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, 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 April 9, 1999, CPI Corp. issued the following press
release:
CPI CORP. CONFIRMS FOURTH QUARTER AND FY1998 RESULTS
- Net earnings up 72.6%, mainly due to the effect of
photofinishing segment sale.
- Sales increase 6.2%, primarily from results in portrait
studio segment.
ST. LOUIS, MO, April 9, 1999 - CPI Corp. (NYSE-CPY) today
reported sales of $389.5 million and net earnings of $21.9
million in the 52 weeks of fiscal 1998 compared with sales
of $366.7 million and net earnings of $12.7 million in the
53 weeks of the prior year.
Earnings in both years reflected non-recurring items related
to the operation and sale of the photofinishing joint
venture: recognition of $5.0 million income in 1998 from the
non-compete agreement, compared to $1.8 million non-compete
income and combined charges of $7.5 million in 1997. Diluted
earnings per share were $2.15 in 1998 compared to $1.07 in
the prior year, with 13.9% fewer weighted average common and
common equivalent shares outstanding.
Operating earnings in 1998 increased 3.8% to $45.3 million
from $43.6 million, as the wall decor segment showed
significant improvement, while portrait studio results were
relatively flat.
Revenues in the 12-week 1998 fourth quarter increased 1.1%
to $121.2 million from $119.9 million in the 13-week 1997
quarter, while operating earnings increased 3.1% to $27.8
million from $27.0 million. Fourth quarter net earnings
were $15.0 million in 1998 compared to $14.5 million in 1997,
while diluted earnings per share were $1.48 compared to $1.26
in the 1997 fourth quarter.
Commenting on Sears Portrait Studio results, Alyn V. Essman,
chairman and chief executive officer said, "In view of the
continuing highly competitive industry environment, we are
pleased that sales increased 7.2% to $325.5 million from the
$303.7 million recorded in the 53 weeks of 1997; on a
comparable 52-week basis the increase was 8.6%. Operating
earnings declined 0.7%, to $44.3 million from $44.6 million,
due primarily to increased employment costs, plus expenses
related to further system and product development."
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Turning to the wall decor segment, Essman said, "Although
sales increased only 1.5%, to $64.0 million from $63.0
million, Prints Plus recorded operating earnings of $1.0
million compared to a loss of $1.0 million last year, partly
due to the introduction of several successful new products,
combined with lower cost of sales and careful expense
control."
Concluding, Essman said, "Looking forward, we are encouraged
by year-to-year Portrait Studio sales increases, which are
expected to be in high single-digits for the 1999 first
quarter when adjusted for comparable Easter seasonality."
The statements contained in this release 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 the Portrait Studio and
Wall Decor segments, are only 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 currently operating
approximately 1,200 retail locations, including 1,027
Sears Portrait Studios in the U.S., Puerto Rico and Canada,
and 152 Prints Plus wall decor locations.
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<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 12 WEEKS ENDED
FEBRUARY 6, 1999 AND THE 13 WEEKS ENDED FEBRUARY 7, 1998
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
02/06/99 02/07/98
---------- ----------
<S> <C> <C>
Net sales:
Portrait studios $ 100,901 $ 98,043
Wall decor 20,254 21,834
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Total net sales $ 121,155 $ 119,877
Operating earnings:
Portrait studios $ 24,176 $ 24,724
Wall decor 3,623 2,232
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Total operating earnings 27,799 26,956
General corporate expense 5,863 5,537
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Income from operations 21,936 21,419
Net interest expense 94 (225)
Interest in joint venture loss - -
Gain (loss) on sale of interest
in Photofinishing segment - -
Other Income 1,253 1,316
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Earnings from operations
before income taxes 23,095 22,960
Income tax expense 8,083 8,495
---------- ----------
Net earnings $ 15,012 $ 14,465
========== ==========
Earnings per common share:
Diluted $ 1.48 $ 1.26
Basic $ 1.53 $ 1.29
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 10,120 11,448
Basic 9,841 11,194
</TABLE>
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<TABLE>
CONDENSED STATEMENT OF EARNINGS - FOR THE 52 WEEKS ENDED
FEBRUARY 6, 1999 AND THE 53 WEEKS ENDED FEBRUARY 7, 1998
(in thousands of dollars except per share amounts - unaudited)
<CAPTION>
02/06/99 02/07/98
---------- ----------
<S> <C> <C>
Net sales:
Portrait studios $ 325,547 $ 303,666
Wall decor 63,963 63,035
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Total net sales $ 389,510 $ 366,701
Operating earnings:
Portrait studios $ 44,276 $ 44,597
Wall decor 1,002 (964)
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Total operating earnings 45,278 43,633
General corporate expense 15,918 15,435
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Income from operations 29,360 28,198
Net interest expense 918 2,001
Interest in joint venture loss - (3,304)
Gain (loss) on sale of interest
in Photofinishing segment - (4,189)
Other Income 5,317 2,193
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Earnings from operations
before income taxes 33,759 20,897
Income tax expense 11,815 8,184
---------- ----------
Net earnings $ 21,944 $ 12,713
========== ==========
Earnings per common share:
Diluted $ 2.15 $ 1.07
Basic $ 2.21 $ 1.09
Weighted average number of common
and common equivalent shares
outstanding:
Diluted 10,217 11,871
Basic 9,935 11,647
</TABLE>
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<TABLE>
CONDENSED BALANCE SHEETS - FOR FEBRUARY 6, 1999 AND
FEBRUARY 7, 1998 (in thousands of dollars - unaudited)
<CAPTION>
FEBRUARY 6, FEBRUARY 7,
1999 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 76,000 $ 15,292
Other current assets 37,671 79,113
Net property and equipment 111,148 124,718
Other assets 9,874 9,638
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Total assets $ 234,693 $ 228,761
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,776 $ 47,442
Long-term obligations 59,559 59,482
Other liabilities 22,842 19,745
Stockholders' equity 116,516 102,092
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Total liabilities and
stockholders' equity $ 234,693 $ 228,761
========== ==========
</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: April 14, 1999
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