UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934 FOR THE
QUARTERLY PERIOD ENDED
NOVEMBER 8, 2003
OR
[ ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
Commission file number 1-10204
CPI Corp.
(Exact name of
registrant as specified in its charter)
| Delaware (State of Incorporation) |
43-1256674 (I.R.S. Employer Identification No.) | |
| 1706 Washington Ave., St. Louis,
Missouri (Address of principal executive offices) |
63103 (Zip Code) |
Registrant’s telephone number, including area code: (314) 231-1575
Indicate by check mark whether the Registrant [1] has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and [2] has been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
[ X ] Yes [ ] No
As of December 16, 2003, the Registrant had 8,058,956 common shares outstanding.
| TABLE OF CONTENTS |
|---|
| PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Interim Condensed Consolidated Balance Sheets Interim Condensed Consolidated Statements of Operations Interim Condensed Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income (Loss) Interim Condensed Consolidated Statements of Cash Flows Notes to Interim Condensed Consolidated Financial Statements Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Item 4. Disclosure Controls and Procedures PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K SIGNATURES EXHIBIT INDEX Computation of Per Share Earnings (Loss) Section 302 Certification of Chief Executive Officer Section 302 Certification of Chief Financial Officer Section 906 Certification of Chief Executive Officer Section 906 Certification of Chief Financial Officer |
CPI CORP.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
16 Weeks and 40 Weeks Ended November 8, 2003
| Page
| ||
|---|---|---|
| PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Interim Condensed Consolidated Balance Sheets November 8, 2003 (Unaudited) and February 1, 2003 Interim Condensed Consolidated Statements of Operations (Unaudited) 16 and 40 Weeks Ended November 8, 2003 and November 9, 2002 Interim Condensed Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income (Loss) (Unaudited) 40 Weeks Ended November 8, 2003 Interim Condensed Consolidated Statements of Cash Flows (Unaudited) 40 Weeks Ended November 8, 2003 and November 9, 2002 Notes to Interim Condensed Consolidated Financial Statements (Unaudited) Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Item 4. Disclosure Controls and Procedures PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit Index |
1 3 4 5 7 10 16 17 18 19 20 |
CPI CORP.
Interim Condensed
Consolidated Balance Sheets — Assets
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| thousands |
November 8, 2003 (Unaudited) |
February 1, 2003
| ||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 30,541 | $ | 57,922 | ||||
| Accounts receivable: | ||||||||
| Due from licensor stores | 15,181 | 7,888 | ||||||
| Other | 411 | 727 | ||||||
| Inventories | 15,172 | 11,767 | ||||||
| Prepaid expenses and other current assets | 9,035 | 6,499 | ||||||
| Refundable income taxes | 6,188 | 6,812 | ||||||
| Deferred tax assets | 4,822 | 4,907 | ||||||
| Total current assets | 81,350 | 96,522 | ||||||
| Property and equipment: | ||||||||
| Land | 2,803 | 2,803 | ||||||
| Building improvements | 26,553 | 26,554 | ||||||
| Leasehold improvements | 7,926 | 6,589 | ||||||
| Photographic, sales and manufacturing equipment | 202,616 | 188,836 | ||||||
| Total | 239,898 | 224,782 | ||||||
| Less accumulated depreciation and amortization | 190,626 | 177,280 | ||||||
| Property and equipment, net | 49,272 | 47,502 | ||||||
| Assets of business transferred under contractual arrangements: | ||||||||
| Preferred Security | 7,529 | 9,566 | ||||||
| Loan receivable | 5,441 | 475 | ||||||
| Assets of supplemental retirement plan: | ||||||||
| Cash surrender value of life insurance policies (net of borrowings | ||||||||
| of $1,596 at November 8, 2003 and February 1, 2003) | 11,248 | 10,161 | ||||||
| Long-term investments held in Rabbi Trust | 2,191 | 3,600 | ||||||
| Other assets, net of amortization of $1,359 at | ||||||||
| November 8, 2003 and February 1, 2003 | 13,063 | 11,464 | ||||||
| TOTAL ASSETS | $ | 170,094 | $ | 179,290 | ||||
See accompanying notes.
1
CPI CORP.
Interim Condensed
Consolidated Balance Sheets — Liabilities
| November 8, 2003 | ||||||||
|---|---|---|---|---|---|---|---|---|
| thousands, except share and per share data |
(Unaudited) |
February 1, 2003 | ||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt | $ | 8,580 | $ | 8,580 | ||||
| Accounts payable | 12,399 | 10,114 | ||||||
| Accrued employment costs | 12,387 | 13,019 | ||||||
| Customer deposit liability | 33,364 | 27,072 | ||||||
| Sales taxes payable | 2,458 | 2,681 | ||||||
| Accrued advertising expenses | 3,857 | 1,232 | ||||||
| Accrued expenses and other liabilities | 5,346 | 3,792 | ||||||
| Total current liabilities | 78,391 | 66,490 | ||||||
| Long-term debt, less current maturities | 25,578 | 34,116 | ||||||
| Accrued pension obligations | 9,646 | 9,646 | ||||||
| Supplemental retirement plan obligations | 5,970 | 6,188 | ||||||
| Customer deposit liability | 4,162 | 5,934 | ||||||
| Other liabilities | 2,204 | 2,733 | ||||||
| Total liabilities | 125,951 | 125,107 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock,no par value. 1,000,000 shares authorized; no shares oustanding | -- | -- | ||||||
| Preferred stock, Series A, no par value, 200,000 shares authorized; | ||||||||
| no shares outstanding | -- | -- | ||||||
| Common stock, $.40 par value. 50,000,000 shares authorized; 18,340,702 and | ||||||||
| 18,288,006 shares issued at November 8, 2003 and February 1, 2003, respectively | 7,336 | 7,315 | ||||||
| Additional paid in capital | 51,968 | 51,211 | ||||||
| Retained earnings | 222,533 | 234,022 | ||||||
| Accumulated other comprehensive loss | (9,106 | ) | (10,703 | ) | ||||
| 272,731 | 281,845 | |||||||
| Treasury stock, at cost, 10,292,503 and 10,238,303 shares at November 8, 2003 and at February 1, 2003, respectively | (228,577 | ) | (227,642 | ) | ||||
| Unamortized deferred compensation- restricted stock | (11 | ) | (20 | ) | ||||
| Total stockholders' equity | 44,143 | 54,183 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 170,094 | $ | 179,290 | ||||
See accompanying notes.
2
CPI CORP.
Interim Condensed Consolidated
Statements of Operations
(Unaudited)
| 16 Weeks Ended |
40 Weeks Ended |
||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| November 8, | November 9, | November 8, | November 9, | ||||||||||||||||||||||||||
| thousands, except share and per share data |
2003 |
2002 |
2003 |
2002 | |||||||||||||||||||||||||
| Net sales | $ | 81,573 | $ | 81,092 | $ | 198,918 | $ | 198,249 | |||||||||||||||||||||
| Cost and expenses: | |||||||||||||||||||||||||||||
| Cost of sales (exclusive of depreciation and amortization | |||||||||||||||||||||||||||||
| shown below) | 10,201 | 10,676 | 26,229 | 27,414 | |||||||||||||||||||||||||
| Selling, general and administrative expenses | 73,344 | 71,222 | 172,157 | 162,269 | |||||||||||||||||||||||||
| Depreciation and amortization | 4,967 | 5,813 | 12,791 | 15,893 | |||||||||||||||||||||||||
| Other charges and impairments | 480 | 4,816 | 480 | 4,816 | |||||||||||||||||||||||||
| 88,992 | 92,527 | 211,657 | 210,392 | ||||||||||||||||||||||||||
| Loss from operations | (7,419 | ) | (11,435 | ) | (12,739 | ) | (12,143 | ) | |||||||||||||||||||||
| Interest expense | 808 | 1,024 | 2,293 | 2,793 | |||||||||||||||||||||||||
| Interest income | 414 | 502 | 1,352 | 1,608 | |||||||||||||||||||||||||
| Other income, net | 687 | 37 | 765 | 79 | |||||||||||||||||||||||||
| Loss from continuing operations before income taxes | (7,126 | ) | (11,920 | ) | (12,915 | ) | (13,249 | ) | |||||||||||||||||||||
| Income tax benefit | 2,749 | 4,653 | 4,983 | 5,180 | |||||||||||||||||||||||||
| Net loss from continuing operations | (4,377 | ) | (7,267 | ) | (7,932 | ) | (8,069 | ) | |||||||||||||||||||||
| Net loss from discontinued operations, net of income tax | |||||||||||||||||||||||||||||
| benefit of $149 and $97, respectively | -- | (233 | ) | -- | (152 | ) | |||||||||||||||||||||||
| NET LOSS | $ | (4,377 | ) | $ | (7,500 | ) | $ | (7,932 | ) | $ | (8,221 | ) | |||||||||||||||||
| LOSS PER COMMON SHARE | |||||||||||||||||||||||||||||
| Net loss per share from continuing operations - diluted | $ | (0.54 | ) | $ | (0.90 | ) | $ | (0.98 | ) | $ | (1.00 | ) | |||||||||||||||||
| Net loss per share from discontinued operations - diluted | -- | (0.03 | ) | -- | (0.02 | ) | |||||||||||||||||||||||
| Net loss per share - diluted | $ | (0.54 | ) | $ | (0.93 | ) | $ | (0.98 | ) | $ | (1.02 | ) | |||||||||||||||||
| Net loss per share from continuing operations - basic | $ | (0.54 | ) | $ | (0.90 | ) | $ | (0.98 | ) | $ | (1.00 | ) | |||||||||||||||||
| Net loss per share from discontinued operations - basic | -- | (0.03 | ) | -- | (0.02 | ) | |||||||||||||||||||||||
| Net loss per share - basic | $ | (0.54 | ) | $ | (0.93 | ) | $ | (0.98 | ) | $ | (1.02 | ) | |||||||||||||||||
| Dividends per share | $ | 0.16 | $ | 0.14 | $ | 0.44 | $ | 0.42 | |||||||||||||||||||||
| Weighted average number of common and common equivalent | |||||||||||||||||||||||||||||
| shares outstanding-diluted | 8,071,830 | 8,044,203 | 8,089,226 | 8,038,874 | |||||||||||||||||||||||||
| Weighted average number of common and common equivalent | |||||||||||||||||||||||||||||
| shares outstanding-basic | 8,071,830 | 8,044,203 | 8,089,226 | 8,038,874 | |||||||||||||||||||||||||
See accompanying notes.
3
CPI CORP.
Interim Condensed Consolidated Statement of Changes in Stockholders' Equity and
Comprehensive Income (Loss)
(Unaudited)
| Forty weeks ended November 8, 2003 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| thousands, except share and per share data | Common
stock |
Additional paid-in capital |
Retained earnings |
Accumulated other comprehensive income (loss) |
Treasury stock, at cost |
Deferred compensation- restricted stock |
Total | ||||||||||||||||
Balance at February 1, 2003 |
$ | 7,315 | $ | 51,211 | $ | 234,022 | ($10,703 | ) | ($227,642 | ) | ($20 | ) | $ | 54,183 | |||||||||
Issuance of common stock to employee stock | |||||||||||||||||||||||
| plans and option exercises (52,696 shares) | 21 | 757 | -- | -- | -- | -- | 778 | ||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||
| Net loss | -- | -- | (7,932 | ) | -- | -- | -- | ||||||||||||||||
| Foreign currency translation | -- | -- | -- | 1,597 | -- | -- | |||||||||||||||||
| Comprehensive loss | -- | -- | -- | -- | -- | -- | (6,335 | ) | |||||||||||||||
Dividends ($.44 per common share) | -- | -- | (3,557 | ) | -- | -- | -- | (3,557 | ) | ||||||||||||||
Purchase of treasury stock, at cost (54,200 shares) | -- | -- | -- | -- | (935 | ) | -- | (935 | ) | ||||||||||||||
Amortization of deferred compensation - | |||||||||||||||||||||||
| restricted stock | -- | -- | -- | -- | -- | 9 | 9 | ||||||||||||||||
| Balance at November 8, 2003 | $ | 7,336 | $ | 51,968 | |||||||||||||||||||