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 9, 1998
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 ITEMS
On April 9, 1998 CPI Corp. issued the following press release
announcing fourth quarter and fiscal 1997 results:
- Portrait Studio earnings increase 26% for the quarter and
25% for the year, while Wall Decor results decline in both
periods. Studio gains due to increase in sales and
continued margin improvement.
- Diluted 1997 EPS of $1.07 vs. $1.06 in 1996, including
contrasting effects of 1997's loss and 1996's gain from
sale of interest in joint venture, and 49% share of the
venture's 1997 losses.
- Diluted fourth quarter EPS of $1.22 compared with $1.03 in
1996 fourth quarter.
CPI REPORTS FOURTH QUARTER AND FISCAL 1997 RESULTS
St. Louis, MO, April 9, 1998 - CPI Corp. (NYSE-CPY) today
reported FY 1997 results, with net sales of $366.7 million
compared with the prior year's $467.0 million. The 1996
total included photofinishing sales of $114.5 million for
35 weeks of operation, compared to none in 1997, when all
revenues were reported by the Fox Photo, Inc. joint
venture operated with Eastman Kodak Company.
CPI's 1997 net earnings were $12.7 million compared with
$14.4 million in 1996. These amounts reflect a 1997
after-tax loss of $3.1 million from the sale to Kodak of
the remaining interest in the joint venture, a 1996
after-tax gain of $3.9 million from the sale of the
initial interest, and other entries related to the
operation and sale of the joint venture. Diluted earnings
per share were $1.07 in 1997 compared to $1.06 in the
prior year, with 12.2% fewer weighted average common and
common equivalent shares outstanding. Basic earnings per
share were $1.09 in 1997 and $1.07 in 1996.
Operating earnings in 1997 increased 11.9% to $43.6
million from $39.0 million, as a 25.1% gain in portrait
studio earnings was partially offset by a $4.2 million
negative swing in wall decor results. With a $3.2 million
reduction in general corporate expense, partly due to
allocation of appropriate charges to the joint venture,
income from operations increased 38.4% to $28.2 million
from $20.4 million.
Fourth quarter 1997 revenues increased 7.5% to $119.9
million from $111.5 million in 1996, while operating
earnings increased 10.9% to $27.0 million from $24.3
<PAGE>
million. Fourth quarter net earnings were $13.9 million
in 1997 compared to $12.3 million in 1996, while diluted
earnings per share were $1.22 compared to $1.03 in the
1996 fourth quarter.
Discussing the PORTRAIT STUDIO segment, Alyn V. Essman,
chairman and chief executive officer, said, "Total
revenues in 1997 increased 4.8% to $303.7 million from
$289.8 million in 1996. It should be noted that the 1997
fiscal year consisted of 53 weeks, with a 13-week fourth
quarter instead of the usual 12-week period. Throughout
the year, a significant increase in the average sale more
than offset a somewhat lower customer count. Operating
earnings increased 25.1% to $44.6 million from $35.7
million on the strength of increased sales volume, and
operating margin grew to 14.7% from 12.3%."
Continuing, Essman said, "Sales in the WALL DECOR segment
for the year increased marginally to $63.0 million from
$62.7 million, and would have declined slightly without
benefit of the 53rd week. Operations resulted in a $1.0
million loss compared to last year's $3.3 million
earnings, with the decline due to lower same store sales,
higher employment and occupancy costs, and the expense of
converting selected stores to an expanded custom framing
format."
Concluding, Essman said, "We are just now completing a
total refocusing of our core portrait studio business. We
continue to test a variety of product concepts and
modifications to our studios. Based on results we have
seen in late 1997, we believe we have the capability to
deliver a new level of customer service that could provide
our company a competitive advantage for some time to come.
It's now a matter of execution."
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,
and the overall level of economic activity in the
company's major markets.
CPI is a consumer services company currently operating
approximately 1,200 retail locations, including 1,026
Sears Portrait Studios in the U.S., Puerto Rico and
Canada, and 156 Prints Plus wall decor locations.
<PAGE>
<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 13 AND 12 WEEKS ENDED
FEBRUARY 7, 1998 AND FEBRUARY 1, 1997
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
13 vs. 12 Weeks Ended
-----------------------
02/07/98 02/01/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 98,043 $ 90,186
One-hour photofinishing - -
Wall decor 21,834 21,305
---------- ----------
Total net sales $ 119,877 $ 111,491
Operating earnings:
Portrait studios $ 24,724 $ 19,547
One-hour photofinishing - -
Wall decor 2,232 4,750
---------- ----------
Total operating earnings 26,956 24,297
General corporate expense 6,059 4,198
---------- ----------
Income from operations 20,897 20,099
Net interest expense (224) 616
Interest in joint venture loss - (55)
Gain (loss) from sale
minority interest - -
Other Income 1,316 21
---------- ----------
Earnings from operations
before income taxes 22,437 19,449
Income tax expense 8,495 7,196
---------- ----------
Net earnings $ 13,942 $ 12,253
========== ==========
Earnings per common share:
Diluted $ 1.22 $ 1.03
Basic $ 1.25 $ 1.04
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 11,448 11,861
Basic 11,194 11,740
</TABLE>
<PAGE>
<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 53 AND 52 WEEKS ENDED
FEBRUARY 7, 1998 AND FEBRUARY 1, 1997
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
53 vs. 52 Weeks Ended
-----------------------
02/07/98 02/01/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 303,666 $ 289,840
One-hour photofinishing - 114,518
Wall decor 63,035 62,676
---------- ----------
Total net sales $ 366,701 $ 467,034
Operating earnings:
Portrait studios $ 44,597 $ 35,656
One-hour photofinishing - 82
Wall decor (964) 3,252
---------- ----------
Total operating earnings 43,633 38,990
General corporate expense 15,435 18,618
---------- ----------
Income from operations 28,198 20,372
Net interest expense 2,001 3,769
Interest in joint venture loss (3,304) (485)
Gain (loss) from sale
minority interest (4,189) 6,180
Other Income 2,193 501
---------- ----------
Earnings from operations
before income taxes 20,897 22,799
Income tax expense 8,184 8,436
---------- ----------
Net earnings $ 12,713 $ 14,363
========== ==========
Earnings per common share:
Diluted $ 1.07 $ 1.06
Basic $ 1.09 $ 1.07
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 11,871 13,518
Basic 11,647 13,420
</TABLE>
<PAGE>
<TABLE>
CONDENSED BALANCE SHEETS - FOR FEBRUARY 7, 1998 AND
FEBRUARY 1, 1997 (in thousands of dollars - unaudited)
<CAPTION>
FEBRUARY 7, FEBRUARY 1,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 15,293 $ 21,923
Other current assets 79,113 41,762
Net property and equipment 124,718 130,762
Minority interest - 48,105
Other assets 9,637 4,168
---------- ----------
Total assets $ 228,761 $ 246,720
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 47,442 $ 50,847
Long-term obligations 59,482 44,888
Other liabilities 19,745 11,460
Stockholders' equity 102,092 139,525
---------- ----------
Total liabilities and
stockholders' equity $ 228,761 $ 246,720
========== ==========
</TABLE>
<PAGE>
ITEM 5. OTHER ITEMS
On April 9, 1998 CPI Corp. issued the following press release
reporting corrected fourth quarter 1997 results:
CPI CORP. REPORTS CORRECTED FOURTH QUARTER 1997 RESULTS
St. Louis, MO., April 9, 1998 - CPI Corp. (NYSE-CPY)
reported late this afternoon a corrected statement of
earnings for its fourth quarter of fiscal year 1997.
The original statement, which was issued earlier today,
contained an overstatement of corporate overhead expenses
for the fourth quarter and a corresponding understatement
of fourth quarter earnings. The corrected diluted and
basic earnings per share for the fourth quarter of 1997
were $1.26 and $1.29, respectively. This correction has
no impact on total earnings for fiscal year 1997, which
were correct as originally reported. A corrected
statement is attached.
CPI is a consumer services company currently operating
approximately 1,200 retail locations, including 1,026
Sears Portrait Studios in the U.S., Puerto Rico and
Canada, and 156 Prints Plus wall decor locations.
<PAGE>
<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 13 AND 12 WEEKS ENDED
FEBRUARY 7, 1998 AND FEBRUARY 1, 1997
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
13 vs. 12 Weeks Ended
-----------------------
02/07/98 02/01/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 98,043 $ 90,186
One-hour photofinishing - -
Wall decor 21,834 21,305
---------- ----------
Total net sales $ 119,877 $ 111,491
Operating earnings:
Portrait studios $ 24,724 $ 19,547
One-hour photofinishing - -
Wall decor 2,232 4,750
---------- ----------
Total operating earnings 26,956 24,297
General corporate expense 5,537 4,198
---------- ----------
Income from operations 21,419 20,099
Net interest expense (225) 616
Interest in joint venture loss - (55)
Gain (loss) from sale
minority interest - -
Other Income 1,316 21
---------- ----------
Earnings from operations
before income taxes 22,960 19,449
Income tax expense 8,495 7,196
---------- ----------
Net earnings $ 14,465 $ 12,253
========== ==========
Earnings per common share:
Diluted $ 1.26 $ 1.03
Basic $ 1.29 $ 1.04
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 11,448 11,861
Basic 11,194 11,740
</TABLE>
<PAGE>
<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 53 AND 52 WEEKS ENDED
FEBRUARY 7, 1998 AND FEBRUARY 1, 1997
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
53 vs. 52 Weeks Ended
-----------------------
02/07/98 02/01/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 303,666 $ 289,840
One-hour photofinishing - 114,518
Wall decor 63,035 62,676
---------- ----------
Total net sales $ 366,701 $ 467,034
Operating earnings:
Portrait studios $ 44,597 $ 35,656
One-hour photofinishing - 82
Wall decor (964) 3,252
---------- ----------
Total operating earnings 43,633 38,990
General corporate expense 15,435 18,618
---------- ----------
Income from operations 28,198 20,372
Net interest expense 2,001 3,769
Interest in joint venture loss (3,304) (485)
Gain (loss) from sale
minority interest (4,189) 6,180
Other Income 2,193 501
---------- ----------
Earnings from operations
before income taxes 20,897 22,799
Income tax expense 8,184 8,436
---------- ----------
Net earnings $ 12,713 $ 14,363
========== ==========
Earnings per common share:
Diluted $ 1.07 $ 1.06
Basic $ 1.09 $ 1.07
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 11,871 13,518
Basic 11,647 13,420
</TABLE>
<PAGE>
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 13, 1998
<PAGE>
