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) April 4, 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>
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: April 16, 1996
<PAGE>
ITEM 5. OTHER EVENTS
A. On April 4, 1996, CPI Corp. issued a press release announcing
1995 results and plans to sell electronic publishing division.
B. On April 15, 1996, CPI Corp. issued a press release announcing
an agreement to sell 50 photofinishing stores.
<PAGE>
ITEM 5(A)
CPI CORP. ANNOUNCES 1995 RESULTS
AND PLANS TO SELL ELECTRONIC PUBLISHING DIVISION
- Annual sales from continuing operations increase 1.8% to
$526.7 million
- Earnings from continuing operations increase to $17.7
million from $16.6 million
- Net EPS of $1.02, after $0.24 charge on sale of electronic
publishing, vs. $1.05 in 1994
St. Louis, MO, April 4, 1996 - CPI Corp. (NYSE--CPY) today reported
that it has reached terms of an agreement to sell its electronic
publishing division for approximately $5.0 million, plus about
$0.9 million in assumed liabilities, to a new company that consists
of principals of Mills & Partners and Stephen D. Coffin, current
executive vice president of CPI Electronic Publishing, with
completion of a definitive agreement and closing expected in about
30 days. In discussing the sale, Alyn V. Essman, chairman and
chief executive officer, said, "Although the division made
significant progress in 1995, having reduced operating losses to
$1.4 million from 1994's $2.9 million, with reasonable prospects
for break-even operation in the near future, we believe its assets
can be invested more productively in other segments of the CPI's
operations that hold the most promise for continuing success."
For the fiscal year ended February 3, 1996, the company reported
that 1995 sales, including those of discontinued operations,
reached a record level of $543.3 million compared to the prior
year's $533.2 million. Net sales from continuing operations
totaled $526.7 million versus $517.5 million. Net earnings from
continuing operations increased 6.1% to $17.7 million from
$16.6 million. Including an after-tax net loss of $3.3 million on
the discontinuance of the electronic publishing business, net
earnings were $14.3 million versus $14.8 million. Earnings per
share from continuing operations were $1.26 in 1995 compared to
$1.18 in 1994. Including a loss of $0.24 from discontinued
operations, 1995 net earnings per share were $1.02 compared to the
prior year's $1.05. Weighted average shares outstanding were
14.0 million, down from 14.1 million for the previous year.
For the fourth quarter, net sales from continuing operations were
$150.0 million compared to $149.6 million in 1994. Net earnings
and net earnings per share from continuing operations were $12.3
million versus $12.6 million and $0.88 versus $0.91 for the fiscal
years 1995 and 1994, respectively. Outstanding shares were up
1.9%.
Commenting on the results for all of 1995, Essman said, "The
fourth quarter, as we all know, was disappointing, but excluding
the changes resulting from the discontinued operations, we reached
the goal we outlined in our December 18, 1995 press release."
<PAGE>
In discussing continuing operations, Essman said, "We are pleased
with the continuing positive customer response to the new
technology-based marketing programs in the Portrait Studios and the
resulting contributions of this core business. With expanded
product offerings, some directed to a more upscale customer, the
average sale increased significantly -- more than offsetting an
anticipated decline in sittings -- and resulted in a slight
increase
in revenues to $279.5 million from $276.4 million. Earnings,
however, grew 10.8% to $42.6 million from last year's
$38.5 million."
Regarding the Photofinishing segment, Essman said, "Sales decreased
slightly to $188.4 million from the prior year's $191.2 million,
mainly due to the closing of over 60 unprofitable locations during
the year, even though same-store sales were moderately higher.
Operating earnings declined to $3.3 million from $4.6 million,
partially a result of the ongoing fiercely competitive environment
in the industry." Essman went on to comment, "As previously
discussed for some time, we have been engaged in strategic planning
and analysis to identify those photofinishing markets with the best
prospects for long-term growth. Based upon that work, we have
decided to concentrate our future focus and investment on those
markets that offer the highest potential and phase out of those
that do not. By taking these actions, we believe we will
strengthen our photofinishing business and improve future
profitability."
"Sales in the Wall Decor segment increased 17.6% to $58.7 million
from $49.9 million in 1994, with growth mainly the result of a net
of 24 new stores opened in the year. Operating earnings were down
slightly at $5.4 million versus $5.5 million."
In conclusion, Essman said, "The recent holiday season was one of
the worst reported in many years for retailers, and compounded by
the severe weather, created a disappointing end to what we really
considered to be a good building year. We have laid a strong
foundation in our portrait studio segment through significant
investment in capital and customer service, and in the longer term
we will benefit increasingly as we build on that foundation.
Looking ahead, we should note that this heavy investment in capital
and service creates a fixed charge that disproportionately
penalizes low activity periods such as the upcoming 1996 first and
second quarters."
CPI Corp. is a consumer services company operating over 1,800
retail locations, including 1,015 Sears Portrait Studios in the
U.S., Puerto Rico and Canada, 611 CPI/Fox Photo/Proex
photofinishing locations and 144 Prints Plus wall decor locations.
<PAGE>
<TABLE>
CONDENSED STATEMENTS OF EARNINGS - FOR THE 12 AND 52 WEEKS ENDED
FEBRUARY 3, 1996 AND FEBRUARY 4, 1995 (in thousands except per
share amounts - unaudited)
<CAPTION>
12 Weeks Ended 52 Weeks Ended
-------------------- --------------------
02/03/96 02/04/95 02/03/96 02/04/95
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales:
Portrait studios $ 83,309 $ 83,701 $ 279,518 $ 276,390
One-hour
photofinishing 46,472 47,838 188,408 191,187
Wall decor 20,265 18,037 58,725 49,944
---------- ---------- ---------- ----------
Total net sales $ 150,046 $ 149,576 $ 526,651 $ 517,521
Operating earnings:
Portrait studios $ 18,793 $ 18,734 $ 42,612 $ 38,470
One-hour
photofinishing 2,247 3,011 3,301 4,571
Wall decor 4,930 5,295 5,357 5,491
---------- ---------- ---------- ----------
Total operating
earnings 25,970 27,040 51,270 48,532
General corp. exp. 6,223 5,803 19,598 18,224
---------- ---------- ---------- ----------
Income from operations 19,747 21,237 31,672 30,308
Net interest expense 939 1,587 4,597 4,338
Other income 258 171 563 443
---------- ---------- ---------- ----------
Earnings from
continuing
operations before
income taxes 19,066 19,821 27,638 26,413
Income tax expense 6,806 7,268 9,979 9,773
---------- ---------- ---------- ----------
Net earnings from
continuing
operations 12,260 12,553 17,659 16,640
---------- ---------- ---------- ----------
Losses from operations
net of income tax
benefits (253) (707) (898) (1,818)
Loss on disposal net
of income tax
benefits of $1,372 (2,428) - (2,428) -
---------- ---------- ---------- ----------
Total losses from
discontinued
operations (2,681) (707) (3,326) (1,818)
---------- ---------- ---------- ----------
Net earnings $ 9,579 $ 11,846 $ 14,333 $ 14,822
========== ========== ========== ==========
Earnings (loss) per
common share:
From continuing
operations $ 0.88 $ 0.91 $ 1.26 $ 1.18
From discontinued
operations (0.19) (0.05) (0.24) (0.13)
---------- ---------- ---------- ----------
Net earnings $ 0.69 $ 0.86 $ 1.02 $ 1.05
========== ========== ========== ==========
Weighted average
number of common
and common
equivalent shares
outstanding 14,005 13,741 13,989 14,101
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
CONDENSED BALANCE SHEETS - FOR FEBRUARY 3, 1996 AND FEBRUARY 4,
1995 (in thousands - unaudited)
<CAPTION>
FEBRUARY 3, FEBRUARY 4,
1996 1995
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 8,217 $ 14,350
Other current assets 63,122 67,633
Net property and equipment 167,944 159,125
Net assets of business
held for sale 5,169 -
Other assets 54,664 59,373
---------- ----------
Total assets $ 299,116 $ 300,481
========== ==========
Liabilities and stockholders' equity
Current liabilities $ 62,641 $ 69,767
Long-term obligations 54,804 59,742
Other liabilities 7,503 4,972
Stockholders' equity 174,168 166,000
---------- ----------
Total liabilities and
stockholders' equity $ 299,116 $ 300,481
========== ==========
</TABLE>
<PAGE>
ITEM 5(B)
CPI CORP. TO SELL 50 PHOTOFINISHING STORES
St. Louis, MO, April 15, 1996 -- CPI Corp. (NYSE--CPY) today
announced that it has reached terms of an agreement to sell 50 of
its 611 photofinishing stores to Wolf Camera, Inc. of Atlanta, GA.,
with closing expected by early June. CPI does not expect any gain
or loss as a result of the transaction. The stores are located in
Orlando, FL; Atlanta, Macon and Columbus, GA; Chicago, IL; and
Chattanooga and Nashville, TN.
In making the announcement, Alyn V. Essman, chairman and chief
executive officer, said, "This action is consistent with our
ongoing strategic planning and analysis, concentrating our focus
and investment on those photofinishing markets with the best
prospects for long-term growth, and withdrawing from those that do
not. As we stated most recently in our April 6, 1996 earnings
release, by doing so, we would expect to strengthen our
photofinishing business and improve future profitability."
CPI Corp. is a consumer services company with $527 million in
fiscal 1995 sales, operating almost 1,800 retail locations,
including 1,015 Sears Portrait Studios in the U.S., Puerto Rico
and Canada, 611 CPI/Fox Photo/Proex photofinishing locations and
144 Prints Plus wall decor locations.
