25354--4/17/2007--CPI

related topics

{personnel, key, retain}

{condition, economic, financial}

{customer, product, revenue}

{cost, operation, labor}

{interest, director, officer}

{capital, credit, financial}

{debt, indebtedness, cash}

We are materially dependent upon Sears. Our business practices and operations need to be acceptable to Sears. Sears or Sears Canada may terminate, breach, otherwise limit or increase our expenses under our license agreements. An economic downturn, a reduction in consumer spending or decreased customer traffic in our host stores could materially adversely affect our business. If our key suppliers become unable to continue to provide us supplies under our current contracts, we will need to obtain an alternative source of supplies. If we enter into an agreement to obtain such supplies at less desirable terms, our financial condition and results of operations could be materially adversely affected. Our inability to remain competitive could have a detrimental impact on our results of operations. If we lose our key personnel, our business may be adversely affected. Our fourth quarter sales and income are disproportionately high and we are vulnerable to downturns in consumer holiday spending that can adversely affect our business. A significant increase in piracy of our photographs could materially adversely affect our business, financial condition or results of operations. Any disruption in our manufacturing process could have a material adverse impact on our business. The agreements governing our debt impose restrictions on our business.

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25354--4/17/2007--CPI_CORP