yes it can, and nobody will poke fun at you for asking a legit question 😉
the functions you are looking for would be along the lines of
[man]imagecopyresampled/man
[man]imagepng/man
[man]imagecreatefrompng/man
those would be the primary ones....
and of course you will need the teady bear and the ribbon pics seperate.... or it could be done with just the bear and the ribbon generated on the fly by PHP but having 2 seperates would be faster....
if you do a search for dynamic image and my nick you should pull up an old old thread where I explain somethings similiar to that... but I'll gladly help you out. And congratulations if you are looking for one of these because you are expecting 🙂