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 recorded) August 18, 1997
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 5. OTHER EVENTS
A. On August 18, 1997, CPI Corp. issued the following press
release announcing second quarter results.
CPI CORP. ANNOUNCES SECOND QUARTER RESULTS
- EPS of 12 cents, versus loss of 6 cents in FY 1996
quarter
- Management encouraged by current trends in Sears
Portrait Studios
St. Louis, MO., August 18, 1997 - CPI Corp. (NYSE-CPY) today
announced improved second quarter earnings of $1.4 million
compared to a loss of $813,000 in the prior year's quarter.
Earnings per share of 12 cents compared with a loss of 6
cents per share a year ago, with 14.9% fewer weighted average
shares outstanding.
Gains were driven by higher sales in the Sears Portrait
Studios, as operating margins increased and operating
earnings doubled in that division. The Wall Decor segment
reported a slight sales increase, but higher seasonal
operating losses. Corporate expenses declined due, in part,
to the transfer of appropriate expenses to the Fox Photo
joint venture with Eastman Kodak. Total income from
operations in the second quarter increased to $2.9 million
compared to a prior-year loss of $385,000, with Portrait
Studio operating earnings more than offsetting the absence
of $1.7 million in 1996 operating earnings of the
Photofinishing segment, the results of which are now
reported on a non-comparable basis as the company's interest
in the joint venture.
Although sales increased in the company's two continuing
segments, reported revenues for the 12 WEEKS ENDED
JULY 19, 1997 declined to $68.5 million from $105.4 million
in the prior year's quarter due to the absence of current-
year Photofinishing sales. Photofinishing sales in the
second quarter of 1996 were approximately $42 million.
For the 24 WEEKS ENDED JULY 19, 1997, sales declined to
$138.7 million from $210.1 million, again reflecting the
absence of Photofinishing revenues. Combining the
positive second quarter results with lower first quarter
comparisons, the company reported a net loss of $1.0 million
from continuing operations, or 9 cents per share, compared to
a net loss of $2.9 million, or 21 cents per share, in the
first half of 1996.
<PAGE>
With only eleven weeks of photofinishing sales in the
52 WEEKS ENDED JULY 19, 1997, sales declined to $395.6 million
from $526.3 million for the 52 weeks ended July 20, 1996.
Earnings from continuing operations were $16.3 million, or
$1.30 per share, including the one-time gain of 31 cents per
share on the sale of interest in the Photofinishing segment,
compared with $12.6 million, or $0.90 per share in the
comparable prior-year period.
Commenting on the results, Alyn V. Essman, chairman and chief
executive officer, said, "We are happy to report that the
strength in PORTRAIT STUDIO performance that began with the
post-Easter period continued throughout the second quarter.
Sales in this segment were up 9.5% to $56.4 million from last
year's $51.5 million, while operating earnings doubled to $6.8
million from $3.4 million. Operating margin expanded to 12.1%
from 6.6% due to proportionately lower cost of sales and
operating expenses.
"In the WALL DECOR segment, second quarter sales increased
1.3% to $12.1 million from $12.0 million a year ago.
However, the division recorded a higher operating loss of $1.0
million compared with last year's loss of $462,000 due to a
3.7% decline in same-store sales, plus higher employment and
occupancy expenses."
Concluding, Essman said, "With the continuing positive
customer response to new marketing programs, as evidenced by
higher sales levels in our Portrait Studios, we are seeing the
expected benefits of the last few years' operating investment.
We should see some leveling of increases in store operating
costs and investments in equipment, and therefore we
anticipate improved operating leverage. Particularly as we
move toward the fourth quarter, the year's peak seasonal
period, fixed expenses become a declining component relative
to the expected increase in sales."
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 $467.0 million in
fiscal 1996 sales, operating approximately 1,200 retail
locations, including 1,023 Sears Portrait Studios in the
U.S., Puerto Rico and Canada, 154 Prints Plus wall decor
stores and, in a joint venture with Eastman Kodak Company,
476 Fox Photo, Inc. photofinishing locations.
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 12 WEEKS ENDED
JULY 19, 1997 (in thousands except per share amounts)
(Unaudited)
<CAPTION>
12 Weeks Ended
----------------------
07/19/97 07/20/96
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 56,383 $ 51,494
One-hour photofinishing - 41,987
Wall decor 12,111 11,959
---------- ----------
Total net sales $ 68,494 $ 105,440
Operating earnings:
Portrait studios $ 6,822 $ 3,382
One-hour photofinishing - 1,718
Wall decor (1,038) (462)
---------- ----------
Total operating earnings 5,784 4,638
General corporate expense 2,873 5,023
---------- ----------
Income (loss) from operations 2,911 (385)
Net interest expense 920 1,038
Interest in joint venture gain
(loss) 19 -
Gain on sale of interest in
Photofinishing segment - -
Other income 188 132
---------- ----------
Earnings (loss) from
continuing operations
before income taxes 2,198 (1,291)
Income tax expense (benefit) 813 (478)
---------- ----------
Net earnings (loss) from
continuing operations 1,385 (813)
Losses from operations net
of income tax benefits - -
Loss on disposal net of
income tax benefits
of $1,372 - -
---------- ----------
Total losses from
discontinued operations - -
---------- ----------
Net earnings (loss) $ 1,385 $ (813)
========== ==========
Earnings (loss) per common
share:
From continuing operations $ 0.12 $ (0.06)
From discontinued
operations - -
---------- ----------
Net earnings (loss) per
common share $ 0.12 $ (0.06)
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 11,921 14,001
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 24 WEEKS ENDED
JULY 19, 1997 (in thousands except per share amounts)
(Unaudited)
<CAPTION>
24 Weeks Ended
----------------------
07/19/97 07/20/96
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 114,457 $ 108,354
One-hour photofinishing - 78,081
Wall decor 24,211 23,673
---------- ----------
Total net sales $ 138,668 $ 210,108
Operating earnings:
Portrait studios $ 9,664 $ 7,887
One-hour photofinishing - (357)
Wall decor (2,292) (1,278)
---------- ----------
Total operating earnings 7,372 6,252
General corporate expense 5,906 9,232
---------- ----------
Income (loss) from operations 1,466 (2,980)
Net interest expense 1,515 2,008
Interest in joint venture gain
(loss) (1,830) -
Gain on sale of interest in
Photofinishing segment - -
Other income 249 331
---------- ----------
Earnings (loss) from
continuing operations
before income taxes (1,630) (4,657)
Income tax expense (benefit) (603) (1,723)
---------- ----------
Net earnings (loss) from
continuing operations (1,027) (2,934)
Losses from operations net
of income tax benefits - -
Loss on disposal net of
income tax benefits
of $1,372 - -
---------- ----------
Total losses from
discontinued operations - -
---------- ----------
Net earnings (loss) $ (1,027) $ (2,934)
========== ==========
Earnings (loss) per common
share:
From continuing operations $ (0.09) $ (0.21)
From discontinued
operations - -
---------- ----------
Net earnings (loss) per
common share $ (0.09) $ (0.21)
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 11,878 13,982
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 52 WEEKS ENDED
JULY 19, 1997 (in thousands except per share amounts)
(Unaudited)
<CAPTION>
52 Weeks Ended
----------------------
07/19/97 07/20/96
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 295,943 $ 282,681
One-hour photofinishing 36,438 182,719
Wall decor 63,214 60,909
---------- ----------
Total net sales $ 395,595 $ 526,309
Operating earnings:
Portrait studios $ 37,433 $ 39,079
One-hour photofinishing 440 1,764
Wall decor 2,238 4,624
---------- ----------
Total operating earnings 40,111 45,467
General corporate expense 15,293 21,964
---------- ----------
Income (loss) from operations 24,818 23,503
Net interest expense 3,277 4,638
Interest in joint venture gain
(loss) (2,314) -
Gain on sale of interest in
Photofinishing segment 6,180 -
Other income 419 738
---------- ----------
Earnings (loss) from
continuing operations
before income taxes 25,826 19,603
Income tax expense (benefit) 9,556 7,007
---------- ----------
Net earnings (loss) from
continuing operations 16,270 12,596
Losses from operations net
of income tax benefits - (347)
Loss on disposal net of
income tax benefits
of $1,372 - (2,428)
---------- ----------
Total losses from
discontinued operations - (2,775)
---------- ----------
Net earnings (loss) $ 16,270 $ 9,821
========== ==========
Earnings (loss) per common
share:
From continuing operations $ 1.30 $ 0.90
From discontinued
operations - (0.20)
---------- ----------
Net earnings (loss) per
common share $ 1.30 $ 0.70
========== ==========
Weighted average number of
common and common equivalent
shares outstanding 12,547 14,021
========== ==========
</TABLE>
<PAGE>
<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR JULY 19, 1997 AND
JULY 20, 1996 (In Thousands - Unaudited)
<CAPTION>
JULY 19, JULY 20,
1997 1996
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 12,019 $ 6,136
Other current assets 48,478 62,566
Net property and equipment 129,259 170,200
Investment in Fox joint venture 46,276 -
Other assets 6,357 54,334
----------- ------------
Total assets $ 242,389 $ 293,236
=========== ============
Liabilities and stockholders' equity
Current liabilities $ 36,656 $ 64,036
Long-term obligations 60,108 54,846
Other liabilities 9,993 5,719
Stockholders' equity 135,632 168,635
----------- ------------
Total liabilities and
stockholders' equity $ 242,389 $ 293,236
=========== ============
</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)
/s/ Barry Arthur
------------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: August 25, 1997
<PAGE>
