ST. LOUIS, June 11 /PRNewswire-FirstCall/ -- -- Comparable
same-store sales, excluding impacts of revenue deferral
adjustments, foreign currency translation, loyalty program revenue
deferral and store closures, increase 1% versus the prior-year
first quarter. -- First-quarter PictureMe Portrait Studio(R) brand
(PMPS) comparable store sales, as adjusted, increase 14%
year-over-year -- First-quarter Sears Portrait Studio brand (SPS)
comparable store sales, as adjusted, decrease 11% year-over-year --
First-quarter Adjusted EBITDA increases to $11.5 million versus
$10.5 million in the prior-year period despite significant deferral
of sales and EBITDA to the second quarter as a result of the late
Easter. -- Net deferral to the second quarter of approximately $3.7
million in sales associated with the timing of Easter in 2009
reduced Adjusted EBITDA in the first quarter by $2.4 million. --
First-quarter diluted earnings per share (EPS) increases to $0.34
compared with a loss of ($0.04) a year ago despite large negative
impact of Easter-related deferral. -- Net deferral of
Easter-related sales to the second quarter reduced EPS in the first
quarter by $0.23 per diluted share. -- Strong results in the first
quarter reflect the successful integration and upgrade of the PMPS
studios as well as the impact of cost reductions and productivity
improvements implemented throughout the organization. -- The
Company presently expects to pay down a substantial portion of its
term debt before the end of the fiscal year. A prepayment of $5
million will be made next week. CPI Corp. (NYSE:CPY) today reported
strong results for the first quarter ended May 2, 2009. "Our strong
first-quarter results amid very difficult economic and industry
conditions are a testament to the success of our distinctive,
high-quality product offerings and aggressive marketing efforts as
well as the significant added value of our state-of-the-art digital
technology platform," said Renato Cataldo, president and chief
executive officer. "We are very encouraged by our results to date
as well as our progress on various customer indicators and
productivity metrics we track internally. As a result, we expect to
see improved gains in earnings and cash flow over the course of the
year even as we continue to experience fierce economic headwinds."
Net sales for the fiscal 2009 first quarter decreased $9.9 million,
or 10%, to $93.5 million from the $103.4 million reported in the
2008 first quarter. Excluding impacts of revenue deferral
associated with the timing of Easter ($3.7 million), foreign
exchange translation ($2.8 million), revenue deferral related to
positive response to the Company's loyalty programs ($2.3 million)
and store closures ($1.9 million), comparable same-store sales
increased $0.8 million, or 1%. Net sales from the Company's
PictureMe Portrait Studio(R) brand (PMPS), on a comparable
same-store basis, excluding revenue deferral adjustments associated
with the timing of Easter and the Company's loyalty program,
foreign currency translation, store closures and other items,
totaling $6.6 million, increased 14% in the first quarter of 2009
to $54.7 million from $48.1 million reported in the first quarter
of 2008. PMPS sales performance for the first quarter was the
result of an approximate 33% increase in average sale per customer
sitting, offset in part by an approximate 15% decline in the number
of sittings. The Company attributes its increase in average sale
per customer sitting primarily to customers' positive response to
the new offerings made possible by the recently completed digital
conversion and the implementation of new sales and performance
management processes. The Company believes the sittings decline
reflects the difficult economic environment, which has especially
pressured customer demand in lower income categories. During the
first quarter of 2009, net sales from the Company's Sears Portrait
Studio brand (SPS), on a comparable same-store basis, excluding
revenue deferral adjustments associated with the timing of Easter
and the Company's loyalty program, foreign currency translation,
store closures and other items, totaling $4.1 million, decreased
11%, to $46.3 million from $52.0 million reported in the first
quarter of 2008. SPS sales performance for the first quarter was
the result of declines in the number of sittings and sales per
sitting of approximately 10% and 2%, respectively. The Company
believes the decline in SPS brand sales reflects the difficult
economic environment and, especially, the related reduction in
same-day, walk-in business. The decline was mitigated substantially
by improved execution of the Company's customer outreach and
loyalty programs. The Company also reported net income of $2.3
million, or $0.34 per diluted share, for the fiscal 2009 first
quarter, versus a net loss of $256,000, or ($0.04) per diluted
share, reported for the first quarter of fiscal 2008. Foreign
currency translation and store closures did not materially affect
net income but the revenue deferral of $3.7 million (associated
principally with the late Easter which caused significant
deliveries of finished Easter portraits to fall into the second
quarter) reduced reported net income in the first quarter of fiscal
2009 by approximately $1.6 million, or $0.23 per diluted share.
First-quarter Adjusted EBITDA increased to $11.5 million versus
$10.5 million in the prior-year period, despite the net deferral to
the second quarter of approximately $3.7 million in sales
associated with the timing of Easter which negatively impacted
Adjusted EBITDA in the first quarter by $2.4 million. The
improvements in net income and Adjusted EBITDA year-over-year
result from cost reductions and productivity improvements
implemented throughout the organization. Costs and expenses were
$88.6 million in the first quarter of 2009, compared with $102.4
million in the first quarter of 2008. Cost of sales, excluding
depreciation and amortization expense, was $7.0 million in the
first quarter of 2009, compared with $10.5 million in the first
quarter of 2008. The decrease is principally attributable to lower
overall manufacturing production levels, improved product mix,
increased manufacturing productivity, eliminated film and related
shipping costs stemming from the PMPS digital conversion, and
decreased overhead costs resulting from the integration of the PMPS
operations. Selling, general and administrative (SG&A) expenses
were $75.2 million for the first quarter of 2009, compared with
$82.9 million in the first quarter of 2008. The decrease in
SG&A expenses primarily relates to the elimination of
duplicative costs in connection with the PMPS integration; fiscal
year 2008 nonrecurring costs associated with the PMPS digital
conversion; lower studio employment costs due to scheduling
improvements and selected operating hour reductions; reduced
employee insurance costs related to changes in plan design and
lower enrollment; and favorable foreign exchange rate translation.
These decreases were offset in part by increases in marketing
expense due to additional promotional programs for the Easter
holiday, higher average hourly studio rates and increased sales
incentives in connection with new studio and field initiatives.
Depreciation and amortization decreased to $6.0 million in the
first quarter of 2009 from $7.5 million in the first quarter of
2008. The decrease in depreciation and amortization is primarily
attributable to certain assets, acquired in connection with the
2007 acquisition of PCA, becoming fully depreciated subsequent to
the prior-year first quarter. This decrease is offset in part by an
increase in depreciation attributable to the equipment purchased
for the PMPS digital conversion throughout fiscal year 2008. In the
first quarter of 2009 and 2008, the Company recognized $420,000 and
$1.5 million, respectively, in other charges and impairments
primarily associated with certain PMPS integration charges,
including severance and lab closure costs. The prior-year charges
also include certain fees incurred in connection with the
settlement of the previous Sears license agreement. The Company's
preliminary net sales for the first five weeks of the second
quarter, on a comparable same-store point-of-sale basis, excluding
the impacts of foreign currency translation and the favorable
revenue deferral from the first quarter, decreased 7% compared with
the corresponding period in the prior year. PMPS and SPS net sales
for the first five weeks of the second quarter were +10% and -21%,
respectively. The Company presently expects to pay down a
substantial portion of its term debt before the end of the fiscal
year. A prepayment of $5 million will be made next week. Conference
Call/Webcast Information The Company will host a conference call
and audio webcast on Thursday, June 11, 2009, at 10:00 a.m. Central
time to discuss the financial results and provide a Company update.
To participate on the call, please dial 866-202-3109 or
617-213-8844 and reference passcode 59578529 at least five minutes
before start time. The webcast can be accessed on the Company's own
site at http://www.cpicorp.com/ as well as
http://www.earnings.com/. To listen to a live broadcast, please go
to these websites at least 15 minutes prior to the scheduled start
time in order to register, download, and install any necessary
audio software. A replay will be available on the above websites as
well as by dialing 888-286-8010 or 617-801-6888 and providing
passcode 39932561. The replay will be available through June 25 by
phone and for 30 days on the Internet. CPI Corp. uses the Investor
Relations page of its website at http://www.cpicorp.com/ to make
information available to its investors and the public. You can sign
up to receive e-mail alerts whenever the Company posts new
information to the website. About CPI Corp. CPI Corp. has been
dedicated to helping families conveniently create cherished
photography portrait keepsakes that capture a lifetime of memories
for more than 60 years. CPI Corp. provides portrait photography
services in approximately 3,000 locations, principally in Sears and
Wal-Mart stores. As the first in the category to convert to a fully
digital format, CPI Corp. studios offer unique posing options,
creative photography selections, a wide variety of sizes and an
unparalleled assortment of enhancements to customize each portrait
- all for an affordable price. CPI Corp. is based in St. Louis and
traded on the New York Stock Exchange (ticker: CPY).
Forward-Looking Statements The statements contained in this press
release that are not historical facts are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and involve risks and uncertainties. The
Company identifies forward-looking statements by using words such
as "preliminary," "plan," "expect," "looking ahead," "anticipate,"
"estimate," "believe," "should," "intend" and other similar
expressions. Management wishes to caution the reader that these
forward-looking statements, such as the Company's outlook for
portrait studios, net income, future cash requirements, cost
savings, compliance with debt covenants, valuation allowances,
reserves for charges and impairments and capital expenditures, are
only predictions or expectations; 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 dependence on
Sears and Wal-Mart, the approval of the Company's business
practices and operations by Sears and Wal-Mart, the termination,
breach, limitation or increase of the Company's expenses by Sears
under the license agreements, or Wal-Mart under the lease and
license agreements, customer demand for the Company's products and
services, the economic recession and resulting decrease in consumer
spending, compliance with the NYSE listing requirements,
manufacturing interruptions, dependence on certain suppliers,
competition, dependence on key personnel, fluctuations in operating
results, a significant increase in piracy of the Company's
photographs, widespread equipment failure, compliance with debt
covenants, high level of indebtedness, implementation of marketing
and operating strategies, outcome of litigation and other claims,
impact of declines in global equity markets to pension plans and
impact of foreign currency translation. The risks described above
do not include events that the Company does not currently
anticipate or that it currently deems immaterial, which may also
affect its results of operations and financial condition. The
Company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. Important Information CPI Corp. has
filed a Preliminary Proxy Statement with the Securities and
Exchange Commission ("SEC") and will furnish to its stockholders a
Proxy Statement in connection with the solicitation of proxies for
the 2009 Annual Meeting of stockholders. The Company advises its
stockholders to read the Proxy Statement relating to the 2009
Annual Meeting when it becomes available, because it will contain
important information. Stockholders may obtain a free copy of the
Proxy Statement and other documents (when available) that CPI files
with the SEC at the SEC's website at http://www.sec.gov/. The Proxy
Statement and these other documents (when available) may also be
obtained for free from CPI by directing a request to CPI Corp.,
1706 Washington Avenue, St. Louis, Missouri 63103-1717, Attn:
Corporate Secretary, calling (314) 231-1575, or by contacting
MacKenzie Partners, Inc., by toll-free telephone at 800-322-2885 or
by e-mail at . Certain Information Concerning Participants CPI
Corp. and its directors and executive officers (other than Peter
Feld) may be deemed to be participants in the solicitation of
proxies from stockholders in connection with the Company's 2009
Annual Meeting. Information concerning persons who may be
considered participants in the solicitation of the Company's
stockholders under the rules of the SEC is set forth in public
filings by the Company with the SEC, including the preliminary
proxy statement relating to the 2009 Annual Meeting of
stockholders. CPI CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands except per share amounts) -------- -------- 12 Weeks Vs
12 Weeks -------- -------- May 02, 2009 Apr. 26, 2008 ------------
------------- Net sales $93,467 $103,367 Cost and expenses: Cost of
sales (exclusive of depreciation and amortization shown below)
6,959 10,533 Selling, general and administrative expenses 75,153
82,820 Depreciation and amortization 6,039 7,494 Other charges and
impairments 420 1,518 ------ ------- 88,571 102,365 Income from
continuing operations 4,896 1,002 Interest expense 1,491 1,521
Interest income 122 362 Other income, net 9 6 ------ ------ Income
(loss) from continuing operations before income tax provision
(benefit) 3,536 (151) Income tax provision (benefit) 1,207 (59)
------ ------ Net income (loss) from continuing operations 2,329
(92) Net loss from discontinued operations, net of income tax
benefit - (164) ------ ------ Net income (loss) $2,329 ($256)
====== ====== Net income (loss) per common share - diluted From
continuing operations $0.34 ($0.01) From discontinued operations -
(0.03) ------ ------ Net income (loss) - diluted $0.34 ($0.04)
====== ====== Net income (loss) per common share - basic From
continuing operations $0.34 ($0.01) From discontinued operations -
(0.03) ------ ------ Net income (loss) - basic $0.34 ($0.04) ======
====== Weighted average number of common and common equivalent
shares outstanding: Diluted 6,949 6,452 Basic 6,949 6,452 CPI CORP.
ADDITIONAL CONSOLIDATED OPERATING INFORMATION (In thousands)
-------- -------- 12 Weeks Vs. 12 Weeks -------- -------- May 02,
2009 Apr. 26, 2008 ------------ ------------- Capital expenditures
$907 $11,299 EBITDA is calculated as follows: Net income (loss)
from continuing operations $2,329 ($92) Income tax provision
(benefit) 1,207 (59) Interest expense 1,491 1,521 Depreciation and
amortization 6,039 7,494 Other non-cash charges 229 133 -------
------- EBITDA (1) & (5) $11,295 $8,997 ======= =======
Adjusted EBITDA (2) $11,486 $10,514 EBITDA margin (3) 12.08% 8.70%
Adjusted EBITDA margin (4) 12.29% 10.17% (1) EBITDA represents net
income from continuing operations before interest expense, income
taxes, depreciation and amortization and other non-cash charges.
EBITDA is included because it is one liquidity measure used by
certain investors to determine a company's ability to service its
indebtedness. EBITDA is unaffected by the debt and equity structure
of the company. EBITDA does not represent cash flow from operations
as defined by GAAP, is not necessarily indicative of cash available
to fund all cash flow needs and should not be considered an
alternative to net income under GAAP for purposes of evaluating the
Company's results of operations. EBITDA is not necessarily
comparable with similarly-titled measures for other companies. (2)
Adjusted EBITDA is calculated as follows: EBITDA $11,295 $8,997
EBITDA adjustments: Reserves for severance and related costs 178 -
Litigation (138) 217 Cost associated with acquisition 136 794
Contract negotiations/Sears - 506 Other 15 - ------- -------
Adjusted EBITDA $11,486 $10,514 ======= ======= (3) EBITDA margin
represents EBITDA, as defined in (1), stated as a percentage of
sales. (4) Adjusted EBITDA margin represents Adjusted EBITDA, as
defined in (2), stated as a percentage of sales. (5) As required by
the SEC's Regulation G, a reconciliation of EBITDA, a non-GAAP
liquidity measure, with the most directly comparable GAAP liquidity
measure, cash flow from continuing operations follows: --------
-------- 12 Weeks Vs. 12 Weeks -------- -------- May 02, 2009 Apr.
26, 2008 ------------ ------------- EBITDA $11,295 $8,997 Income
tax (provision) benefit (1,207) 59 Interest expense (1,491) (1,521)
Adjustments for items not requiring cash: Deferred income taxes
1,375 (329) Deferred revenues and related costs 3,627 (731) Other,
net (507) 136 Decrease (increase) in current assets (2,795) 2,174
Increase (decrease) in current liabilities (4,155) (11,271)
Increase (decrease) in current income taxes (154) (362) ------
------- Cash flows from continuing operations $5,988 $(2,848)
====== ======= CPI CORP. CONSOLIDATED BALANCE SHEETS MAY 02, 2009
AND APRIL 26, 2008 (In thousands) MAY 02, APR. 26, 2009 2008
-------- ---------- Assets Current assets: Cash and cash
equivalents $26,839 $43,332 Other current assets 41,766 31,407 Net
property and equipment 46,026 60,561 Intangible assets, net 61,374
61,624 Other assets 14,755 25,076 ------ ------ Total assets
$190,760 $222,000 ======== ======== Liabilities and stockholders'
equity Current liabilities $64,427 $71,227 Long-term debt
obligations 92,428 102,893 Other liabilities 30,543 32,258
Stockholders' equity 3,362 15,622 ----- ------ Total liabilities
and stockholders' equity $190,760 $222,000 ======== ========
DATASOURCE: CPI Corp. CONTACT: Jane Nelson, CPI Corp.,
+1-314-231-1575 Web Site: http://www.cpicorp.com/
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