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 25, 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's telephone number including area code:(314)231-1575
________________________________________________________________
(Former name or former address, if changes since last report.)
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ITEM 5. OTHER EVENTS
A. On August 25, 1998, CPI Corp. issued the following press
release announcing second quarter results.
CPI CORP. ANNOUNCES SECOND QUARTER RESULTS
- Diluted EPS of 13 cents, versus 12 cents in FY 1997
quarter
- Lower operating earnings offset by other income and
reduced expenses
- Encouraging trend in Sears Portrait Studio sales
ST. LOUIS, MO., August 25, 1998 - CPI Corp. (NYSE-CPY) today
reported 1998 second quarter net earnings of $1.4 million,
the same as in the comparable 1997 period. Although sales
in the quarter increased 3.7% to $71.0 million from $68.5
million, as the Portrait Studio and Wall Decor segments both
recorded moderate gains, operating earnings declined to $3.8
million from $5.8 million, with the reduction due mainly to
increased expenses in the portrait studios.
The current quarter's results were bolstered by $1.2 million
in pro-rata amortization of $10 million received from Kodak
in relation to a non-compete agreement, plus a reduction of
$0.3 million in general corporate expense and $0.6 million
lower net interest expense. Even though net earnings were
flat, EPS was 13 cents versus 12 cents in the comparable
1997 period, due to 13.4% fewer weighted average common and
equivalent shares outstanding on a diluted basis.
For the 24 weeks ended July 25, 1998, net earnings were $0.9
million versus a net loss of $1.0 million in the prior year's
comparable period. The current period's results included $2.3
million in amortization of the Kodak non-compete agreement,
while the prior period reflected a $1.8 million loss from
CPI's interest in the since-disposed-of joint venture in Fox
Photo, Inc.
Discussing second quarter results, Alyn V. Essman, chairman
and chief executive officer, said, "Sales in the Sears
Portrait Studios increased to $58.3 million compared to the
prior year's $56.4 million, as customer traffic and the
average transaction both showed moderate gains. Operating
earnings declined to $4.9 million from $6.8 million, however,
as a result primarily of higher employment costs and, to a
lesser degree, to increased advertising expenses. It should
be noted that this quarter's comparisons were up against very
strong results recorded last year, when sales increased by
9.5% and operating earnings doubled over the prior year's
level. We are encouraged that sales have shown accelerating
improvement throughout the second quarter, and that the trend
has continued in the first four weeks of the third quarter."
<PAGE>
Turning to the Wall Decor segment, Essman said, "Second
quarter sales increased 4.6% to $12.7 million compared to
$12.1 million in the 1997 period. Operating losses were
slightly higher at $1.1 million compared to $1.0 million,
with higher occupancy costs being the most significant of
several variances."
The statements contained in this report which are not
historical facts are forward-looking statements that
involved risks and uncertainties. Management wishes to
caution the reader that these forward-looking statements,
such as the Company's outlook for Sears Portrait Studios
and Prints Plus, are not predictions; actual events or
results may differ materially as a result of risks facing
the Company. Such risks include, but are not limited to, the
Company's ongoing ability to develop and introduce attractive
new products, the overall level of economic activity in the
Company's major markets, the effectiveness of marketing
activities of major competitors, manufacturing interruptions,
dependence on certain suppliers, fluctuations in operating
results, the attraction and retention of qualified personnel,
Year 2000 compliance issues and other risks as may be
described in the Company's filings with the Securities and
Exchange Commission, including its Form 10-K for the year
ended February 7, 1998.
CPI is a consumer services company with $366.7 million in
fiscal 1997 sales, operating approximately 1,200 retail
locations, including 1,027 Sears Portrait Studios in the
U.S., Puerto Rico and Canada, 154 Prints Plus wall decor
stores.
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 12 WEEKS ENDED
JULY 25, 1998 and July 19, 1997
(in thousands except per share amounts) (Unaudited)
<CAPTION>
12 Weeks Ended
----------------------
07/25/98 07/19/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 58,330 $ 56,383
Wall decor 12,667 12,111
Photofinishing - -
---------- ----------
Total net sales $ 70,997 $ 68,494
Operating earnings:
Portrait studios $ 4,879 $ 6,822
Wall decor (1,080) (1,038)
Photofinishing - -
---------- ----------
Total operating earnings 3,799 5,784
General corporate expense 2,598 2,873
---------- ----------
Income (loss) from operations 1,201 2,911
Net interest expense 283 920
Interest in joint venture gain
(loss) - 19
Gain (loss) on sale of interest
in Photofinishing segment - -
Other income 1,216 188
---------- ----------
Earnings (loss) from operations
before income taxes 2,134 2,198
Income tax expense (benefit) 747 813
---------- ----------
Net earnings (loss) $ 1,387 $ 1,385
========== ==========
Earnings (loss) per common share:
Diluted $ 0.13 $ 0.12
Basic $ 0.14 $ 0.12
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 10,323 11,921
Basic 10,015 11,762
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 24 WEEKS ENDED
JULY 25, 1998 and JULY 19, 1997
(in thousands except per share amounts) (Unaudited)
<CAPTION>
24 Weeks Ended
----------------------
07/25/98 07/19/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 118,475 $ 114,457
Wall decor 25,876 24,211
Photofinishing - -
---------- ----------
Total net sales $ 144,351 $ 138,668
Operating earnings:
Portrait studios $ 6,522 $ 9,664
Wall decor (1,946) (2,292)
Photofinishing - -
---------- ----------
Total operating earnings 4,576 7,372
General corporate expense 5,177 5,906
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Income (loss) from operations (601) 1,466
Net interest expense 512 1,515
Interest in joint venture gain
(loss) - (1,830)
Gain (loss) on sale of interest
in Photofinishing segment - -
Other income 2,469 249
---------- ----------
Earnings (loss) from operations
operations before income taxes 1,356 (1,630)
Income tax expense (benefit) 475 (603)
---------- ----------
Net earnings (loss) $ 881 $ (1,027)
========== ==========
Earnings (loss) per common share:
Diluted $ 0.09 $ (0.09)
Basic $ 0.09 $ (0.09)
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 10,277 11,744
Basic 9,965 11,744
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE 53 WEEKS ENDED
JULY 25, 1998 and THE 52 WEEKS ENDED JULY 19, 1997
(in thousands except per share amounts) (Unaudited)
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
---------- ----------
07/25/98 07/19/97
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 307,683 $ 295,943
Wall decor 64,700 63,214
Photofinishing - 36,438
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Total net sales $ 372,383 $ 395,595
Operating earnings:
Portrait studios $ 41,454 $ 37,433
Wall decor (618) 2,238
Photofinishing - 440
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Total operating earnings 40,836 40,111
General corporate expense 14,706 15,293
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Income (loss) from operations 26,130 24,818
Net interest expense 997 3,277
Interest in joint venture gain
(loss) (1,475) (2,314)
Gain (loss) on sale of interest
in Photofinishing segment (4,189) 6,180
Other income 4,414 419
---------- ----------
Earnings (loss) from operations
before income taxes 23,883 25,826
Income tax expense (benefit) 9,262 9,556
---------- ----------
Net earnings (loss) $ 14,621 $ 16,270
========== ==========
Earnings (loss) per common share:
Diluted $ 1.31 $ 1.30
Basic $ 1.35 $ 1.31
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 11,146 12,547
Basic 10,842 12,417
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR JULY 25, 1998 and
JULY 19, 1997 (In Thousands - Unaudited)
<CAPTION>
JULY 25, JULY 19,
1998 1997
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<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 6,835 $ 12,019
Other current assets 81,035 48,478
Net property and equipment 118,207 129,259
Investment in Fox joint venture - 46,276
Other assets 9,149 6,357
----------- ------------
Total assets $ 215,226 $ 242,389
=========== ============
Liabilities and stockholders' equity
Current liabilities $ 36,107 $ 36,656
Long-term obligations 59,521 60,108
Other liabilities 17,440 9,993
Stockholders' equity 102,158 135,632
----------- ------------
Total liabilities and
stockholders' equity $ 215,226 $ 242,389
=========== ============
</TABLE>
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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
------------------------------
Barry Arthur
Authorized Officer and
Principal Financial Officer
Dated: September 1, 1998
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