CPI CORP

CIK:0000025354|SEC Filings

DISCONTINUED OPERATIONS

9 Months Ended

Nov. 10, 2012

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

During the second quarter of fiscal 2012, the Company discontinued its Portrait Gallery operations in order to eliminate unprofitable operations. Sales and operating results for this operation included in discontinued operations are as follows:



in thousands	16 Weeks Ended						40 Weeks Ended
	November 10, 2012			November 12, 2011			November 10, 2012			November 12, 2011
Discontinued operations:
Net sales	$	—		$	471		$	883		$	504

Operating loss	$	(120	)	$	(1,338	)	$	(2,076	)	$	(1,967	)
Tax benefit	—			(508		)	—			(747		)

Net loss from discontinued operations	$	(120	)	$	(830	)	$	(2,076	)	$	(1,220	)

The net loss consists of costs to operate the Portrait Gallery operations until they were discontinued in the second quarter of fiscal 2012. Amounts also include asset write-offs and certain closure costs incurred through the third quarter of fiscal 2012.

Interim Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Nov. 10, 2012	Nov. 12, 2011
Reconciliation of net loss to cash flows used in operating activities:
Net loss	$ (60,137,000)	$ (12,886,000)
Adjustments for items not requiring (providing) cash:
Depreciation and amortization	6,084,000	12,363,000
Amortization of prepaid debt fees and other non-cash interest expense	3,279,000	426,000
Amortization of stock warrants	266,000	0
Loss from discontinued operations	2,076,000	1,220,000
Stock-based compensation expense	(17,000)	1,390,000
Issuance of common stock to Sears	52,000	0
Loss (gain) on sale of assets held for sale	103,000	(159,000)
Loss on disposition of property and equipment	435,000	0
Impairment of goodwill	9,719,000	0
Impairment of property and equipment	3,835,000	0
Impairment of intangible assets	12,289,000	0
Deferred income tax provision	(129,000)	(9,936,000)
Pension, supplemental retirement plan and profit sharing expense	350,000	1,213,000
Other	0	29,000
Increase (decrease) in cash flow from operating assets and liabilities:
Accounts receivable	819,000	(2,634,000)
Inventories	(96,000)	(4,179,000)
Prepaid expenses and other current assets	(1,324,000)	(821,000)
Accounts payable	502,000	4,427,000
Contribution to pension plan	(1,114,000)	(2,335,000)
Accrued expenses and other liabilities	9,064,000	1,424,000
Deferred lease fees	86,000	894,000
Income taxes payable	422,000	(2,485,000)
Deferred revenues and related costs	1,321,000	2,607,000
Other	0	187,000
Cash flows used in continuing operations	(12,115,000)	(9,255,000)
Cash flows used in discontinued operations	(930,000)	(2,791,000)
Cash flows (used in) provided by operating activities	(13,045,000)	(12,046,000)
Cash flows provided by financing activities:
Borrowings under revolving credit facility	123,048,000	147,500,000
Repayments on revolving credit facility	(117,660,000)	(122,900,000)
Payment of debt issuance costs	(855,000)	0
Proceeds from lease financing obligation	2,817,000	0
Cash dividends	0	(5,270,000)
Purchase of treasury stock	0	(1,087,000)
Surrender of employee shares for taxes	(18,000)	(690,000)
Other	0	(2,000)
Cash flows provided by financing activities	7,332,000	17,551,000
Cash flows provided by (used in) investing activities:
Additions to property and equipment	(2,514,000)	(7,107,000)
Proceeds from sale of assets held for sale	3,772,000	800,000
Proceeds from liquidation of Rabbi Trust	0	760,000
Other	0	8,000
Cash flows provided by (used in) investing activities for continuing operations	1,258,000	(5,539,000)
Cash flows used in investing activities for discontinued operations	(170,000)	(856,000)
Cash flows provided by (used in) investing activities	1,088,000	(6,395,000)
Effect of exchange rate changes on cash and cash equivalents	13,000	116,000
Net decrease in cash and cash equivalents	(4,612,000)	(774,000)
Cash and cash equivalents at beginning of period	8,524,000	5,363,000
Cash and cash equivalents at end of period	3,912,000	4,589,000
Supplemental cash flow information:
Interest paid	2,537,000	1,788,000
Income taxes (received) paid, net	(21,000)	3,324,000
Supplemental non-cash financing activities:
Issuance of treasury stock under the Employee Profit Sharing Plan	0	800,000
Issuance of common stock, restricted stock and stock options to employees and directors	28,000	1,634,000
Issuance of stock warrants	350,000	0
Treasury stock, at cost [Member]
Reconciliation of net loss to cash flows used in operating activities:
Net loss	0
Adjustments for items not requiring (providing) cash:
Issuance of common stock to Sears	52,000
Cash flows provided by financing activities:
Surrender of employee shares for taxes	0
Supplemental non-cash financing activities:
Issuance of stock warrants	0
Common stock [Member]
Reconciliation of net loss to cash flows used in operating activities:
Net loss	0
Adjustments for items not requiring (providing) cash:
Issuance of common stock to Sears	0
Cash flows provided by financing activities:
Surrender of employee shares for taxes	(5,000)
Supplemental non-cash financing activities:
Issuance of stock warrants	$ 0

Interim Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Nov. 10, 2012	Feb. 04, 2012
Current assets:
Cash and cash equivalents	$ 3,912	$ 8,524
Accounts receivable:
Trade	3,115	4,173
Other	674	443
Inventories	8,007	7,952
Prepaid expenses and other current assets	5,058	3,988
Refundable income taxes	0	255
Total current assets	20,766	25,335
Property and equipment:
Land	1,785	2,185
Buildings and building improvements	20,221	22,698
Leasehold improvements	3,530	4,022
Photographic, sales and manufacturing equipment	113,634	116,895
Property not in use	0	3,401
Total	139,170	149,201
Less accumulated depreciation and amortization	131,806	131,400
Property and equipment, net	7,364	17,801
Prepaid debt fees	588	1,112
Goodwill	0	9,772
Intangible assets, net	16,746	30,436
Deferred tax assets	3,081	1,362
Other assets	7,651	8,712
TOTAL ASSETS	56,196	94,530
Current liabilities:
Current portion of long-term debt	79,388	74,000
Accounts payable	5,815	5,322
Accrued employment costs	6,409	6,622
Customer deposit liability	14,134	12,930
Income taxes payable	68	0
Sales taxes payable	3,722	2,788
Deferred income taxes	3,081	1,393
Accrued advertising expenses	1,064	1,318
Accrued expenses and other liabilities	22,767	12,131
Total current liabilities	136,448	116,504
Long-term debt, less current maturities	0	0
Accrued pension plan obligations	22,267	23,043
Other liabilities	16,125	13,796
Total liabilities	174,840	153,343
CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock	0	0
Common stock, $0.40 par value, 16,000,000 shares authorized; 9,097,361 and 9,134,956 shares outstanding at November 10, 2012, and February 4, 2012, respectively	3,639	3,654
Additional paid-in capital	32,222	31,892
Retained earnings	(83,841)	(23,809)
Accumulated other comprehensive loss	(22,562)	(22,501)
Total stockholders' equity excluding treasury stock and noncontrolling interest	(70,542)	(10,764)
Treasury stock - at cost, 1,897,043 and 2,097,043 shares at November 10, 2012, and February 4, 2012, respectively	(47,848)	(47,900)
Total CPI Corp. stockholders' deficit	(118,390)	(58,664)
Noncontrolling interest in subsidiary	(254)	(149)
Total stockholders' deficit	(118,644)	(58,813)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	56,196	94,530
Series A Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock	$ 0	$ 0