   |   |   |
| Increase (decrease) in cash flow from operating assets and liabilities:                       |   |           |   |   |   |   |   |   |
|      Accounts receivable                                                  |   |           | (200   | ) |   |   | (2,350 | ) |
|      Inventories                                                          |   |           | (229   | ) |   |   | 453 |   |
|      Prepaid expenses and other current assets                            |   |           | 584    |   |   |   | (1,230 | ) |
|      Accounts payable                                                     |   |           | 644    |   |   |   | 3,553 |   |
|      Contribution to pension plan                                         |   |           | (700   | ) |   |   | (626 | )  |
|      Accrued expenses and other liabilities                               |   |           | (4,447 | ) |   |   | (8,828 | ) |
|      Income taxes payable                                                 |   |           | 342    |   |   |   | (348 | ) |
|      Deferred revenues and related costs                                  |   |           | 662    |   |   |   | 814 |   |
|      Other                                                                |   |           | 58     |   |   |   | (130 | ) |
|                                                                                          |   |           |   |   |   |   |   |   |
| Cash flows provided by operating activities                                                   |   |           | 11,649 |   |   |   | 2,263 |   |
|                                                                                          |   |           |   |   |   |   |   |   |

| in thousands                                                                                       |   | 24 Weeks Ended |    |
|----------------------------------------------------------------------------------------------------|--------|----------------|---------|
|                                                                                               |   | July 24, 2010  |    |   | July 25, 2009 |   |
|                                                                                               |   |           |    |   |   |   |
| Cash flows provided by operating activities                                                        |   |           | 11,649  |   |   |   | 2,263 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
| Cash flows used in financing activities:                                                           |   |           |    |   |   |   |   |   |
|      Repayment of long-term debt                                               |   |           | (13,556 | ) |   |   | (7,270 | ) |
|      Payment of debt issuance costs                                            |   |           | -       |   |   |   | (943 | ) |
|      Cash dividends                                                            |   |           | (2,953  | ) |   |   | (2,204 | ) |
|      Other                                                                     |   |           | (35     | ) |   |   | (20 | ) |
|                                                                                               |   |           |    |   |   |   |   |   |
|      Cash flows used in financing activities                                   |   |           | (16,544 | ) |   |   | (10,437 | ) |
|                                                                                               |   |           |    |   |   |   |   |   |
| Cash flows (used in) provided by investing activities:                                             |   |           |    |   |   |   |   |   |
|      Additions to property and equipment                                       |   |           | (8,197  | ) |   |   | (2,234 | ) |
|      Proceeds from sale of assets held for sale                                |   |           | 2,369   |   |   |   | 984 |   |
|      Proceeds from sale of property and equipment                              |   |           | 1       |   |   |   | 336 |   |
|      Other                                                                     |   |           | 41      |   |   |   | 82 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
|      Cash flows used in investing activities                                   |   |           | (5,786  | ) |   |   | (832 | ) |
|                                                                                               |   |           |    |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                       |   |           | (271    | ) |   |   | 393 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents                                               |   |           | (10,952 | ) |   |   | (8,613 | ) |
|                                                                                               |   |           |    |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                   |   |           | 18,913  |   |   |   | 23,665 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                         |   | $              | 7,961   |   |   | $ | 15,052 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
| Supplemental cash flow information:                                                                |   |           |    |   |   |   |   |   |
|      Interest paid                                                             |   | $              | 3,072   |   |   | $ | 3,451 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
|      Income taxes paid, net                                                    |   | $              | 629     |   |   | $ | 216 |   |
|                                                                                               |   |           |    |   |   |   |   |   |
| 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 |   | $              | 3,281   |   |   | $ | 728 |   |
|                                                                                               |   |           |    |   |   |   |   |   |

Notes

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

| NOTE 2   - | FAIR VALUE MEASUREMENTS |
|---------------------------|-------------------------|

| Level 1 - |   | Inputs were unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.                                                                                                                                                         |
|-----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |   |                                                                                                                                                                                                                                                                         |
| Level 2 - |   | Inputs (other than quoted prices included in Level 1) were either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.                 |
|      |   |                                                                                                                                                                                                                                                                         |
| Level 3 - |   | Inputs reflected management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration was given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. |

|                   |   | Fair Value Measurements |   |
|------------------------|--------|-------------------------|--------|
|                   |   | Level 1                 |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Liabilities            |   |                    |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap (1) |   | $                       | -      |   |   | $ | 0.7 |   |   | $ | - |   |   | $ | 0.7 |   |
|                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                               (1) | The total fair value of the interest rate swap is included in Accrued expenses and other liabilities as of July 24, 2010.  This financial instrument was valued using the “income approach” valuation technique.  This method used valuation techniques to convert future amounts to a single present amount.  The measurement was based on the value indicated by current market expectations about those future amounts.  The Company uses its interest rate swap as a means of managing interest rates on its outstanding fixed-rate debt obligations.  Accordingly, the fair market value is estimated to approximate the recorded value of this instrument.  The fair value of the interest rate swap at July 24, 2010, and February 6, 2010, was $0.7 million and $2.0 million, respectively. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 3   - | NEW LICENSE AGREEMENT |
|---------------------------|-----------------------|

| NOTE 4  - | INVENTORIES  |
|---------------------|-------------------|

| in thousands                              |   | July 24, 2010 |   |   | February 6, 2010 |   |
|-------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                      |   |          |   |   |             |   |
| Raw materials - film, paper and chemicals |   | $             | 1,842  |   |             | $      | 2,181 |   |
| Portraits in process                      |   |          | 1,192  |   |             |   | 1,138 |   |
| Finished portraits pending delivery       |   |          | 136    |   |             |   | 91 |   |
| Frames and accessories                    |   |          | 219    |   |             |   | 258 |   |
| Studio supplies                           |   |          | 3,183  |   |             |   | 2,840 |   |
| Equipment repair parts and supplies       |   |          | 759    |   |             |   | 650 |   |
| Other                                     |   |          | 403    |   |             |   | 307 |   |
|                                      |   |          |   |   |             |   |   |   |
| Total                                     |   | $             | 7,734  |   |             | $      | 7,465 |   |
|                                      |   |          |   |   |             |   |   |   |

| NOTE 5  - | ASSETS HELD FOR SALE  |
|---------------------|----------------------------|

| in thousands                                    |   | July 24, 2010 |   |   | February 6, 2010 |   |
|-------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                            |   |          |   |   |             |   |
| Land                                            |   | $             | 1,358  |   |             | $      | 2,203 |   |
| Buildings and building improvements             |   |          | 4,553  |   |             |   | 4,135 |   |
| Photographic, sales and manufacturing equipment |   |          | 59     |   |             |   | - |   |
|                                            |   |          |   |   |             |   |   |   |
|      Assets held for sale   |   | $             | 5,970  |   |             | $      | 6,338 |   |
|                                            |   |          |   |   |             |   |   |   |

| NOTE 6  - | GOODWILL AND INTANGIBLE ASSETS |
|---------------------|--------------------------------|

| in thousands                           |   | July 24, 2010 |   |   | February 6, 2010 |   |
|----------------------------------------|--------|---------------|--------|--------|------------------|--------|
|                                   |   |          |   |   |             |   |
| PCA acquisition                        |   | $             | 21,227 |   |             | $      | 21,227 |   |
|                                   |   |          |   |   |             |   |   |   |
| Goodwill from prior acquisitions       |   |          | 512    |   |             |   | 512 |   |
|                                   |   |          |   |   |             |   |   |   |
| Translation impact on foreign balances |   |          | 49     |   |             |   | (19 | ) |
|                                   |   | $             | 21,788 |   |             | $      | 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 |   |        | $      | -      |         |   | $      | (944             | )      |   | $           | 216    |   |   | $ | 37,510 |   |
| Acquired customer lists |   |         | 422    |   |        |   | 257    |         |   |   | (104             | )      |   |        | 3      |   |   |   | 578 |   |
|                    |   | $            | 38,660 |   |        | $      | 257    |         |   | $      | (1,048           | )      |   | $           | 219    |   |   | $ | 38,088 |   |
|                    |   |         |   |   |        |   |   |         |   |   |             |   |   |        |   |   |   |   |   |   |

| NOTE 7  - | OTHER ASSETS AND OTHER LIABILITIES |
|---------------------|------------------------------------|

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

|            |          |   | Options Outstanding and Exercisable |    |
|-----------------|---------------|--------|-------------------------------------|---------|
|            |          |   |                                |    |   | Weighted-Average |   |   |   |   |   |   |   |   |   |   |
| Range of        |          |   | Number of Shares                    |    |   | Remaining Contractual |   |   | Weighted-Average |   |   | Number of Shares |   |   | Weighted-Average |   |
| Exercise Prices |          |   | Outstanding                         |    |   | Life (Years) |   |   | Exercise Price |   |   | Exercisable |   |   | Exercise Price |   |
| $               | 12.21 - 13.58 |   |                                |    | 217,500 |   |   |   | 6.72 |   |   | $ | 13.04 |   |   |   | - |   |   | $ | - |   |
|            |          |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total           |          |   |                                | 217,500 |   |   |   | 6.72 |   |   | $ | 13.04 |   |   |   | - |   |   | $ | - |   |
|            |          |

| 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)          |

| (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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | 24 Weeks Ended July 24, 2010 |    |
|------------------------------------------|--------|------------------------------|---------|
|                                     |   |                         |    |   | Weighted-Average |   |
|                                     |   | Shares                       |    |   | Grant-Date Value |   |
| Nonvested stock, beginning of period     |   |                         | 528     |   |   | $ | 18.95 |   |
| Granted                                  |   |                         | 236,164 |   |   |   | 13.89 |   |
| Vested                                   |   |                         | (3,823  | ) |   |   | 14.05 |   |
| Nonvested stock, end of period           |   |                         | 232,869 |   |   | $ | 13.90 |   |
|                                     |   |                         |    |   |   |   |   |   |
| Stock-based compensation expense related |   |                         |    |   |   |   |   |   |
| to nonvested stock                       |   | $                            | 994,000 |   |   |   |   |   |
|                                     |   |                         |    |   |   |   |   |   |

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

| in thousands                                                |   | 12 Weeks Ended |   |   | 12 Weeks Ended               |   |
|-------------------------------------------------------------|--------|----------------|--------|--------|------------------------------|--------|
|                                                        |   | Pension Plan   |   |   | Supplemental Retirement Plan |   |
|                                                        |   | July 24, 2010  |   |   | July 25, 2009                |   |   | July 24, 2010 |   |   | July 25, 2009 |   |
| Components of net periodic benefit costs:                   |   |           |   |   |                         |   |   |   |   |   |   |   |
|      Service cost                       |   | $              | -      |   |                         | $      | - |   |   | $ | - |   |   | $ | - |   |
|      Interest cost                      |   |           | 715    |   |                         |   | 713 |   |   |   | 18 |   |   |   | 19 |   |
|      Expected return on plan assets     |   |           | (715   | )      |                         |   | (725 | ) |   |   | - |   |   |   | - |   |
|      Amortization of prior service cost |   |           | -      |   |                         |   | - |   |   |   | - |   |   |   | - |   |
|      Amortization of net loss (gain)    |   |           | 282    |   |                         |   | 59 |   |   |   | (18 | ) |   |   | (35 | ) |
|                                                        |   |           |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                                   |   | $              | 282    |   |                         | $      | 47 |   |   | $ | - |   |   | $ | (16 | ) |
|                                                        |   |           |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |

| in thousands                                                |   | 24 Weeks Ended |   |   | 24 Weeks Ended               |   |
|-------------------------------------------------------------|--------|----------------|--------|--------|------------------------------|--------|
|                                                        |   | Pension Plan   |   |   | Supplemental Retirement Plan |   |
|                                                        |   | July 24, 2010  |   |   | July 25, 2009                |   |   | July 24, 2010 |   |   | July 25, 2009 |   |
| Components of net periodic benefit costs:                   |   |           |   |   |                         |   |   |   |   |   |   |   |
|      Service cost                       |   | $              | -      |   |                         | $      | - |   |   | $ | - |   |   | $ | - |   |
|      Interest cost                      |   |           | 1,431  |   |                         |   | 1,427 |   |   |   | 36 |   |   |   | 39 |   |
|      Expected return on plan assets     |   |           | (1,430 | )      |                         |   | (1,451 | ) |   |   | - |   |   |   | - |   |
|      Amortization of prior service cost |   |           | -      |   |                         |   | - |   |   |   | - |   |   |   | - |   |
|      Amortization of net loss (gain)    |   |           | 564    |   |                         |   | 118 |   |   |   | (36 | ) |   |   | (70 | ) |
|                                                        |   |           |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost                                   |   | $              | 565    |   |                         | $      | 94 |   |   | $ | - |   |   | $ | (31 | ) |
|                                                        |   |           |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |

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

| ·  | Unrecognized tax benefits were approximately $2.7 million at both July 24, 2010, and February 6, 2010.  If these unrecognized tax benefits were recognized, approximately $2.7 million would impact the effective tax rate.  It is not expected the amount of these unrecognized tax benefits will change in the next 12 months.                                                                                                                  |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | 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 $28,000 and $21,000 accrued interest and penalties as of July 24, 2010, and February 6, 2010, respectively.                                                                                                                                       |
| ·  | The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, many states, Mexican and Canadian jurisdictions.  The Company is no longer subject to U.S. Federal income tax examination for the years prior to 2003.   The Internal Revenue Service has requested certain specific information related to the 2005 and 2008 tax years. There are currently no ongoing examinations by state taxing authorities. |

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

| NOTE 12   - | SUBSEQUENT EVENT |
|----------------------------|------------------|

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

|                                             |   | July 24, 2010 |   |   | July 25, 2009 |   |
|--------------------------------------------------|--------|---------------|--------|--------|---------------|--------|
| Within Sears stores:                             |   |          |   |   |          |   |
| United States and Puerto Rico                    |   |          | 858    |   |          |   | 876 |   |
| Canada                                           |   |          | 110    |   |          |   | 110 |   |
|                                             |   |          |   |   |          |   |   |   |
| Within Walmart stores:                           |   |          |   |   |          |   |   |   |
| United States and Puerto Rico                    |   |          | 1,534  |   |          |   | 1,558 |   |
| Canada                                           |   |          | 258    |   |          |   | 259 |   |
| Mexico                                           |   |          | 104    |   |          |   | 114 |   |
|                                             |   |          |   |   |          |   |   |   |
| Within Babies "R" Us stores in the United States |   |          | 134    |   |          |   | - |   |
|                                             |   |          |   |   |          |   |   |   |
| Locations not within above host stores           |   |          | 35     |   |          |   | 28 |   |
|                                             |   |          |   |   |          |   |   |   |
| Total                                            |   |          | 3,033  |   |          |   | 2,945 |   |
|                                             |   |          |   |   |          |   |   |   |

| in thousands, except share and per share data                                                   |   | 12 Weeks Ended |      |   | 24 Weeks Ended |   |
|-------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|----------------|--------|
|                                                                                            |   | July 24, 2010  |      |   | July 25, 2009  |   |   | July 24, 2010 |   |   | July 25, 2009 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |
| Net sales                                                                                       |   | $              | 76,414    |   |           | $      | 81,377 |   |   | $ | 171,913 |   |   | $ | 174,844 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Cost and expenses:                                                                              |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      Cost of sales (exclusive of depreciation and amortization shown below) |   |           | 5,844     |   |           |   | 6,605 |   |   |   | 12,366 |   |   |   | 13,610 |   |
|      Selling, general and administrative expenses                           |   |           | 68,880    |   |           |   | 70,435 |   |   |   | 142,701 |   |   |   | 145,543 |   |
|      Depreciation and amortization                                          |   |           | 4,355     |   |           |   | 5,552 |   |   |   | 8,820 |   |   |   | 11,591 |   |
|      Other charges and impairments                                          |   |           | (1,052    | )      |           |   | 2,187 |   |   |   | (756 | ) |   |   | 2,607 |   |
|                                                                                            |   |           | 78,027    |   |           |   | 84,779 |   |   |   | 163,131 |   |   |   | 173,351 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from operations                                                                   |   |           | (1,613    | )      |           |   | (3,402 | ) |   |   | 8,782 |   |   |   | 1,493 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                |   |           | 1,073     |   |           |   | 1,825 |   |   |   | 2,333 |   |   |   | 3,219 |   |
| Interest income                                                                                 |   |           | -         |   |           |   | 15 |   |   |   | 7 |   |   |   | 41 |   |
| Other income (expense), net                                                                     |   |           | (51       | )      |           |   | 7 |   |   |   | 658 |   |   |   | 16 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income tax provision (benefit)                                             |   |           | (2,737    | )      |           |   | (5,205 | ) |   |   | 7,114 |   |   |   | (1,669 | ) |
| Income tax provision (benefit)                                                                  |   |           | (920      | )      |           |   | (1,776 | ) |   |   | 2,391 |   |   |   | (570 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                                                               |   | $              | (1,817    | )      |           | $      | (3,429 | ) |   | $ | 4,723 |   |   | $ | (1,099 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) PER COMMON SHARE                                                              |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - diluted                                                    |   | $              | (0.25     | )      |           | $      | (0.49 | ) |   | $ | 0.65 |   |   | $ | (0.16 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic                                                      |   | $              | (0.25     | )      |           | $      | (0.49 | ) |   | $ | 0.65 |   |   | $ | (0.16 | ) |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                                         |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      shares outstanding - diluted                                           |   |           | 7,318,746 |   |           |   | 7,005,244 |   |   |   | 7,249,318 |   |   |   | 6,977,021 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common and common equivalent                                         |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      shares outstanding - basic                                             |   |           | 7,318,746 |   |           |   | 7,005,244 |   |   |   | 7,244,031 |   |   |   | 6,977,021 |   |
|                                                                                            |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |

| ●   | Net sales for the second quarter of fiscal 2010 decreased $5.0 million, or 6%, to $76.4 million from the $81.4 million reported in the fiscal 2009 second quarter.  Excluding the negative impact of a net revenue recognition change ($3.0 million) and the positive impacts of net store openings ($2.7 million), foreign currency translation ($1.0 million), and other items totaling $700,000, comparable same-store sales decreased approximately 8%. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Cost of sales, excluding depreciation and amortization expense, declined to $5.8 million in the second quarter of 2010, from $6.6 million in the second quarter 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 $68.9 million in the second quarter from $70.4 million in the prior-year quarter primarily due to reductions in studio employment costs from improved scheduling, selected operating hour reductions and studio closures, reduced advertising cost attributable to more focused offers, and a decline in host commission expense due to lower sales levels.  Partially offsetting these declines was an increase in employment expense related to the Kiddie Kandids operations in the second quarter of 2010. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Depreciation and amortization expense was $4.4 million in the second quarter of 2010, compared with $5.6 million in the second quarter 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 throughout fiscal 2009 and in the first half of 2010. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In the second quarter of 2010, the Company recognized a $1.1 million credit in other charges and impairments, compared with a $2.2 million charge in the second quarter of 2009.  The current quarter credit primarily relates to the gain on sale of the Brampton, Ontario facility and an early termination fee received from Walmart in relation to certain early PMPS store closures, offset in part by costs incurred in connection with the Kiddie Kandids asset acquisition.  The prior year charge primarily related to proxy contest fees, lab closures and litigation costs. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Net sales for the first half of fiscal 2010 decreased $2.9 million, or 2%, to $171.9 million from the $174.8 million reported in the fiscal 2009 first half.  Excluding the positive impacts of foreign currency translation ($3.2 million), revenue deferral related to the Company’s loyalty programs ($1.0 million) and other items totaling $1.6 million, comparable same-store sales decreased approximately 5%. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Cost of sales, excluding depreciation and amortization expense, declined to $12.4 million in the first half of 2010, from $13.6 million in the first half 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 $142.7 million in the first half of 2010 from $145.5 million in the first half of 2009, primarily due to reductions in studio employment costs from improved scheduling, selected operating hour reductions and studio closures and reduced net advertising cost attributable to more focused offers.  Partially offsetting these declines were an increase in employment expense related to the Kiddie Kandids operations in the first half of 2010 and an increase in 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. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Depreciation and amortization expense was $8.8 million in the first half of 2010, compared with $11.6 million in the first half 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 throughout fiscal 2009 and in the first half of 2010. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In the first half of 2010, the Company recognized a $756,000 credit in other charges and impairments, compared with a $2.6 million charge in the first half of 2009.  The current quarter credit primarily relates to the gain on sale of the Brampton, Ontario facility and an early termination fee received from Walmart in relation to certain early PMPS store closures, offset in part by costs incurred in connection with the Kiddie Kandids asset acquisition.  The prior year charge primarily related to lab closures, proxy contest fees and litigation costs. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| in thousands                            |   | 24 Weeks Ended |    |
|-----------------------------------------|--------|----------------|---------|
|                                    |   | July 24, 2010  |    |   | July 25, 2009 |   |
| Net cash (used in) provided by:         |   |           |    |   |   |   |
| Operating activities                    |   | $              | 11,649  |   |   | $ | 2,263 |   |
| Financing activities                    |   |           | (16,544 | ) |   |   | (10,437 | ) |
| Investing activities                    |   |           | (5,786  | ) |   |   | (832 | ) |
| Effect of exchange rate changes on cash |   |           | (271    | ) |   |   | 393 |   |
| Net (decrease) increase in cash         |   | $              | (10,952 | ) |   | $ | (8,613 | ) |
|                                    |   |           |    |   |   |   |   |   |

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

| Notional amount        |   | $                  | 57,500,000 |   |
|------------------------|--------|--------------------|------------|--------|
|                   |   |               |       |   |
| Fixed rate paid        |   |               | 4.97       | %      |
|                   |   |               |       |   |
| Variable rate received |   |               | 0.54       | %      |
|                   |   |               |       |   |
| Effective date         |   | September 17, 2007 |       |
|                   |   |               |       |   |
| Expiration date        |   | September 17, 2010 |       |

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

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

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

| Item 1. |   | Legal Proceedings |
|---------|--------|-------------------|

| Item 5. |   | Other Information |
|---------|--------|-------------------|

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

SIGNATURES

EXHIBIT

| EXHIBIT |                                                                                    |                                                                                                                                 |
|---------|-----------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
| NUMBER  |                                                                                    | DESCRIPTION                                                                                                                          |
|    |                                                                                    |                                                                                                                                 |
| 10.49   |                                                                                    | Credit Agreement dated as of August 30, 2010, among the Company, the financial institutions that are or may from time to time        |
|    |                                                                                    | become parties thereto and Bank of America, N.A., as administrative agent for the lenders, and as swing line lender and issuing      |
|    |                                                                                    | lender, filed within this Form 10-Q as Exhibit 10.49.                                                                                |
|    |                                                                                    |                                                                                                                                 |
| 10.50   | *                                                                                       | Separation and Release Agreement by and between Consumer Programs Incorporated and James Mills entered into as of                    |
|    |                                                                                    | September 1, 2010, effective as of August 13, 2010, filed within this Form 10-Q as Exhibit 10.50.                                    |
|    |                                                                                    |                                                                                                                                 |
| 11.1    |                                                                                    | Computation of Per Common Share Income (Loss)  - Diluted - for the 12 and 24 weeks ended July 24, 2010, and July 25, 2009. |
|    |                                                                                    |                                                                                                                                 |
| 11.2    |                                                                                    | Computation of Per Common Share Income (Loss) - Basic - for the 12 and 24 weeks ended July 24, 2010, and July 25, 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.                                                                      |
|    |                                                                                    |                                                                                                                                 |
| *       | Management contract or compensatory plan available to employees, officers or directors. |