BUSINESS AQUISITION

6 Months Ended

Jul. 23, 2011

BUSINESS AQUISITION [Abstract]

BUSINESS AQUISITION

NOTE 2  - BUSINESS ACQUISITION

On January 26, 2011, the Company acquired substantially all of the assets and certain liabilities of Bella Pictures, Inc., a provider of branded wedding photography services (the “Bella Pictures® Acquisition”).  The Bella Pictures® Acquisition was made pursuant to the Asset Purchase Agreement (the “Agreement”) dated January 26, 2011, by and among Bella Pictures Holdings, LLC, a Delaware limited liability company (“Bella Pictures®” or the “Buyer”),Bella Pictures, Inc., a Delaware corporation (the “Seller”), CPI Corp., a Delaware corporation (“CPI”), and Foundation Capital IV, L.P. (“Foundation Capital”).  In consideration for the Assets purchased, the Buyer issued to the Seller Class A Units in Bella Pictures®, representing a 5% equity interest in Bella Pictures® with a fair value at the date of issuance of approximately $40,000, estimated using a discounted cash flow analysis.  In addition, the Buyer assumed certain liabilities of the Seller, consisting primarily of customer deposits and the obligation to fulfill customer wedding orders booked and outstanding at the date of acquisition.  In addition, the Buyer received approximately $1.4 million in cash from the Seller.  The Company accounted for the acquisition as a business combination under the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations”.

The purchase price was allocated as of February 5, 2011, based on the Company’s preliminary estimate at that time of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed.  The Company finalized the purchase price allocation as of its first quarter ended April 30, 2011.  As a result of final purchase price allocation adjustments made during the Company’s first quarter of fiscal 2011, the preliminary estimate of goodwill was reduced by approximately $1.0 million as of April 30, 2011, which the Company considered insignificant to the consolidated financial statements.  Accordingly, the preliminary purchase price allocation as of February 5, 2011 has not been retrospectively adjusted for the final purchase price allocation adjustments.

The following unaudited pro forma summary presents the Company’s revenue, net income, diluted income per common share and basic income per common share as if the Bella Pictures® Acquisition had occurred on the first day of the periods presented (in thousands, except per share data):

	12 Weeks Ended			24 Weeks Ended
	July 24, 2010			July 24, 2010
Revenue	$	78,315		$	174,935
Net loss		(4,368	)		(1,039	)
Net loss attributable to noncontrolling interest		(128	)		(288	)
Net loss attributable to CPI Corp.	$	(4,240	)	$	(751	)
Diluted loss per common share attributable to CPI Corp.	$	(0.58	)	$	(0.10	)
Basic loss per common share attributable to CPI Corp.	$	(0.58	)	$	(0.10	)

Pro forma adjustments have been made to reflect depreciation and amortization using asset values recognized after applying purchase accounting adjustments.

This pro forma information is presented for informational purposes only and is not necessarily indicative of actual results had the acquisition been effected at the beginning of the periods presented or future results.