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) Aug. 25, 1999
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.)
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ITEM 5. OTHER EVENTS
A. On August 25, 1999, CPI Corp. issued the following press
release:
CPI CORP. ANNOUNCES SECOND QUARTER RESULTS
- Loss of 10 cents per share versus EPS of 13 cents in FY
1998 quarter
- Lower operating earnings due to increased expenses in
portrait studios associated with the introduction of new
programs
- Portrait studio and wall decor segments both report
marginally higher sales
ST. LOUIS, MO., AUGUST 25, 1999 - CPI CORP. (NYSE - CPY)
today reported a 1999 second quarter net loss of $1.0
million (10 cents per share) versus net earnings of $1.4
million (13 cents per share) in the comparable 1998 period.
Sales were marginally higher, at $71.2 million compared
with $71.0 million, as the Portrait Studio and Wall Decor
segments both recorded gains of less than 1%. Operating
earnings declined, however, to $0.7 million from $3.8
million, with the reduction due mainly to increased
employment expenses in the portrait studios. Both years'
quarterly results included recognition of $1.2 million
income from the non-compete agreement with Kodak.
For the 24 weeks ended July 24, 1999, the company reported
a net loss of $0.9 million versus net earnings of $0.9
million in the prior year's comparable period. Both
period's results included $2.3 million in income
recognition from the non-compete agreement. Sales increased
slightly, as portrait studios reported a 4.3% increase,
while wall decor revenues were down 2.1%.
For the 52 weeks ended July 24, 1999, net earnings were
$20.2 million compared with $14.6 million for the 53 weeks
ended July 25, 1998. The earlier 53-week period results
reflected $5.7 million in pre-tax charges and losses
related to the since-sold photofinishing joint venture.
Additionally, the earlier period included $4.1 million in
income recognition from the non-compete agreement compared
with $5.0 million in the recent 52-week period. Sales
increased 5.8%, as portrait studios were up 7.5%, while
wall decor declined 2.0%.
Discussing second quarter results, Alyn V. Essman, chairman
and chief executive officer, said, "Although sales in the
Sears Portrait Studios increased slightly, to $58.5 million
from the prior year's $58.3 million, operating earnings
declined to $1.7 million from $4.9 million, primarily the
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result of a $3.2 million increase in employee-related
costs. Those expenses were investments in people designed
to improve customer service through the launch of two major
initiatives. The first, a new compensation plan called the
Independent Study Program (ISP), combines training and
incentives in upgrading portrait quality and employee
skills. The second involves initial training on the new
Store Automated System (SAS), which will ultimately
integrate all studio activities and provide a platform to
expand future digital imaging capability."
Continuing, Essman said, "We also rolled out nationwide the
Smile Savers Plan, which is devoted to assuring continuing
customer loyalty. Giving effect to all of the investments
we have made and that we anticipate continuing in the
current year, we are about where we expected to be. We
expect continuing sales growth, with full-year earnings
approximately even with last year's."
Turning to the Wall Decor segment, Essman said, "Second
quarter sales were flat at $12.7 million in both years.
Operating losses were slightly lower at $1.0 million
compared with $1.1 million."
The statements contained in this report which are not
historical facts are forward-looking statements that
involve 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 6,
1999.
CPI is a consumer services company operating 1,030 Sears
Portrait Studios in the U.S., Puerto Rico and Canada, and
152 Prints Plus wall decor locations
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE TWELVE WEEKS ENDED
JULY 24, 1999 AND JULY 25, 1998 (in thousands of dollars except
per share amounts) (Unaudited)
<CAPTION>
12 Weeks Ended
----------------------
07/24/99 07/25/98
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 58,482 $ 58,330
Wall decor 12,747 12,667
---------- ----------
Total net sales $ 71,229 $ 70,997
========== ==========
Operating earnings:
Portrait studios $ 1,726 $ 4,879
Wall decor (985) (1,080)
---------- ----------
Total operating earnings 741 3,799
General corporate expense 2,964 2,598
---------- ----------
Income (loss) from operations (2,223) 1,201
Net interest expense 415 283
Interest in joint venture loss - -
Gain (loss) on sale of
interest in Photofinishing
segment - -
Other income 1,161 1,216
---------- ----------
Earnings (loss) from
operations before income
taxes (1,477) 2,134
Income tax expense (benefit) (517) 747
---------- ----------
Net earnings (loss) $ (960) $ 1,387
========== ==========
Earnings (loss) per common
share:
Diluted $ (0.10) $ 0.13
Basic $ (0.10) $ 0.14
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 9,917 10,323
Basic 9,917 10,015
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE TWENTY-FOUR WEEKS
ENDED JULY 24, 1999 AND JULY 25, 1998 (in thousands of dollars
except per share amounts) (Unaudited)
<CAPTION>
24 Weeks Ended
----------------------
07/24/99 07/25/98
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 123,556 $ 118,475
Wall decor 25,335 25,876
---------- ----------
Total net sales $ 148,891 $ 144,351
========== ==========
Operating earnings:
Portrait studios $ 4,677 $ 6,522
Wall decor (1,960) (1,946)
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Total operating earnings 2,717 4,576
General corporate expense 5,714 5,177
---------- ----------
Income (loss) from operations (2,997) (601)
Net interest expense 707 512
Interest in joint venture loss - -
Gain (loss) on sale of
interest in Photofinishing
segment - -
Other income 2,341 2,469
---------- ----------
Earnings (loss) from
operations before income
taxes (1,363) 1,356
Income tax expense (benefit) (477) 475
---------- ----------
Net earnings (loss) $ (886) $ 881
========== ==========
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 9,908 10,277
Basic 9,908 9,965
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED STATEMENTS OF EARNINGS - FOR THE FIFTY-TWO WEEKS
ENDED JULY 24, 1999 AND THE FIFTY-THREE WEEKS ENDED JULY 25,
1998 (in thousands of dollars except per share amounts)
(Unaudited)
<CAPTION>
52 Weeks 53 Weeks
Ended Ended
---------- ----------
07/24/99 07/25/98
---------- ----------
<S> <C> <C>
Net Sales:
Portrait studios $ 330,628 $ 307,683
Wall decor 63,423 64,700
---------- ----------
Total net sales $ 394,051 $ 372,383
========== ==========
Operating earnings:
Portrait studios $ 42,431 $ 41,454
Wall decor 988 (618)
---------- ----------
Total operating earnings 43,419 40,836
General corporate expense 16,456 14,706
---------- ----------
Income (loss) from operations 26,963 26,130
Net interest expense 1,113 997
Interest in joint venture loss - (1,475)
Gain (loss) on sale of
interest in Photofinishing
segment - (4,189)
Other income 5,190 4,414
---------- ----------
Earnings (loss) from
operations before income
taxes 31,040 23,883
Income tax expense (benefit) 10,864 9,262
---------- ----------
Net earnings (loss) $ 20,176 $ 14,621
========== ==========
Earnings (loss) per common
share:
Diluted $ 1.98 $ 1.31
Basic $ 2.04 $ 1.35
Weighted average number of
common and common equivalent
shares outstanding:
Diluted 10,208 11,146
Basic 9,909 10,842
</TABLE>
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<TABLE>
CPI CORP.
CONDENSED BALANCE SHEETS - FOR JULY 24, 1999 AND
JULY 25, 1998 (in thousands - unaudited)
<CAPTION>
07/24/99 07/25/98
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 68,500 $ 6,835
Other current assets 44,510 81,035
Net property and equipment 108,644 118,207
Other assets 9,771 9,149
--------- ---------
Total assets $ 231,425 $ 215,226
========= =========
Liabilities and stockholders' equity
Current liabilities $ 35,514 $ 36,107
Long-term obligations 59,599 59,521
Other liabilities 22,495 17,440
Stockholders' equity 113,817 102,158
--------- ---------
Total liabilities and
stockholders' equity $ 231,425 $ 215,226
========= =========
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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: August 25, 1999
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