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 10,1996
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' telephone number, including area code (314) 231-1575
________________________________________________________________
________________________________________________________________
(Former name or former address, if changes since last report.)
<PAGE>
ITEM 5. OTHER EVENTS
A. On December 10, 1996, CPI Corp. issued the following press
release announcing third quarter results.
CPI CORP. ANNOUNCES THIRD QUARTER RESULTS
- Gain on formation of joint venture drives net earnings
from continuing operations to 54.3% increase, with EPS
of 36 cents (28 cents from gain) compared to 24 cents
- Operating earnings down 36.3%, reflecting soft
portrait studio and Prints Plus sales results
St. Louis, MO., December 9, 1996 - CPI Corp. (NYSE - CPY)
said today that third quarter operating earnings declined
36.3% from the prior year's level, due mainly to flat Sears
Portrait Studio sales, combined with higher cost of sales
and other expenses in that segment. However, a gain from
the sale of a share in the company's photofinishing segment
(in the formation of a joint venture) resulted in a 54.3%
increase in earnings from continuing operations, which
without the gain would have declined 64.8%.
Sales were not comparable in the 16 WEEKS ENDED NOVEMBER 9,
1996 as they reflected a decrease to $145.4 million from
$166.2 million in the 16 weeks ended November 11, 1995,
while operating earnings decreased to $8.4 million from
last year's $13.2 million. Because the joint venture was
consumated in the 11th week of the 16-week quarter,
revenues for the previously wholly owned photofinishing
segment were not reflected in sales for the last five weeks
of the quarter, and operating results are non-comparable.
General corporate expense decreased from $6.5 million to
$5.2 million, while interest expense declined by $0.5
million. Including a $6.2 million gain from the sale of
51% of the Fox Photo, Inc. photofinishing segment to
Eastman Kodak Co., earnings from continuing operations
totaled $8.0 million compared to last year's $5.2 million.
Net earnings were $5.0 million ($3.9 million from the gain)
compared to $3.3 million, and earnings per share were 36
cents (28 cents from the gain) versus 24 cents. Including
discontinued operations, 1995 net earnings per share were
23 cents.
For the 40 WEEKS ENDED NOVEMBER 9, 1996, the company
recorded earnings from continuing operations of $2.1
million (15 cents per share) compared to $5.4 million (39
cents per share) for last year's comparable period.
Including discontinued operations, net earnings per share
were 34 cents in 1995.
<PAGE>
For the 52 WEEKS ENDED NOVEMBER 9, 1996, earnings from
continuing operations were $14.4 million ($1.03 per share)
as compared to $18.0 million ($1.29 per share). Including
discontinued operations, net earnings per share were $0.84
as compared to $1.19.
Commenting on the results, Alyn V. Essman, chairman and
chief executive officer said, "Third quarter sales in our
PORTRAIT STUDIOS segment were essentially flat at $91.3
million compared to the prior year's $91.2 million.
Operating earnings declined to $8.2 million from last
year's $12.4 million, due primarily to increased cost of
sales, plus higher employment and depreciation expenses."
Continuing, Essman said, "PHOTOFINISHING segment sales were
$36.4 million through the October 4, 1996 consummation of
the joint venture, as compared to $58.0 million for the
full 1995 third quarter. Operating earnings were $0.4
million, compared to the prior year's loss of $0.1 million.
CPI's interest in Fox Photo operations following the
formation of the joint venture amounted to a loss of $0.4
million."
"In our Wall Decor segment, third quarter sales increased
to $17.7 million from $17.0 million. The segment recorded
an operating loss of $0.2 million compared to last year's
operating earnings of $1.0 million. The decline was
largely due to higher employment and occupancy expenses
associated with new stores opened in the past year, plus
weak sales performance in comparable stores, which were
3.1% down from last year's level."
Concluding, Essman said, "The current year has been a
disappointing one. Because of high installation costs,
training costs and research and development in the portrait
studio operation, we needed a very strong sales increase in
the third and fourth quarters to achieve improved
profitability. That goal will not be achieved. Customer
traffic has been good and we expect sales to exceed last
year's, but studio operating profits will be significantly
lower than last year. Prints Plus is also having a weak
Christmas season so far, and will likely have lower sales
and lower profits.
"Looking forward to 1997, the major technology investments
are in place, so we'll be redoubling our efforts to reduce
costs and improve profit performance. That is our goal for
the coming year."
CPI is a consumer services company currently operating
approximately 1,200 retail locations, including 1,033 Sears
Portrait Studios in the U.S., Puerto Rico and Canada, and
156 Prints Plus wall decor locations.
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 16 WEEKS ENDED
NOVEMBER 9, 1996 (in thousands except per share amounts -
unaudited)
<CAPTION>
16 Weeks Ended
----------------------
11/09/96 11/11/95
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 91,300 $ 91,156
One-hour photofinishing 36,437 58,028
Wall decor 17,698 16,972
---------- ----------
Total net sales $ 145,435 $ 166,156
Operating earnings:
Portrait studios $ 8,222 $ 12,399
One-hour photofinishing 439 (125)
Wall decor (220) 972
---------- ----------
Total operating earnings 8,441 13,246
General corporate expense 5,189 6,509
---------- ----------
Income from operations 3,252 6,737
Net interest expense 1,145 1,691
Minority interest in affiliate (430) -
Gain 6,180 -
Other income 150 147
---------- ----------
Earnings from continuing
operations before income
taxes 8,007 5,193
Income tax expense 2,963 1,923
---------- ----------
Net earnings from continuing
operations 5,044 3,270
---------- ----------
Losses from discontinued
operations net of income
tax benefits - (94)
Loss on disposal net of
income tax benefits
of $1,372 - -
---------- ----------
Total losses from
discontinued operations - (94)
---------- ----------
Net earnings $ 5,044 $ 3,176
========== ==========
Earnings (loss) per
common share:
From continuing operations $ 0.36 $ 0.24
From discontinued
operations - (0.01)
---------- ----------
Net earnings (loss) per
common share $ 0.36 $ 0.23
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 14,066 14,090
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 40 WEEKS ENDED
NOVEMBER 9, 1996 (in thousands except per share amounts -
unaudited)
<CAPTION>
40 Weeks Ended
----------------------
11/09/96 11/11/95
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 199,654 $ 196,208
One-hour photofinishing 114,518 141,937
Wall decor 41,371 38,460
---------- ----------
Total net sales $ 355,543 $ 376,605
Operating earnings:
Portrait studios $ 16,109 $ 23,819
One-hour photofinishing 82 1,055
Wall decor (1,498) 426
---------- ----------
Total operating earnings 14,693 25,300
General corporate expense 14,420 13,374
---------- ----------
Income from operations 273 11,926
Net interest expense 3,153 3,658
Minority interest in affiliate (430) -
Gain 6,180 -
Other income 480 304
---------- ----------
Earnings from continuing
operations before income
taxes 3,350 8,572
Income tax expense 1,239 3,174
---------- ----------
Net earnings from continuing
operations 2,111 5,398
---------- ----------
Losses from discontinued
operations net of income
tax benefits - (644)
Loss on disposal net of
income tax benefits
of $1,372 - -
---------- ----------
Total losses from
discontinued operations - (644)
---------- ----------
Net earnings $ 2,111 $ 4,754
========== ==========
Earnings (loss) per
common share:
From continuing operations $ 0.15 $ 0.39
From discontinued
operations - (0.05)
---------- ----------
Net earnings (loss) per
common share $ 0.15 $ 0.34
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 14,016 13,984
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 52 WEEKS ENDED
NOVEMBER 9, 1996 (in thousands except per share amounts -
unaudited)
<CAPTION>
52 Weeks Ended
----------------------
11/09/96 11/11/95
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 282,963 $ 279,909
One-hour photofinishing 160,990 189,775
Wall decor 61,636 56,497
---------- ----------
Total net sales $ 505,589 $ 526,181
Operating earnings:
Portrait studios $ 34,902 $ 42,553
One-hour photofinishing 2,328 4,065
Wall decor 3,432 5,721
---------- ----------
Total operating earnings 40,662 52,339
General corporate expense 20,644 19,177
---------- ----------
Income from operations 20,018 33,162
Net interest expense 4,092 5,244
Minority interest in affiliate (430) -
Gain 6,180 -
Other income 740 475
---------- ----------
Earnings from continuing
operations before income
taxes 22,416 28,393
Income tax expense 8,045 10,442
---------- ----------
Net earnings from continuing
operations 14,371 17,951
---------- ----------
Losses from discontinued
operations net of income
tax benefits (253) (1,351)
Loss on disposal net of
income tax benefits
of $1,372 (2,428) -
---------- ----------
Total losses from
discontinued operations (2,681) (1,351)
---------- ----------
Net earnings $ 11,690 $ 16,600
========== ==========
Earnings (loss) per
common share:
From continuing operations $ 1.03 $ 1.29
From discontinued
operations (0.19) (0.10)
---------- ----------
Net earnings (loss) per
common share $ 0.84 $ 1.19
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 14,013 13,929
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR NOVEMBER 9, 1996 AND
NOVEMBER 11, 1995 (in thousands - unaudited)
<CAPTION>
NOVEMBER 9, NOVEMBER 11,
1996 1995
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 29,724 $ 9,487
Other current assets 63,336 83,801
Net property and equipment 133,167 170,500
Minority interest 48,590 -
Other assets 4,344 56,676
----------- ------------
Total assets $ 279,161 $ 320,464
=========== ============
Liabilities and stockholders' equity
Current liabilities $ 52,342 $ 92,637
Long-term obligations 44,870 54,792
Other liabilities 9,022 6,280
Stockholders' equity 172,927 166,755
----------- ------------
Total liabilities and
stockholders' equity $ 279,161 $ 320,464
=========== ============
</TABLE>
<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)
-----------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: December 10, 1996
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