CPI CORP CONFIRMS FOURTH QUARTER AND FY1998 RESULTS
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." 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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