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) October 18, 1996
CPI CORP.
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(exact name of registrant as specified in its charter)
Delaware 0-11227 43-1256674
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(State or other jurisdiction (Commission file (IRS Employer
of incorporation) Number) Identification No.)
1706 Washington Avenue, St. Louis, Missouri 63103-1790
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(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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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 7, 1996, the Company announced Eastman Kodak Company
has completed its purchase of a 51% stake in the Company's Fox
Photo, Inc. subsidiary for $56.1 million in cash. Details of the
transaction were previously disclosed on a Form 8-K Current
Report filed with the Securities and Exchange Commission
Registration Commission File No. 0-11227 on August 22, 1996 and
are incorporated herein by reference. An excerpt from the August
22, 1996 filing summarizing the transaction is as follows:
"On August 8, 1996, the Company announced that it had
entered into a definitive agreement with Eastman Kodak
Company ("Kodak") to establish a joint venture with
Kodak to own and operate the Company's retail
photofinishing business. The retail photofinishing
business is currently conducted by the Company's Fox
Photo, Inc. ("Fox") and Proex Photo Systems, Inc.
("Proex") subsidiaries. Proex is a wholly owned
subsidiary of Fox.
Pursuant to a Subscription Agreement, dated August 8,
1996, by and among Kodak, the Company, Consumer
Programs Holding, Inc. (a wholly owned subsidiary of
the Company) ("Holding") and Fox (the "Subscription
Agreement"), Kodak will purchase new shares of Fox
constituting 51% of the then outstanding common stock
of Fox for a cash purchase price of $56.1 million.
The purchase price will be subject to upward or
downward adjustment to account for changes in Fox's
net worth between April 27, 1996 and the date the
transaction is consummated.
Pursuant to the terms of a Stockholders' Agreement (the
"Stockholders' Agreement") to be entered into by Kodak,
the Company, Holding and Fox upon consummation of the
joint venture transaction, at any time from and after
January 1, 1999 Kodak can require the Company to sell
its interest in Fox and the Company can require Kodak
to purchase the Company's interest in Fox for a price
equal to 49% of (A) Fox's "fair market value" (as
determined pursuant to the Stockholders' Agreement at
the time such "put" or "call" right is exercised) less
(B) $30 million. In no event, however, will such
purchase price for the Company's remaining interest in
Fox be less than $53.9 million. Additionally, prior to
January 1, 1999, the Stockholders' Agreement will
entitle Kodak to require that the Company sell its
remaining interest in Fox to Kodak upon a "change in
control" (as defined in the Stockholders' Agreement) of
the Company for a purchase price of $53.9 million.
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The Stockholders' Agreement provides that Kodak will
designate four members and the Company will designate
three members of Fox's seven-member Board of Directors.
Alyn V. Essman, the Company's Chairman and Chief
Executive Officer, will be the initial Chairman of
Fox's Board of Directors. Certain specified significant
actions will require the consent of both Kodak and the
Company."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
A. Financial Statements of Business Acquired.
Not applicable.
B. Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K,
it is impracticable for the Registrant to provide the pro
forma financial information required by this Item 7(B). In
accordance with Item 7(B) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no
later than 60 days after October 4, 1996.
C. Exhibits.
None.
ITEM 5. OTHER EVENTS.
On October 18, 1996, CPI Corp. issued the following press
release:
CPI CORP. SAYS 3RD QUARTER PORTRAIT STUDIO SALES LOWER THAN
EXPECTED
ST. LOUIS, MO., October 18, 1996 - CPI Corp. (NYSE-CPY) said
today that, due to lower-than-expected third quarter
portrait studio sales, it no longer anticipates that 1996
full-year comparable earnings will exceed those of 1995.
In making the announcement, Alyn V. Essman, chairman and
chief executive officer said, "In earlier communications, we
stated that we expected CPI's full-year results for the 1996
fiscal year ending February 1, 1997 to show an increase over
comparable earnings of last year. Those expectations were
predicated on a strong second half, including the all-
important fourth quarter. In our Sears Portrait Studio
division we are approximately five weeks into the holiday
season portrait activity, and early results indicate that,
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although sales should exceed last year's, we are not
experiencing the sales strength we anticipated.
"Our best estimates at this time are that third quarter
portrait studio sales could be approximately four million
dollars lower than previously expected. This sales short-
fall could reduce pre-tax portrait studio operating income
approximately $2.5 million from our prior expectations.
While our very important fourth quarter is difficult to
predict, these recent results and the trend suggest that
full-year comparable overall earnings (before consideration
of effects of the photofinishing joint venture and/or
pending share repurchases) are likely to be below last
year's."
This release contains certain "forward looking statements"
that are subject to risks and uncertainties. The Company's
actual results and performance could differ materially from
those anticipated depending on, among other things, customer
demand for the Company's services, the amount of revenue
derived from the Portrait Studio Division through the fiscal
year end and the overall level of economic activity in the
Company's major markets.
CPI is a consumer services company with $527.6 million in
fiscal 1995 sales from continuing operations, operating over
1,700 retail locations, including 1,020 Sears Portrait
Studios in the U.S., Puerto Rico and Canada, 153 Prints Plus
wall decor locations and, in a joint venture with Eastman
Kodak Company, 550 photofinishing locations.
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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
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Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: October 18, 1996
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