SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 1, 1994
CPI CORP.
__________________________________________________________________
(exact name of registrant as specified in its charter)
Delaware 0-11227 43-1256674
___________________________________________________________________
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) Number) Identification No.)
1706 Washington Avenue, St. Louis, Missouri 63103-1790
___________________________________________________________________
(Address of principal executive offices) (Zip code)
Registrants's telephone number, including area code (314) 231-1575
___________________________________________________________________
___________________________________________________________________
(Former name or former address, if changes since last report.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CPI CORP.
(Registrant)
/s/ Barry Arthur
----------------------------
Executive Vice President -
Finance
Principal Financial Officer
Dated: September 9, 1994
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ITEM 5. OTHER EVENTS
On September 1, 1994, CPI Corp. issued the following Press Release:
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CPI CORP. ANNOUNCES SECOND QUARTER RESULTS
- Earnings per share of 11 cents vs. 14 cents.
- Sales increase 9.7% as new marketing programs boost portrait
studio results.
- Photofinishing earnings reflect industry softness, plus
investments in new marketing projects.
- Management anticipates meeting, and possibly exceeding, high
end of full-year EPS range.
ST. LOUIS, MO., September 1, 1994 -- CPI Corp. (NYSE - CPY) today
announced that while second quarter sales increased 9.7%
year-to-year, due primarily to strong results in the portrait
studio segment, net earnings and earnings per share declined
somewhat, primarily due to continuing softness in the
photofinishing business, expected seasonal losses in the Prints
Plus wall decor chain and higher interest expense. The company
anticipates further improvements in portrait studios for the second
half of fiscal 1994 as it continues to roll out new marketing
programs.
Sales for the 12 weeks ended July 23, 1994 increased to $104.7
million from $95.4 million in the 12 weeks ended July 24, 1993.
Net earnings declined to $1.6 million from last year's $2.1
million, while earnings per share were 11 cents versus 14 cents,
with 2.3% fewer shares outstanding. The quarter's income from
operations was slightly above last year's before reflecting a $0.7
million increase in net interest expense due to the August 1993
private note placement.
For the 24 weeks ended July 23, 1994, sales increased 11.2% to
$204.8 million from $184.2 million due to growth in portrait studio
revenues and the inclusion of the full 24 weeks of the Prints Plus
business, which was acquired in May 1993. The company incurred a
loss of $0.9 million, or $0.06/share, in the period. Excluding the
cumulative effect of a first-quarter 1993 accounting change which
caused a one-time credit of $2.1 million, or $0.14/share, 1993's
first half showed a loss of $0.5 million, or $0.03/share. Last
year's net earnings after the accounting change were $1.6 million,
or $0.11/share. A 20.9% reduction in general corporate expense was
due primarily to the non-recurrence of last year's first-quarter
one-time charges for severance and early retirement allowances.
For the 52 weeks ended July 23, 1994, sales increased to $496.1
million from $448.3 million for the 53 weeks ended July 24, 1993.
Net earnings were $10.7 million, or $0.74 per share, versus last
year's $18.4 million, or $1.25 per share (after inclusion of the
special item mentioned above).
During the second quarter, in accordance with its ongoing program,
the company repurchased 471,600 shares of its common stock,
bringing the cumulative repurchases for the year to 676,455.
Commenting on the company's progress, Alyn V. Essman, chairman and
chief executive officer, said, "The combined first and second
quarter results in the Sears Portrait Studios were quite a bit
better than we expected, and though their effect is partially
offset by weakness in the photofinishing segment, we anticipate
improvement in overall performance for the full year. Our current
analysis, barring unforeseen circumstances, would lead us to expect
earnings to exceed $1.00 per share, and if we see continuing
positive results in the portrait studios, to be comfortably ahead
of our previously projected $1.05 maximum."
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Discussing Portrait Studio operations, Essman said, "Second quarter
sales were up 15.2% to $45.8 million, while operating earnings
increased 38.5% to $4.7 million, reflecting the impact of new
marketing programs and the partial installation of new technology.
For the first half of the year, revenues and operating earnings
increased approximately 9% and 10%, respectively, despite expenses
incurred year-to-date of $2.0 million related to the new
technology. It is worth noting that only one-third of the first
half's business was conducted utilizing the new technology. We
anticipate completing the installation of the system in the U.S.
during the third quarter, with 100% coverage prior to the
all-important Christmas season. The remaining Canadian
installations (about 10% of total studios) should be completed in
early 1995. Full-year 1994 expenses for the new technology are
expected to total approximately $6.2 million."
Turning to the Photofinishing segment, Essman commented, "Although
sales increased slightly to $46.1 million, operating earnings
declined to $2.7 million from $4.2 million. Reflecting weak
industry trends, the company experienced reductions in roll volume
and gross margin; those declines were offset by lower operating
expenses, and excluding two major marketing tests, operating
earnings in comparable operations were essentially flat. The
year-to-year difference in segment earnings is primarily due to
significant investments in those tests in two major markets, which
in the first six months show comparable operating declines in
excess of $1.25 million. The tests are encouraging in their
initial stages but will probably continue to penalize earnings
throughout 1994. If successful, the projects could form the base
for new marketing programs in 1995."
Continuing, Essman said, "Second quarter sales in the Other
Products and Services segment increased to $12.7 million compared
to last year's $9.8 million, mainly due to the inclusion of
full-quarter revenues of the Prints Plus chain, which was acquired
May 30, 1993. Although the business recorded seasonal operating
losses, it is performing generally within plan and is expected to
make a positive contribution to CPI's results again in the current
year. We expect to open about twenty new Prints Plus units this
year, and have similar expansion plans for 1995. Electronic
publishing, the segment's other business, experienced a further
reduction in operating losses on essentially flat sales."
CPI Corp. is a consumer services company with $475.5 million in
fiscal 1993 sales, operating over 1,800 retail locations, including
1,005 Sears Portrait Studios in the U.S., Puerto Rico and Canada,
667 CPI/Fox Photo/Proex photofinishing locations, 107 Prints Plus
wall decor locations, and 45 high-tech copy stores.
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS
For the 12 Weeks Ended July 23, 1994 and July 24, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
12 Weeks Ended
-------------------------
7/23/94 7/24/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 45,797 $ 39,743
Photo finishing 46,111 45,851
Other products and services 12,743 9,792
---------- ----------
Total net sales $ 104,651 $ 95,386
========== ==========
Operating earnings:*
Portrait studios $ 4,663 $ 3,368
Photo finishing 2,747 4,201
Other products and services (1,158) (928)
---------- ----------
Total operating earnings 6,252 6,641
General corporate expense* 2,851 3,288
---------- ----------
Income from operations 3,401 3,353
Net interest expense 788 62
Other income 108 168
---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 2,721 3,459
Income taxes expense 1,089 1,392
---------- ----------
Earnings before cumulative
effect of accounting change 1,632 2,067
Cumulative effect of
accounting change - -
---------- ----------
Net earnings $ 1,632 $ 2,067
========== ==========
Earnings per common share:
Earnings before cumulative
effect of accounting change $ 0.11 $ 0.14
Cumulative effect of
accounting change - -
---------- ----------
Net earnings $ 0.11 $ 0.14
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 14,342 14,680
========== ==========
<FN>
* Segment operating earnings for prior years have been restated to
conform with current year's presentation. Certain employee benefit
costs, which in prior years were recorded as part of corporate
expense, have now been reclassified to the operating segments to
better reflect the operating contribution of the segments.
</FN>
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS
For the 24 Weeks Ended July 23, 1994 and July 24, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
24 Weeks Ended
-------------------------
7/23/94 7/24/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 95,565 $ 87,827
Photo finishing 83,900 82,703
Other products and services 25,290 13,646
---------- ----------
Total net sales $ 204,755 $ 184,176
========== ==========
Operating earnings:*
Portrait studios $ 8,210 $ 7,468
Photo finishing 527 1,913
Other products and services (2,031) (1,639)
---------- ----------
Total operating earnings 6,706 7,742
General corporate expense* 7,019 8,872
---------- ----------
Loss from operations 313 1,130
Net interest income (expense) (1,317) 52
Other income 204 292
---------- ----------
Loss before income taxes
and cumulative effect of
accounting change 1,426 786
Income taxes benefit 570 315
---------- ----------
Loss before cumulative
effect of accounting change 856 471
Cumulative effect of
accounting change - 2,120
---------- ----------
Net earnings (loss) $ (856) $ 1,649
========== ==========
Earnings (loss) per common share:
Earnings (loss) before cumulative
effect of accounting change $ (0.06) $ (0.03)
Cumulative effect of
accounting change - 0.14
---------- ----------
Net earnings (loss) $ (0.06) $ 0.11
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 14,462 14,671
========== ==========
<FN>
* Segment operating earnings for prior years have been restated to
conform with current year's presentation. Certain employee benefit
costs, which in prior years were recorded as part of corporate
expense, have now been reclassified to the operating segments to
better reflect the operating contribution of the segments.
</FN>
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS
For the 52 Weeks Ended July 23, 1994 Versus
the 53 Weeks ended July 24, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
52 Vs 53 Weeks Ended
-------------------------
7/23/94 7/24/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 245,676 $ 246,945
Photo finishing 188,406 179,156
Other products and services 62,017 22,183
---------- ----------
Total net sales $ 496,099 $ 448,284
========== ==========
Operating earnings:*
Portrait studios $ 30,712 $ 39,822
Photo finishing 5,586 8,485
Other products and services 750 (4,264)
---------- ----------
Total operating earnings 37,048 44,043
General corporate expense* 17,446 18,868
---------- ----------
Income from operations 19,602 25,175
Net interest income (expense) (2,158) 504
Other income 436 598
---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 17,880 26,277
Income taxes expense 7,149 9,960
---------- ----------
Earnings before cumulative
effect of accounting change 10,731 16,317
Cumulative effect of
accounting change - 2,120
---------- ----------
Net earnings $ 10,731 $ 18,437
========== ==========
Earnings per common share:
Earnings before cumulative
effect of accounting change $ 0.74 $ 1.11
Cumulative effect of
accounting change - .14
---------- ----------
Net earnings $ 0.74 $ 1.25
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 14,569 14,663
========== ==========
<FN>
* Segment operating earnings for prior years have been restated to
conform with current year's presentation. Certain employee benefit
costs, which in prior years were recorded as part of corporate
expense, have now been reclassified to the operating segments to
better reflect the operating contribution of the segments.
</FN>
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS
July 23, 1994 and July 24, 1993
(In Thousands)
(Unaudited)
<CAPTION>
July 23, 1994 July 24, 1993
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 21,634 $ 16,877
Other current assets 59,164 53,571
Net property and equipment 139,862 108,902
Other assets 61,761 66,171
---------- ----------
Total assets $ 282,421 $ 245,521
========== ==========
Liabilities and stockholders' equity
Current liabilities $ 59,857 $ 69,366
Long-term obligations 59,728 330
Other liabilities 3,461 6,500
Stockholders' equity 159,375 169,325
---------- ----------
Total liabilities and
stockholders' equity $ 282,421 $ 245,521
========== ==========
</TABLE>
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