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) December 19, 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: December 22, 1994
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ITEM 5. OTHER EVENTS
On December 19, 1994, CPI Corp. issued the following Press Release:
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CPI CORP ANNOUNCES THIRD QUARTER RESULTS
- - - - Sales increase 20.7%, led by Sears Portrait Studios
- - - - Earnings per share of 28 cents versus 23 cents - up 21.7%
- - - - Unlikely to achieve most recent full-year earnings projection
St. Louis, MO., December 19, 1994 - CPI Corp. (NYSE - CPY) said
today that third quarter sales increased by 20.7% year-over-year,
driven primarily by strong performance in the Sears Portrait
Studios. Net earnings grew by 14.3%, while earnings per share were
up 21.7%, partially bolstered by the repurchase of 939,000 common
shares.
Sales in the 16 weeks ended November 12, 1994 increased to $175.4
million from $145.3 million in the 16 weeks ended November 13,
1993. Income from continuing operations was essentially constant
as a percentage of sales and grew by $1.5 million, to $7.6 million
from $6.1 million. In the face of higher revenues, general
corporate expense declined somewhat. Those factors, partially
offset by $800,000 higher net interest cost, resulted in net
earnings of $3.8 million versus last year's $3.4 million; earnings
per share were 28 cents versus 23 cents.
For the 40 weeks ended November 12, 1994, the company recorded net
earnings per share of 21 cents versus 34 cents for last year's
comparable period. For the 52 weeks ended November 12, 1994, net
earnings per share were $0.78 versus $1.06 for the 53 weeks ended
November 13, 1993. The 1993 results in both periods include a 14
cents credit for the cumulative effect of an accounting change.
Third quarter Portrait Studio revenues increased to $96.5 million
from $68.7 million and operating earnings grew to $12.0 million
from $8.7 million. Commenting on the results, Alyn V. Essman,
chairman and chief executive officer, said, "We are extremely
pleased with the top-line growth resulting from our customers'
enthusiastic response to the new technology and marketing programs.
The added expenses associated with introduction of the new
technology, including training, additional depreciation costs from
installation, and a very heavy advertising budget, have hampered
our efforts to improve operating margin, which was 12.4% for the
quarter versus last year's 12.7%."
"We are quite happy with the overall development of the new system.
As we refine processes and move beyond the one-time costs of system
installation and introduction, we anticipate gaining efficiencies
which would help us to convert future revenue gains into higher
operating margins. Our new portrait studio program is based on
delivering high value. The long-term success will be measured by
the return of many satisfied customers."
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In discussing the Photofinish segment, Essman said, "Revenues
increased slightly to $59.4 million, with the growth coming
primarily in the last four to five weeks of the quarter. Operating
earnings declined, however, to $1.0 million from $3.3 million.
Continuing competitive pressures, along with the impact of ongoing
tests, had a negative impact on margins. We continue to test new
technologies and marketing approaches."
Turning to the Other Products and Services segment, Essman said,
"Revenues increased to $19.5 million from $18.1 million, mainly due
to growth in the Prints Plus division. Operating losses were
reduced, primarily due to increased contributions from Prints Plus;
results in the copy services division were essentially flat. We
are very satisfied with the progress of the Prints Plus operation,
which will make its most significant contribution in the fourth
quarter as results from existing stores are combined with those of
the seventeen locations opened thus far in the current year."
Looking ahead, Essman said, "Due to the vast technology and
marketing changes in our portrait studios, we entered this year's
Christmas season knowing that it would be more difficult than usual
to predict. The fourth quarter sittings are much stronger than we
anticipated, which has hampered our ability to sell effectively,
resulting in less growth in the average sale than we projected, and
has not allowed us to fully realize the benefits the new technology
can ultimately provide. Therefore, we do not expect margins in the
final quarter to be as strong as we had hoped, and it appears that
we are unlikely to achieve our most recent earnings projection.
For guidance purposes only, until better information is available,
we would tend to estimate that full-year earnings per share will
fall within the general range of 80 cents to $1.00. If necessary,
we will provide further earnings guidance in early January."
Concluding, Essman said, "We are confident that the lessons learned
during this transition period about the new portrait studio
technology and marketing programs will allow us to optimize the
results and achieve the targeted returns on the multi-year
investments we have made in our core business."
CPI Corp. is a consumer services company with $475.5 million in
fiscal 1993 sales, operating over 1,800 retail locations, including
1,017 Sears Portrait Studios in the U.S., Puerto Rico and Canada,
681 CPI/Fox Photo/Proex photofinishing locations, 120 Prints Plus
wall decor locations, and 43 high-tech copy stores.
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS
For the 16 Weeks Ended November 12, 1994 and November 13, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
16 Weeks Ended
-------------------------
11/12/94 11/13/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 96,477 $ 68,670
Photo finishing 59,448 58,519
Other products and services 19,479 18,131
---------- ----------
Total net sales $ 175,404 $ 145,320
========== ==========
Operating earnings:*
Portrait studios $ 11,975 $ 8,705
Photo finishing 1,033 3,325
Other products and services (36) (270)
---------- ----------
Total operating earnings 12,972 11,760
General corporate expense* 5,401 5,688
---------- ----------
Income from operations 7,571 6,072
Net interest expense (1,436) (616)
Other income 91 132
---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 6,226 5,588
Income tax expense 2,394 2,235
---------- ----------
Earnings before cumulative
effect of accounting change 3,832 3,353
Cumulative effect of
accounting change - -
---------- ----------
Net earnings $ 3,832 $ 3,353
========== ==========
Earnings per common share:
Earnings before cumulative
effect of accounting change $ 0.28 $ 0.23
Cumulative effect of
accounting change - -
---------- ----------
Net earnings $ 0.28 $ 0.23
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 13,829 14,673
========== ==========
<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 40 Weeks Ended November 12, 1994 and November 13, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
40 Weeks Ended
-------------------------
11/12/94 11/13/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 192,043 $ 156,497
Photo finishing 143,348 141,222
Other products and services 44,769 31,777
---------- ----------
Total net sales $ 380,160 $ 329,496
========== ==========
Operating earnings:*
Portrait studios $ 20,184 $ 16,172
Photo finishing 1,559 5,238
Other products and services (2,067) (1,908)
---------- ----------
Total operating earnings 19,676 19,502
General corporate expense* 12,420 14,560
---------- ----------
Income from operations 7,256 4,942
Net interest expense (2,751) (563)
Other income 295 423
---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 4,800 4,802
Income tax expense 1,824 1,920
---------- ----------
Earnings before cumulative
effect of accounting change 2,976 2,882
Cumulative effect of
accounting change - 2,120
---------- ----------
Net earnings $ 2,976 $ 5,002
========== ==========
Earnings per common share:
Earnings before cumulative
effect of accounting change $ 0.21 $ 0.20
Cumulative effect of
accounting change - 0.14
---------- ----------
Net earnings $ 0.21 $ 0.34
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 14,209 14,672
========== ==========
<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 November 12, 1994 Versus
the 53 Weeks Ended November 13, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
52 Vs 53 Weeks Ended
-------------------------
11/12/94 11/13/93
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 273,483 $ 244,760
Photo finishing 189,335 186,957
Other products and services 63,366 35,418
---------- ----------
Total net sales $ 526,184 $ 467,135
========== ==========
Operating earnings:*
Portrait studios $ 33,981 $ 37,419
Photo finishing 3,293 8,044
Other products and services 984 (3,390)
---------- ----------
Total operating earnings 38,258 42,073
General corporate expense* 17,158 20,316
---------- ----------
Income from operations 21,100 21,757
Net interest expense (2,978) (377)
Other income 396 578
---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 18,518 21,958
Income tax expense 7,307 8,469
---------- ----------
Earnings before cumulative
effect of accounting change 11,211 13,489
Cumulative effect of
accounting change - 2,120
---------- ----------
Net earnings $ 11,211 $ 15,609
========== ==========
Earnings per common share:
Earnings before cumulative
effect of accounting change $ 0.78 $ 0.92
Cumulative effect of
accounting change - .14
---------- ----------
Net earnings $ 0.78 $ 1.06
========== ==========
Weighted average number of common
and common equivalent shares
outstanding 14,309 14,669
========== ==========
<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
November 12, 1994 and November 13, 1993
(In Thousands)
(Unaudited)
<CAPTION>
November 12, November 13,
1994 1993
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 17,715 $ 50,172
Other current assets 88,121 79,835
Net property and equipment 157,111 112,309
Other assets 60,358 64,699
---------- ----------
Total assets $ 323,305 $ 307,015
========== ==========
Liabilities and stockholders' equity
Current liabilities $ 102,676 $ 71,266
Long-term obligations 59,738 59,841
Other liabilities 4,303 6,301
Stockholders' equity 156,588 169,607
---------- ----------
Total liabilities and
stockholders' equity $ 323,305 $ 307,015
========== ==========
</TABLE>
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