A quarterly update on the current state of U.S. retail photo printing and 5 year projections.

1. U.S. Retail Photo Printing 2009-2014 U.S. Retail Photo Print Output 2009-2014 cover Confidential Property of [F/22] Consulting, Inc. - 2010 1

2. Report Objectives To provide a comprehensive review of photo printed output produced in-store at retail outlets in the United States. To cover only printed output. To project printed output for the period 2009-2014 based on current volumes, current and likely trends, and currently available products. 2 Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 2 Confidential Property of [F/22] Consulting - 2010

3. Situation Analysis - 1 Conventional1 print volume (film + digital) and revenue continues to fall. Conventional digital print volume and revenue began to decline in 2009 and the decline will continue. Walmart Stores, which enjoyed share leadership for numerous years, has slipped from the top position, replaced by the promotional drug chains Walgreens and CVS. Personalized output continues to be the category growth opportunity for retailers. Kiosk prints as a % of total prints will grow as retailers increasingly turn to lower-cost, lower-touch print solutions and as consumers opt for ever-easier, ever-more-robust product creation and instant gratification. 3 Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 3 Confidential Property of [F/22] Consulting - 2010

4. Situation Analysis - 2 Transformation from “wet” chemical minilabs to “dry” ink, dye-sub, laser and xerographic replacement print platforms has begun (Walmart has completed more than ½ of their installed base to Fuji and Epson Inkjet and Xerox . Meijer and Duane Reade have hp ink and laser platforms. CVS and Target are rapidly updating with Kodak Apex dry solutions). Seasonal demand spikes are a significant and increasing challenge for retailers as demand shifts from everyday conventional print demand to personalized products with primary demand concentrated from mid-November through late-December. Focus required to identify and develop new output products with everyday demand. (1) Conventional prints are defined as 1-sided (i.e. simplex) photo prints with no personalization 4 Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 4 Confidential Property of [F/22] Consulting - 2010

5. Conventional and Personalized Photo Prints Conventional Prints 4x6 prints from film or digital All other print sizes printed in-store on 1-side with no personalization. PersonalizedPrints* Greeting Cards Slimline Folded Photobooks Scrapbook/Album Pages Calendars Calendars (simplex) Calendars (duplex) Collages/Posters Banners Other 5 *The list is inclusive of all current popular printed products produced on-site. “Other “includes random personalized printed products currently printed. No effort is made to project results for currently unavailable products. Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 5 Confidential Property of [F/22] Consulting - 2010

6. Understated Projections 6 This study does not attempt to project sales generated by currently unavailable retail printed products, therefore, the projections for outlying years are undoubtedly understated. It is reasonable to expect that manufacturers, service providers and retailers will collectively develop and deliver important new products over the next 5 years which will drive new streams of revenue resulting in a significantly larger personalized printed products opportunity than currently reflected in this study. Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 6 Confidential Property of [F/22] Consulting - 2010

7. 7 Total On-Site Photo Print Output 2009-2014(4x6 Equivalent Units - B) The growth of personalized printed output is not yet on a trend to compensate fully for the loss of conventional print consumption. Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 7 Confidential Property of [F/22] Consulting - 2010

9. By 2014 revenues from personalized printed products are likely to represent more than 50% of category print revenues. Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 8 Confidential Property of [F/22] Consulting - 2010

11. Minilab prints decline by >40% over next 5 years while kiosk prints hold steady.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 9 Confidential Property of [F/22] Consulting - 2010

13. Minilab prints decline by >40% over next 5 years while kiosk prints hold steady.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 10 Confidential Property of [F/22] Consulting - 2010

15. Minilab prints decline by >40% over next 5 years while kiosk prints hold steady.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 11 Confidential Property of [F/22] Consulting - 2010

17. There are, simultaneously, forces at work that limit the investment interest in minilabs (especially labor costs, operational complexities, and declining revenues).

18. With a declining market for conventional prints investment in new clerk supported print technology will be driven by a desire to capture share of new personalized output growth.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 12 Confidential Property of [F/22] Consulting - 2010

21. Revenue from self-service kiosk prints is projected to reach 44% of total by 2014.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 14 Confidential Property of [F/22] Consulting - 2010

22. 15 Retailer Share of Prints - 2009 Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 15 Confidential Property of [F/22] Consulting - 2010

24. As the share of output from personalized printed output grows this trend threatens to shift even more volume to a narrow holiday window.

25. The popularity of photo merchandise, which is currently dominated by holiday gift giving increases the challenges of equipping and staffing this changing category.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 16 Confidential Property of [F/22] Consulting - 2010

26. 17 Personalized Photo PrintsShare of Revenue - 2009 Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 17 Confidential Property of [F/22] Consulting - 2010

28. Growth of kiosk print preference +

29. Installation of dry minilab replacement technology =

30. Dry prints will rapidly begin to replace AgX prints over the next 5 years +

31. A majority of all personalized printed output will be dry.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 18 Confidential Property of [F/22] Consulting - 2010

33. Growth of kiosk print preference +

34. Installation of dry minilab replacement technology =

35. Dry prints will rapidly begin to replace AgX prints over the next 5 years.Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 19 Confidential Property of [F/22] Consulting - 2010

36. 20 Threats & Opportunities Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 20 Confidential Property of [F/22] Consulting - 2010

37. Quote 21 "We are very excited about the future of the industry and it's being fueled by the innovative retailers who are delivering specialized services to their local consumers that enable more creative, expressive story telling. Images are being integrated in more forms of communication than ever before via Facebook, MySpace and camera phones. We are inspired by our leading edge retailers tapping into this and monetizing the benefits of transactions that go beyond the simple 4" x 6" print. We'd like to see more participation across the industry. Our innovative technologies, flexible hardware and some new product announcements we plan to make at PMA will enhance the fun for the consumers to tell their stories with images. " Lori Babigian Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 21 Confidential Property of [F/22] Consulting - 2010

38. Quote 22 “It is important to see the photo department through the eyes of this core [predominantly female] customer. It is not a photo center anymore; it’s a personal publishing center.” Manny Almeida Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 22 Confidential Property of [F/22] Consulting - 2010

39. Quote 23 “The Industry will take a quantum leap forward, I have no doubt, when it is able to master this unique skill of delighting the customer, by giving her the experiences and the solutions that she craves – anytime, anywhere, and in any form!” Miguel Adao Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 23 Confidential Property of [F/22] Consulting - 2010

40. Engines of Growth 24 Personalized Event Celebration Bundles Home Decor Commercial Image-Rich Printed Output Retail Products with Output Components Licensed Content for Consumer and Commercial Output Delivering a select number of new high-demand products with year-long demand. Retail Photo Output – 2009-2014 Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 24 Confidential Property of [F/22] Consulting - 2010

41. New Revenue -Personalized Event Celebration Bundles Birthday Anniversaries Family Gatherings Class Reunions In Remembrance ….and much more! Retail Photo Output Projections Update – May 2009 PAGE 25 Confidential Property of [F/22] Consulting, Inc. - 2009 25

42. New Revenue –Home Decor Canvas Prints Posters Collages Framed Prints Etc. PAGE 26 Confidential Property of [F/22] Consulting, Inc. - 2009 26 Retail Photo Output Projections Update – May 2009

43. New Revenue - Commercial Image-Rich Printed Output Flyers Menus Direct Mail Catalogs Image-Rich Business Cards Banners Interior and Exterior Signs Variable Data Advertising (circulars, handbills, etc.) Variable Data Direct Mail Materials ….and much more! Retail Photo Output Projections Update – May 2009 PAGE 27 Confidential Property of [F/22] Consulting, Inc. - 2009 27

44. New Revenue - Retail Products with Output Components Photo Albums & Software Bundles Digital Scrapbook & Software Bundles Collage Frame and Software bundles Album, Scanner & Software Bundles ….and much more! Retail Photo Output Projections Update – May 2009 PAGE 28 Confidential Property of [F/22] Consulting, Inc. - 2009 28

45. New Revenue - Licensed Content for Consumer and Commercial Output Disney Characters & Movie Releases) Mattel Hasbro Martha Stewart NFL NBA MLB NASCAR Warner Brothers (Characters & Movie Releases) Pixar (Characters & Movie Releases) Celebrities Events (Festivals, Major Sports Events, Concerts, etc.) ….and Much More Retail Photo Output Projections Update – May 2009 PAGE 29 Confidential Property of [F/22] Consulting, Inc. - 2009 29

46. Retail Photo Output Projections Update – May 2009 PAGE 30 Confidential Property of [F/22] Consulting, Inc. - 2009 30 About the Author Frank Baillargeon is founder and president of [F/22] Consulting. Please visit www.f22consulting.com for more information about the author or services available from [F/22] Consulting. Contact: 208-939-3301 fjbaillargeon@f22consulting.com