SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 29, 1995
Commission File Number 1-10204
CPI CORP.
------------------------------------------------------------
(Exact Name of Registrant as Specified In Its Charter)
Delaware 43-1256674
- ---------------------------- -------------------
(State of Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1706 Washington Avenue, St. Louis, Missouri 63103-1790
- -------------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 231-1575
--------------
Indicate by check mark whether the registrant has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and has been subject to such filing requirements for
the past 90 days.
Yes ______X______ No ____________
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of the latest practicable
date.
Common Stock $.40 par value 13,862,980 shares
- --------------------------- ----------------------------
Class Outstanding at June 8, 1995
<PAGE>
CPI CORP.
INDEX
Part I. Financial Information:
Item 1. Financial Statements:
Interim Condensed Consolidated Balance
Sheets - April 29, 1995, April 30, 1994
and February 4, 1995
Interim Condensed Consolidated Statements
of Earnings - For the 12 Weeks Ended
April 29, 1995 and April 30, 1994
Interim Condensed Consolidated Statements
of Changes in Stockholders' Equity - For
the 52 Weeks Ended February 4, 1995 and
for the 12 Weeks Ended April 29, 1995
Interim Condensed Consolidated Statements
of Cash Flows - For the 12 Weeks Ended
April 29, 1995 and April 30, 1994
Notes to Interim Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 6.(a) Exhibits
Exhibit 11 - Computation of Earnings
per Common Share
Exhibit 27 - Financial Data Schedule
Part II. Other Information:
Item 5 - Other Information
Item 6.(b) - Reports on Form 8-K
Signature
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS - ASSETS
(UNAUDITED)
<CAPTION>
April 29, April 30, February 4,
1995 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Current assets:
Cash $ 3,183,890 $ 4,168,402 $ 4,023,435
Short-term investments 6,821,788 32,727,215 10,326,347
Receivables 24,159,359 23,639,312 23,119,562
Inventories 30,812,429 27,885,856 33,943,140
Deferred costs applicable
to unsold portraits 145,334 2,920,186 172,645
Deferred income taxes, net 696,668 --- 244,910
Prepaid expenses and other
current assets 9,514,052 7,304,316 10,152,414
------------ ------------ ------------
Total current assets 75,333,520 98,645,287 81,982,453
------------ ------------ ------------
Net property and equipment 166,530,029 127,698,373 159,125,536
Other assets:
Intangible assets 55,436,873 59,981,890 56,362,451
Other long-term assets 2,947,278 2,954,138 3,010,636
------------ ------------ ------------
Total assets $300,247,700 $289,279,688 $300,481,076
============ ============ ============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS -
LIABILITIES (UNAUDITED)
<CAPTION>
April 29, April 30, February 4,
1995 1994 1995
------------- ------------ ------------
<S> <C> <C> <C>
Current liabilities:
Short-term borrowings $ 19,425,000 $ --- $ 6,850,000
Current maturities of
long-term
obligations 42,315 232,217 127,506
Accounts payable 31,221,726 35,718,850 27,137,106
Accrued expenses and
other liabilities 19,126,119 18,966,949 25,884,038
Income taxes 1,380,628 1,337,861 9,768,352
Deferred income taxes,
net --- 1,751,980 ---
------------- -------------- -------------
Total current
liabilities 71,195,788 58,007,857 69,767,002
------------- -------------- -------------
Long-term obligations,
less current
maturities 59,761,994 59,744,930 59,742,426
Other liabilities 3,357,259 3,268,333 4,346,139
Deferred income taxes,
net 1,192,276 672,214 625,388
------------- -------------- -------------
Total liabilities 135,507,317 121,693,334 134,480,955
------------- -------------- -------------
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS -
STOCKHOLDERS' EQUITY (UNAUDITED)
<CAPTION>
Apr. 29, 1995 Apr. 30, 1994 Feb. 4, 1995
------------- ------------- ------------
<S> <C> <C> <C>
Stockholders' equity:
Preferred stock, no
par value. 1,000,000
shares authorized;
no shares outstanding --- --- ---
Preferred stock,
Series A,no par value --- --- ---
Common stock, $.40 par
value, 50,000,000
shares authorized;
17,165,448,
17,002,365 and
17,123,599 shares
outstanding at April
29, 1995, April 30,
1994 and February 4,
1995, respectively 6,866,179 6,800,946 6,849,440
Additional paid-in
capital 32,004,840 29,644,209 31,277,872
Retained earnings 203,831,186 195,014,559 206,439,841
Cumulative foreign
currency translation
adjustment (1,821,800) (1,850,707) (2,279,278)
Treasury stock, at
cost, 3,302,463,
2,568,663 and
3,302,463 shares at
April 29, 1995,
April 30, 1994
and February 4,
1995, respectively (74,531,219) (61,885,304) (74,531,219)
Unamortized deferred
compensation -
restricted stock (1,608,803) (137,349) (1,756,535)
------------- ------------- -------------
Total stockholders'
equity 164,740,383 167,586,354 166,000,121
------------- ------------- -------------
Total liabilities and
stockholder's equity $300,247,700 $289,279,688 $300,481,076
============= ============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
12 Weeks Ended
----------------------------
April 29, April 30,
1995 1994
------------- -------------
<S> <C> <C>
Net Sales $107,445,759 $100,103,675
Cost and expenses:
Cost of sales (exclusive of
depreciation expense shown
below) 30,160,625 30,903,147
Selling, administrative and
general expenses 67,805,024 64,992,660
Depreciation 8,300,404 6,606,799
Amortization 1,370,641 1,314,720
------------- -------------
Total cost and expense 107,636,694 103,817,326
------------- -------------
Loss from operations (190,935) (3,713,651)
Net interest expense 973,817 529,474
Other income 95,367 96,215
------------- -------------
Loss before income taxes (1,069,385) (4,146,910)
Income tax benefit 395,689 1,659,778
------------- -------------
Net loss $ (673,696) $ (2,487,132)
============= =============
Net loss per share $ (0.05) $ (0.17)
============= =============
Weighted average number of
common and common equivalent
shares outstanding 13,897,180 14,581,352
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
(UNAUDITED)
52 Weeks Ended February 4, 1995 and 12 Weeks Ended April 29, 1995
<CAPTION>
Additional
Common Paid-In
Stock Capital
------------ -------------
<S> <C> <C>
Balance at February 5, 1994 $ 6,791,548 $ 29,262,531
Issuance of common stock:
Profit sharing plan and trust
(19,887 shares) 7,955 327,182
Stock bonus plan (3,694 shares) 1,476 55,764
Employee stock plans
(121,150 shares) 48,461 1,632,395
Foreign currency translation --- ---
Dividends ($0.56 per
common share) --- ---
Net earnings --- ---
Purchase of treasury stock,
at cost --- ---
Amortization of deferred
compensation-restricted stock --- ---
------------ -------------
Balance at February 4, 1995 6,849,440 31,277,872
Issuance of common stock:
Profit sharing plan and trust
(40,459 shares) 16,183 707,021
Stock bonus plan (1,390 shares) 556 19,947
Foreign currency translation --- ---
Dividends ($0.14 per common
share) --- ---
Net loss --- ---
Purchase of treasury stock,
at cost --- ---
Amortization of deferred
compensation-restricted stock --- ---
------------- -------------
Balance at April 29, 1995 $ 6,866,179 $ 32,004,840
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - RETAINED EARNINGS AND CUMULATIVE FOREIGN
CURRENCY TRANSACTION ADJUSTMENT (UNAUDITED)
52 Weeks Ended February 4, 1995 and 12 Weeks Ended April 29, 1995
<CAPTION>
Cumulative
Foreign
Currency
Retained Transaction
Earnings Adjustment
------------ -------------
<S> <C> <C>
Balance at February 5, 1994 $199,547,800 $ (1,381,524)
Issuance of common stock:
Profit sharing plan and trust
(19,887 shares) --- ---
Stock bonus plan (3,694 shares) --- ---
Employee stock plans
(121,150 shares) --- ---
Foreign currency translation --- (897,754)
Dividends ($0.56 per
common share) (7,930,037) ---
Net earnings 14,822,078 ---
Purchase of treasury stock,
at cost --- ---
Amortization of deferred
compensation-restricted stock --- ---
------------ -------------
Balance at February 4, 1995 206,439,841 (2,279,278)
Issuance of common stock:
Profit sharing plan and trust
(40,459 shares) --- ---
Stock bonus plan (1,390 shares) --- ---
Foreign currency translation --- 457,478
Dividends ($0.14 per common
share) (1,934,959) ---
Net loss (673,696) ---
Purchase of treasury stock,
at cost --- ---
Amortization of deferred
compensation-restricted stock --- ---
------------- -------------
Balance at April 29, 1995 $203,831,186 $ (1,821,800)
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - TREASURY STOCK AT COST AND DEFERRED
COMPENSATION-RESTRICTED STOCK (UNAUDITED)
52 Weeks Ended February 4, 1995 and 12 Weeks Ended April 29, 1995
<CAPTION>
Deferred
Treasury Compensation-
Stock, Restricted
At Cost Stock
------------- -------------
<S> <C> <C>
Balance at February 5, 1994 $(58,556,032) $ (155,850)
Issuance of common stock:
Profit sharing plan and trust
(19,887 shares) --- ---
Stock bonus plan (3,694 shares) --- ---
Employee stock plans
(121,150 shares) --- (1,680,856)
Foreign currency translation --- ---
Dividends ($0.56 per
common share) --- ---
Net earnings --- ---
Purchase of treasury stock,
at cost (15,975,187) ---
Amortization of deferred
compensation-restricted stock --- 80,171
------------- ------------
Balance at February 4, 1995 (74,531,219) (1,756,535)
Issuance of common stock:
Profit sharing plan and trust
(40,459 shares) --- ---
Stock bonus plan (1,390 shares) --- ---
Foreign currency translation --- ---
Dividends ($0.14 per common
share) --- ---
Net loss --- ---
Purchase of treasury stock,
at cost --- ---
Amortization of deferred
compensation-restricted stock --- 147,732
------------- -------------
Balance at April 29, 1995 $(74,531,219) $ (1,608,803)
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - TOTAL (UNAUDITED)
52 Weeks Ended February 4, 1995 and 12 Weeks Ended April 29, 1995
<CAPTION>
Total
-------------
<S> <C>
Balance at February 5, 1994 $175,508,473
Issuance of common stock:
Profit sharing plan and trust
(19,887 shares) 335,137
Stock bonus plan (3,694 shares) 57,240
Employee stock plans
(121,150 shares) ---
Foreign currency translation (897,754)
Dividends ($0.56 per
common share) (7,930,037)
Net earnings 14,822,078
Purchase of treasury stock,
at cost (15,975,187)
Amortization of deferred
compensation-restricted stock 80,171
-------------
Balance at February 4, 1995 166,000,121
Issuance of common stock:
Profit sharing plan and trust
(40,459 shares) 723,204
Stock bonus plan (1,390 shares) 20,503
Foreign currency translation 457,478
Dividends ($0.14 per common
share) (1,934,959)
Net loss (673,696)
Purchase of treasury stock,
at cost ---
Amortization of deferred
compensation-restricted stock 147,732
-------------
Balance at April 29, 1995 $164,740,383
=============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
12 Weeks Ended
----------------------------
Apr.29, 1995 Apr. 30, 1994
------------- -------------
<S> <C> <C>
Cash flows used in
operating activities $ (262,976) $ (4,018,240)
Cash flows provided by (used in)
financing activities:
Proceeds from issuance of
short-term debt 12,575,000 ---
Repayment of long-term debt (85,191) (146,131)
Issuance of common stock to
employee stock plans 743,707 391,076
Cash dividends (1,934,959) (2,046,109)
Purchase of treasury stock --- (3,329,272)
------------- -------------
Cash flows provided by
(used in) financing
activities 11,298,557 (5,130,436)
------------- -------------
Cash flows provided by (used in)
investing activities:
Purchases of short-term
investments (5,121,587) (3,991,619)
Proceeds from maturing of
short-term investments 5,077,911 17,148,379
Additions to property and
equipment (15,704,896) (19,976,399)
Long-term investments --- 49,765
------------- -------------
Cash flows used in investing
activities (15,748,572) (6,769,874)
------------- -------------
Effect of exchange rate changes
on cash and equivalents 325,211 (384,985)
------------- -------------
Net decrease in cash and cash
equivalents (4,387,780) (16,303,535)
Cash and cash equivalents at
beginning of year 9,213,908 36,070,354
------------- -------------
Cash and cash equivalents at
end of period $ 4,826,128 $ 19,766,819
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
12 Weeks Ended
----------------------------
April 29, April 30,
1995 1994
------------- -------------
<S> <C> <C>
Reconciliation of net loss
to cash flows used in
operating activities:
Net loss $ (673,696) $ (2,487,132)
Adjustments for items not
requiring cash:
Depreciation and amortization 9,666,961 7,921,519
Deferred income taxes 115,130 (249,680)
Deferred compensation (988,880) (1,579,818)
Other (78,055) (649,681)
Decrease (increase) in current
assets:
Receivables and inventories 2,090,914 (1,937,541)
Deferred costs applicable to
unsold portraits 27,311 (98,063)
Prepaid expenses and other
current assets 638,362 1,701,077
Increase (decrease) in current
liabilities:
Accounts payable, accrued
expenses and other
liabilities (2,673,299) 790,440
Income taxes (8,387,724) (7,429,361)
------------- -------------
Cash flows used in
operating activities $ (262,976) $ (4,018,240)
============= =============
Supplemental cash flow
information:
Interest paid $ 2,100,010 $ 900,776
============= =============
Income taxes paid $ 7,976,522 $ 575,553
============= =============
<FN>
See notes to interim condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
CPI CORP.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments necessary for a fair presentation of the Company's
financial position as of April 29, 1995, April 30, 1994 and
February 4, 1995 and the results of its operations and changes
in its cash flows for the 12 weeks ended April 29, 1995 and
April 30, 1994. These financial statements should be read in
conjunction with the financial statements and the notes included
in the Company's annual report on Form 10-K for its fiscal year
ended February 4, 1995.
2. Short-term investments are comprised of money market instruments
which aggregated $6.8 million, $32.7 million and $10.3 million
as of April 29, 1995, April 30, 1994, and February 4, 1995,
respectively, and are stated at cost which approximates market.
Total interest income for the 12 weeks ended April 29, 1995 and
April 30, 1994 was $135,000 and $371,000, respectively.
3. Inventories consist of the following components (amounts in
thousands)
<TABLE>
CPI CORP. INVENTORIES AT APRIL 29, 1995, APRIL 30, 1994 AND
FEBRUARY 4, 1995
<CAPTION>
April 29, April 30, February 4,
1995 1994 1995
--------- --------- ----------
<S> <C> <C> <C>
Raw materials and supplies $30,667 $27,275 $33,887
Portraits-in-process 145 611 56
-------- -------- --------
$30,812 $27,886 $33,943
======== ======== ========
</TABLE>
4. On April 28, 1995, Consumer Programs Incorporated, a wholly-
owned subsidiary of CPI Corp., entered into two separate $5.0
million credit agreements with two domestic banks. Both $5.0
million credit agreements will expire on July 31, 1995 and have
interest charged at the lower of a quoted interest rate or the
bank's prime lending rate.
<PAGE>
Total interest expense for the 12 weeks ended April 29,
1995 and April 30, 1994 was $1.1 million and $901,000,
respectively.
Total interest expense for the first fiscal quarter of
1995 was not impacted by the Company's $40 million interest
rate swap agreement. In the first fiscal quarter of 1994, net
interest expense was reduced by $83,000 in connection with the
swap agreement. While the Company has credit risk associated
with this financial instrument, no loss is anticipated due to
nonperformance by the counterparties to these agreements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
To establish a framework for discussion, selected financial data
summarizing the Company's operating results for the 12 weeks ended
April 29, 1995 and April 30, 1994, respectively, are presented in
the following table and are discussed in greater detail on
subsequent pages.
<TABLE>
<CAPTION>
12 Weeks Ended
---------------------------------------
(in thousands except per share amounts)
April 29, April 30, Amount
1995 1994 Change
---------- ---------- ----------
<S> <C> <C> <C>
Net sales:
Portrait Studios $ 55,302 $ 49,768 $ 5,534
Photofinishing 37,739 37,790 (51)
Wall Decor 10,187 8,560 1,627
Other Products and Services 4,218 3,986 232
--------- --------- ---------
$107,446 $100,104 $ 7,342
========= ========= =========
Operating earnings:
Portrait Studios $ 6,249 $ 3,547 $ 2,702
Photofinishing (1,758) (2,220) 462
Wall Decor (600) (347) (253)
Other Products and Services (411) (526) 115
--------- --------- ---------
3,480 454 3,026
General corporate expenses 3,670 4,168 498
--------- --------- ---------
Loss from operations (190) (3,714) 3,524
Net interest expense 974 529 (445)
Other income 95 96 (1)
--------- --------- ---------
Loss before income taxes (1,069) (4,147) 3,078
Income tax benefit 395 1,660 (1,265)
--------- --------- ---------
Net loss $ (674) $ (2,487) $ 1,813
========= ========= =========
Net loss per common share $ (0.05) $ (0.17) $ 0.12
========= ========= =========
Weighted average number of
common and common equivalent
shares outstanding 13,897 14,581 (684)
========= ========= =========
</TABLE>
<PAGE>
Results of Operations
- ---------------------
Revenues: Sales increased 7.3% to $107.4 million in the first
fiscal quarter of 1995 from $100.1 million in the first fiscal
quarter of 1994, due primarily to increased sales in the Portrait
Studio segment. In addition, the Wall Decor and Other Products
and Services segments had increases in sales in the first fiscal
quarter of 1995 over the comparable period of the prior fiscal
year. First fiscal quarter Photofinishing segment sales remained
essentially level when compared to the prior year's first fiscal
quarter.
Portrait Studio sales were $55.3 million in the first fiscal
quarter of 1995, increasing 11.1% from $49.8 million recorded in
the comparable period last year. The Company believes the
installation of the new digital imaging technology, completed in
September of 1994, has contributed significantly to higher customer
sales as customers continue to respond favorably to this new
technology. In addition, customers are responding favorably to the
Custom Portraits by Sears program, introduced by the Company in the
latter part of fiscal year 1994. Under the new program, the
customer can select any combination of poses, sizes and
backgrounds, and only the portraits ordered by the customer are
produced and delivered. This customization has increased the
customer's satisfaction and allowed the Company to decrease costs.
In the Photofinishing segment, which has a seasonally slow first
fiscal quarter, sales levels were relatively unchanged at $37.7
million for the first fiscal quarter of 1995 compared to $37.8
million in the corresponding period last year, with an increase in
sales per roll attributed to a modified advertising program
offsetting a decrease in the number of store locations.
Sales of the Wall Decor segment were $10.2 million in the first
fiscal quarter of 1995, increasing 19.0% from $8.6 million recorded
in the comparable period last year, due largely to the opening of
18 new locations during the latter half of fiscal 1994 and 11 new
locations in the first fiscal quarter of 1995.
Other Products and Services, which includes the electronic
publishing business, also experienced sales improvement, increasing
to $4.2 million in first fiscal quarter 1995 from $4.0 million in
first fiscal quarter 1994, a 5.8% increase. Sales per week per
store for electronic publishing locations rose 18.3% in the first
fiscal quarter of 1995 from the comparable quarter of 1994,
reflecting the improving performance of the newer markets and the
closure of six marginal locations late in 1994 and early in 1995.
Operating Income: Losses from operations declined to $190,000 in
the first fiscal quarter of 1995 from $3.7 million recorded in the
first fiscal quarter of 1994 due primarily to improved operating
earnings in the Portrait Studio operations.
<PAGE>
Portrait Studio operating earnings increased 76.1% to $6.2 million
in the first fiscal quarter of 1995 from $3.5 million in the first
fiscal quarter of 1994 as higher sales, lower advertising expenses
and lower manufacturing costs, resulting from a substantial
reduction in the number of speculative units produced, were offset
by increased depreciation and studio employment costs. Additional
depreciation for the new freeze-frame digital imaging system in the
first fiscal quarter of 1995 amounted to $1.3 million in excess of
the comparable period last year.
Photofinishing operating losses for first fiscal quarter were
reduced to $1.8 million from $2.2 million due primarily to improved
results in certain test markets and improved gross margin.
The seasonally slow first fiscal quarter for the Wall Decor segment
was reflected in operating losses of $600,000, an increase in
operating losses from the $347,000 recorded in the first fiscal
quarter of 1994, due primarily to the seasonal losses from the
addition of 28 locations opened during the latter part of 1994 and
the first fiscal quarter of 1995.
Other Products and Services operating losses were improved due to
the closure of several unprofitable stores during the latter part
of 1994 and during the first fiscal quarter of 1995, in addition to
improved sales per store.
Net Earnings: Net losses decreased to $674,000 in the first fiscal
quarter of 1995 from $2.5 million recorded in the same period in
1994 as a result of higher income from operations and a decrease in
corporate expense due primarily to a reduction in the Company's
health care costs, offset slightly by higher interest expenses due
to increased short-term borrowings. Interest expense for the first
fiscal quarter of 1995 was not impacted by any additional charges
for the Company's $40 million interest rate swap agreement as the
Company had recorded the swap agreement at its market value in
fiscal year 1994 and no appreciable changes in the interest rate
environment have occurred from the end of the fiscal year 1994 to
the end of the first fiscal quarter of 1995. In the first fiscal
quarter of 1994, net interest expense was reduced by $83,000 in
connection with the swap agreement.
Net loss per share was $.05 per share in the first fiscal quarter
of 1995 compared to $.17 per share in the first fiscal quarter of
1994 with weighted average number of common and common equivalent
shares outstanding being 13,897,180 and 14,581,352 for first fiscal
quarters of 1995 and 1994, respectively. The reduction in weighted
average number of common and common equivalent shares outstanding
was a result of shares purchased in fiscal 1994 under the Company's
stock repurchase program.
<PAGE>
Capital Resources and Liquidity
- -------------------------------
The Company has a $50.0 million revolving credit agreement with a
domestic bank. In addition, on April 28, 1995, Consumer Programs
Incorporated, a wholly-owned subsidiary of CPI Corp., entered into
two separate $5.0 million credit agreements with two domestic
banks. Both $5.0 million credit agreements will expire on July 31,
1995 and have interest charged at the lower of a quoted interest
rate or the bank's prime lending rate. The Company is currently
negotiating to consolidate all three credit agreements into a
single $60.0 million revolving credit agreement.
Cash, cash equivalents and short-term investments were $10.0
million, $36.9 million and $14.3 million on April 29, 1995, April
30, 1994 and February 4, 1995, respectively. Short-term borrowings
amounted to $19.4 million and $6.9 million on April 29, 1995 and
February 4, 1995, respectively. There were no short-term
borrowings on April 30, 1994.
The decline in cash, cash equivalents, short-term investments and
available short-term borrowings from fiscal year-end was due to the
seasonal cash needs of the business and capital expenditures
amounting to $15.7 million in the first fiscal quarter of 1995.
These capital expenditures included the continuing installation of
the new digital imaging technology in the Canadian Portrait Studio
operations and the previously announced studio renovation program.
ITEM 6(a) INDEX TO EXHIBITS
Exhibit 11 - Computation of Earnings per Comman Share
Exhibit 27 - Financial Data Schedule
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On August 31, 1993, the Company entered into an agreement (the
"Note Agreement") for the private placement with two insurance
companies of $60.0 million of the Company's senior notes. At the
same time, the Company entered into a $25.0 million revolving
credit agreement with a bank (the "Revolving Credit Agreement"),
which was subsequently amended to $50.0 on November 9, 1994.
The agreements are also secured by the pledge of all of the issued
and outstanding capital stock of all of the Company's direct,
wholly owned subsidiaries pursuant to a Pledge Agreement. The
lenders, under the pledged Note Agreement and the Revolving Credit
Agreement, must release their lien on the pledged shares if the
Company satisfies a specified consolidated fixed charge coverage
ratio for its fiscal year ending February 3, 1995.
On April 25, 1995, the Company certified to the lenders that the
specified consolidated fixed charge coverage ratio for fiscal year
ending February 3, 1995 had been met. Pursuant to the direction of
the lenders, on June 5, 1995, the lien on the pledged shares of the
Company's direct, wholly owned subsidiaries was released.
ITEM 6(b) REPORTS ON FORM 8-K
- On March 3, 1995, CPI Corp. reported the issuance of a
press release on March 2, 1995 announcing preliminary
fourth quarter and full year results for fiscal year 1994
were better than recent estimates.
- On April 11, 1995, CPI Corp. reported the issuance of
press releases on April 3, 1995 and April 6, 1995. The
first release announced Sears, Roebuck and Co. had
bestowed double honors upon CPI Corp. by awarding CPI
Corp. the "Chairman's Award" for the first time and the
"Partners in Progress" award for the tenth time in twelve
years. The second release announced final fourth quarter
and fiscal year 1994 results.
<PAGE>
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.
Date: June 9, 1995 By: /s/ Barry Arthur
---------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
ITEM 6(a). EXHIBIT 11
<TABLE>
CPI CORP. COMPUTATION OF EARNINGS PER COMMON SHARE
(In Thousands Except Per Share Amounts)
<CAPTION>
12 Weeks Ended
---------------------
April 29, April 30,
1995 1994
--------- ---------
<S> <C> <C>
Primary:
Net loss applicable to
common shares $ (674) $ (2,487)
========= =========
Shares:
Weighted average number of
common shares outstanding 17,165 17,002
Shares issuable under employee
stock plans - weighted average 34 16
Less: Treasury stock - weighted
average (3,302) (2,437)
--------- ---------
Weighted average number of common
and common equivalent shares
outstanding 13,897 14,581
========= =========
Net loss per common and
common equivalent shares $ (0.05) $ (0.17)
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> APR-29-1995
<CASH> 3,184
<SECURITIES> 6,822
<RECEIVABLES> 25,558
<ALLOWANCES> 1,399
<INVENTORY> 30,812
<CURRENT-ASSETS> 75,334
<PP&E> 323,557
<DEPRECIATION> 157,027
<TOTAL-ASSETS> 300,248
<CURRENT-LIABILITIES> 71,196
<BONDS> 0
<COMMON> 6,866
0
0
<OTHER-SE> 157,184
<TOTAL-LIABILITY-AND-EQUITY> 300,248
<SALES> 107,446
<TOTAL-REVENUES> 107,446
<CGS> 30,1617
<TOTAL-COSTS> 107,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,109
<INCOME-PRETAX> (1,069)
<INCOME-TAX> (396)
<INCOME-CONTINUING> (674)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (674)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
