SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-KA
CURRENT REPORT
AMENDMENT 2
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 18, 1996
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.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
B. Pro Forma Financial Information
CPI CORP.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Pro Forma Consolidated Financial Statements have been
prepared to reflect the Photofinishing Joint Venture Transaction
wherein the Company sold 51% of the outstanding shares of Fox
Photo, Inc. (Fox Photo) to Eastman Kodak Company for a cash
purchase price of $56.1 million subject to adjustment resulting
from changes in Fox Photo's net worth between April 27, 1996 and
October 4, 1996.
Fox Photo contains substantially all the Company's retail
photofinishing business and currently operates under the trade
names of Fox Photo, CPI Photo Finish and Proex Photo Systems,
Inc. (Proex). Proex is a wholly owned subsidiary of Fox Photo,
Inc.
The following Unaudited Pro Forma Consolidated Financial
Statements are based on historical information which has been
adjusted to reflect the Photofinishing Joint Venture Transaction
as if it had occurred on February 5, 1995, the beginning of the
periods presented with respect to the income statement data, and
as of July 20, 1996 with respect to balance sheet data. The
assumptions on which the pro forma financial information is based
are further described in the Notes to the Unaudited Pro Forma
Consolidated Financial Statements. The historical statements are
included in the Company's Annual Report on Form 10-K for the year
ended February 3, 1996 (the Company's 1995 Annual Report) and
from the Unaudited Consolidated Financial Statements included in
the Company's Quarterly Reports on From 10-Q for the period ended
July 20, 1996. More comprehensive financial information is
included in such reports and the financial information which
follows is qualified in its entirety by reference to such reports
and all of the financial statements and related notes contained
therein. The Unaudited Pro Forma Consolidated Financial
Statements should be read in conjunction with the consolidated
historical financial information and does not purport to be
indicative of the results that would actually have been obtained
had the Photofinishing Joint Venture Transaction been consummated
at the dates indicated or that may be obtained in the future.
<PAGE>
<TABLE>
CPI CORP. PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Twenty-four weeks ended July 20, 1996
<CAPTION>
Historical Pro Forma Note Pro Forma
07/20/96 Adjustments Ref. 07/20/96
---------- ----------- ---- ---------
<S> <C> <C> <C> <C>
Net sales $ 210,108 $ (78,220) (5) $ 131,888
Costs and expenses:
Cost of sales
(exclusive of
depreciation) 58,453 (31,288) (5) 27,165
Selling, admini-
strative and
general expenses 135,442 (38,791) (5) 95,354
550 (6)
(1,385) (7)
(462) (8)
Depreciation 17,234 (5,980) (5) 11,254
Amortization 1,959 (1,800) (5) 159
---------- ---------- ----------
213,088 79,156 133,932
Income (loss)
from operations (2,980) 936 (2,044)
Net interest expense 2,008 (1,225) (10) 783
Minority interest in
losses of venture - (596) (9) (596)
Other income 331 - 331
---------- ---------- ----------
Earnings (losses)
before income taxes (4,657) 1,565 (3,092)
Income tax expense
(benefit) (1,723) 579 (11) (1,144)
---------- ---------- ----------
Net earnings (loss) (2,934) 986 (1,948)
========== ========== ==========
Net earnings (loss)
per common share (.21) .07 (.14)
========== ========== ==========
Weighted average
number of common
and common equi-
valent shares
outstanding 13,982 13,982 13,982
========== ========== ==========
<FN>
See notes to pro forma consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited) (in thousands of dollars except per share amounts)
Fifty-two weeks ended February 3, 1996
<CAPTION>
Historical Pro Forma Note Pro Forma
02/03/96 Adjustments Ref. 02/03/96
---------- ----------- ---- ---------
<S> <C> <C> <C> <C>
Net sales $ 526,651 $(188,408) (5) $ 338,243
Costs and expenses:
Cost of sales
(exclusive of
depreciation) 135,559 (75,363) (5) 60,196
Selling, admini-
strative and
general expenses 318,413 (91,219) (5) 224,294
1,100 (6)
(3,000) (7)
(1,000) (8)
Depreciation 35,457 (13,957) (5) 21,500
Amortization 5,550 (3,600) (5) 1,950
---------- ---------- ----------
494,979 (187,039) 307,940
Income from operations 31,672 (1,369) 30,303
Net interest expense 4,597 (2,655) (10) 1,942
Minority interest in
earnings of venture - 372 (9) 372
Other income 563 - 563
---------- ---------- ----------
Earnings from
continuing operations
before income taxes 27,638 1,658 29,296
Income tax expense 9,979 614 (11) 10,593
---------- ---------- ----------
Net earnings from
continuing operation 17,659 1,044 18,703
Net losses from dis-
continued operations (3,326) - (3,326)
---------- ---------- ----------
Net earnings $ 14,333 $ 1,044 $ 15,377
========== ========== ==========
Earnings per common
share:
Net earnings from
cont. operations $ 1.26 $ .08 $ 1.34
Net losses from
discont. operations (.24) - (.24)
--------- ----------- ----------
Net earnings $ 1.02 $ .08 $ 1.10
========== ========== ==========
Weighted average
number of common
and common equi-
valent shares
outstanding 13,989 13,989 13,989
========== ========== ==========
<FN>
See notes to Pro Forma Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA CONSOLIDATED BALANCE SHEET - ASSETS
(Unaudited) (in thousands of dollars)
Twenty-four weeks ended July 20, 1996
<CAPTION>
Historical
CPI Corp. Pro Forma Note Pro Forma
07/20/96 Adjustments Ref. 07/20/96
---------- ----------- ---- ---------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 3,374 $ (1,900) (2) $ (1,474)
Short-term
investments 2,762 52,591 (2) 42,053
(4,000) (3)
(9,300) (4)
Receivables 18,999 (6,306) (2) 12,693
Inventories 31,164 (12,917) (2) 18,247
Prepaid expenses
and other
current assets 8,927 (802) (2) 8,125
Deferred income
taxes, net 3,476 - 3,476
---------- ----------- ----------
Total current
assets 68,702 17,366 86,068
Net property
and equipment 170,200 (36,000) (2) 134,200
Other assets
Intangible assets,
net 50,214 (49,747) (2) 467
Investment in
minority-
owned venture - 44,590 (2) 48,590
4,000 (3)
Other long-term
assets 4,120 - 4,120
---------- ----------- ----------
Total other
assets 54,334 (1,157) 53,177
---------- ----------- ----------
Total assets $ 293,236 $ (19,791) $ 273,445
========== ========== ==========
<FN>
See accompanying notes to pro forma consolidated financial
statements
</FN>
</TABLE>
<PAGE>
<TABLE>
CPI CORP. PRO FORMA CONSOLIDATED BALANCE SHEET - LIABILITIES
(Unaudited) (in thousands of dollars)
Twenty-four weeks ended July 20, 1996
<CAPTION>
Historical
CPI Corp. Pro Forma Note Pro Forma
07/20/96 Adjustments Ref. 07/20/96
---------- ----------- ---- ---------
<S> <C> <C> <C> <C>
Liabilities and
stockholders' equity
Current liabilities:
Short-term borrowings $ 9,300 $ (9,300) (4) $ -
Current maturities
of long-term
obligations 5,000 - 5,000
Accounts Payable 29,517 (12,986) (2) 16,531
Accrued expenses and
other liabilities 20,219 (3,500) (2) 16,719
---------- ----------- ----------
Total current
liabilities 64,036 (25,786) 38,250
Long-term obligations
less current maturities 54,846 - 54,846
Other liabilities 4,228 (185) (2) 4,043
Deferred income taxes,
net 1,491 2,287 (2) 3,778
---------- ----------- ----------
Total liabilities 124,601 (23,684) 100,917
Stockholders' equity 168,635 3,893 (2) 172,528
---------- ----------- ----------
Total liabilities
and stockholders'
equity $ 293,236 $ (19,791) $ 273,445
========== ========== ==========
<FN>
See accompanying notes to pro forma consolidated financial
statements
</FN>
</TABLE>
<PAGE>
CPI CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The Pro Forma Consolidated Financial Statements reflect the
joint venture transaction entered into by the Company with Eastman
Kodak Company (Kodak) on October 4, 1996 as if the transaction had
occurred on February 5, 1995, the beginning of the periods
presented with respect to the income statement data, and on July
20, 1996 with respect to the balance sheet data. The new joint
venture will own and operate the Company's retail photofinishing
business previously conducted by the Company's Fox Photo, Inc. and
Proex Photo System, Inc. (Proex) subsidiaries and operates under
the trade names of Fox Photo, CPI Photo Finish and Proex. Proex
is a wholly owned subsidiary of Fox Photo, Inc. Under terms of
the agreement, Kodak acquired a 51% interest in the joint venture
for a cash purchase price of $56.1 million subject to adjustments
resulting from changes in Fox's net worth between April 27, 1996
and the October 4, 1996 consummation date.
<PAGE>
(2) Entry to reflect the purchase price as adjusted, eliminate
the net assets of the Joint Venture on the Company's books, record
the estimated transaction cost, record the gain on the transaction
net of taxes and the minority interest for the 49% share of the
Joint Venture retained by the Company as follows:
<TABLE>
<CAPTION>
07/20/96
<S> <C>
Cash $ 1,900
Receivables 6,306
Inventories 12,917
Prepaid expenses and other
current assets 802
Net property and equipment 36,000
Intangible assets 49,747
---------
107,672
Accounts payable 12,986
Accrued expenses and other
liabilities 3,500
Other liabilities 185
---------
Net assets of Joint Venture 91,001
Minority interest 49% 44,590
---------
Percent sold 51% 46,411
---------
Consideration received 56,100
Estimated consideration adjustments
and costs of transaction (3,509)
---------
Net consideration 52,591
---------
Gain before taxes on Joint Venture
transaction 6,180
Deferred tax liability 2,287
---------
Net gain on Joint Venture
transaction $ 3,893
=========
</TABLE>
(3) Entry to record $4.0 million loan to the Joint Venture.
(4) Entry to reclassify short-term borrowings to short-term
investments for balance sheet presentation assuming cash would
have been used to pay off debt related to Fox.
<PAGE>
(5) Entry to eliminate the photo finish business which is being
transferred to the Joint Venture.
(6) Entry to adjust for certain benefit expense allocations to
reflect the expected future cost to the Joint Venture.
(7) Entry to adjust for administrative services to be provided to
the Joint Venture which were not charged to the photo finish
business.
(8) Entry to reflect minimal consulting services by senior
management to the Joint Venture. Consulting services are expected
to be from $1.0 million to $3.0 million per year based on certain
performance levels.
(9) Entry to reflect minority interest profit (loss) for the
period indicated.
(10) Entry to adjust for an estimated net decrease in interest
expense to reflect the increase in short-term investments
resulting from the Joint Venture transaction.
(11) Entry to record an estimated tax expense on the pro forma
adjustments.
<PAGE>
SIGNATURE
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
-----------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: December 10, 1996
<PAGE>
