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CSS INDUSTRIES, INC. REPORTS RESULTS OF OPERATIONS FOR THE QUARTER AND YEAR ENDED MARCH 31, 2014

CSS INDUSTRIES, INC. REPORTS RESULTS OF OPERATIONS FOR THE QUARTER AND YEAR ENDED MARCH 31, 2014


CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the quarter and year ended March 31, 2014.  As previously announced, the Company divested the Halloween portion of its Paper Magic Group, Inc. business during fiscal 2013.  Due to the divestiture, Halloween sales for the fiscal year ended March 31, 2013 of approximately $30,914,000 were reduced to $1,366,000 in fiscal 2014. 

 

Sales for the fourth quarter of fiscal 2014 increased 1.8% to $54,560,000 from $53,621,000 in the fourth quarter of fiscal 2013.  Excluding $1,569,000 of Halloween sales in the fourth quarter of the prior year, net sales increased 4.8%, primarily due to higher sales of All Occasion stationery products.  Loss from continuing operations before income taxes for the fourth quarter of fiscal 2014 was $(2,085,000), compared to $(5,308,000) in the fourth quarter of fiscal 2013.  Loss from continuing operations for the fourth quarter of fiscal 2014 was $(1,603,000), or $(0.17) per diluted share, versus $(1,985,000), or $(0.21) per diluted share, in the fourth quarter of the prior fiscal year.  Net loss for the fourth quarter of fiscal 2014 was $(1,529,000), or $(0.16) per diluted share, versus $(2,401,000), or $(0.25) per diluted share, in the fourth quarter of fiscal 2013.

 

Sales for full year fiscal 2014 decreased 12.0% to $320,459,000 from $364,193,000 in full year fiscal 2013.  Approximately $29,548,000 of the lower sales level is due to the divestiture of the Halloween business in the second quarter of fiscal 2013, with the balance primarily due to lower sales of Christmas products and All Occasion products.  Income from continuing operations before income taxes for the full year fiscal 2014 was $27,700,000, compared to $22,637,000 in the prior year.  Results for full year fiscal 2013 include a pretax loss of $4,363,000 relating to the Halloween business.  This loss was comprised of $2,701,000 of income from Halloween operations offset by $7,064,000 of charges incurred as a result of the divestiture.  Income from continuing operations for the full year fiscal 2014 was $18,564,000, or $1.97 per diluted share, versus $15,588,000, or $1.63 per diluted share, in the prior year.  Net income for full year fiscal 2014 was $18,769,000, or $1.99 per diluted share, versus $15,227,000, or $1.59 per diluted share, in the prior fiscal year.  The Company's seasonal orientation has historically resulted in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters.  Results for full year fiscal 2014 and 2013 include income from Halloween operations and charges incurred as a result of the divestiture as detailed in the charts below.

Full Year Fiscal 2014

 

Halloween Impact

Non-GAAP

 

As Reported

Operations

Charges

Results

Income from continuing operations before income taxes

$

27,700,000

 

$

(52,000

)

$

 

$

27,752,000

 

Income tax expense

9,136,000

 

(18,000

)

 

9,154,000

 

Income from continuing operations

18,564,000

 

(34,000

)

 

18,598,000

 

Diluted net income per common share-continuing operations

$

1.97

 

$

 

$

 

$

1.97

 

 

 

 

 

 

 

 

 

 

                 

Full Year Fiscal 2013

 

 

Halloween Impact

Non-GAAP

 

As Reported

Operations

Charges

Results

Income from continuing operations before income taxes

$

22,637,000

 

$

2,701,000

 

$

(7,064,000

)

$

27,000,000

 

Income tax expense

7,049,000

 

933,000

 

(1,636,000

)

7,752,000

 

Income from continuing operations

15,588,000

 

1,768,000

 

(5,428,000

)

19,248,000

 

Diluted net income per common share-continuing operations

$

1.63

 

$

0.18

 

$

(0.57

)

$

2.01

 

 

 

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of all occasion and seasonal social expression products, principally to mass market retailers.  These all occasion and seasonal products include decorative ribbons and bows, boxed greeting cards, gift tags, gift wrap, gift bags, gift boxes, gift card holders, decorative tissue paper, decorations, classroom exchange Valentines, floral accessories, Easter egg dyes and novelties, craft and educational products, stickers, memory books, stationery, journals, note cards, infant and wedding photo albums, scrapbooks, and other gift items that commemorate life's celebrations.

 

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management as to future events and financial performance with respect to the Company's operations.  Forward-looking statements speak only as of the date made.  The Company undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they were made.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including without limitation, general market and economic conditions; increased competition (including competition from foreign products which may be imported at less than fair value and from foreign products which may benefit from foreign governmental subsidies); increased operating costs, including labor-related and energy costs and costs relating to the imposition or retrospective application of duties on imported products; currency risks and other risks associated with international markets; risks associated with acquisitions, including acquisition integration costs and the risk that the Company may not be able to integrate and derive the expected benefits from such acquisitions; the risk that customers may become insolvent, may delay payments or may impose deductions or penalties on amounts owed to the Company; costs of compliance with governmental regulations and government investigations; liability associated with non-compliance with governmental regulations, including regulations pertaining to the environment, Federal and state employment laws, and import and export controls and customs laws; and other factors described more fully in the Company's annual report on Form 10-K for the fiscal year ended March 31, 2013 and elsewhere in the Company's filings with the Securities and Exchange Commission.  As a result of these factors, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, the Company. 

 

CSS' consolidated results of operations for the three months and twelve months ended March 31, 2014 and 2013 and condensed consolidated balance sheets as of March 31, 2014 and March 31, 2013 follow:

 

 

 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

Three Months Ended

 

Twelve Months Ended

 

March 31,

 

March 31,

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

$

54,560

 

 

$

53,621

 

 

$

320,459

 

 

$

364,193

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

  Cost of sales

38,856

 

 

40,172

 

 

217,303

 

 

255,102

 

  Selling, general and administrative expenses

17,660

 

 

18,685

 

 

75,204

 

 

80,619

 

  Disposition of product line, net

 

 

 

 

 

 

5,798

 

  Interest expense (income), net

39

 

 

17

 

 

191

 

 

(51

)

  Other expense, net

90

 

 

55

 

 

61

 

 

88

 

 

56,645

 

 

58,929

 

 

292,759

 

 

341,556

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

(2,085

)

 

(5,308

)

 

27,700

 

 

22,637

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

(482

)

 

(3,323

)

 

9,136

 

 

7,049

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

(1,603

)

 

(1,985

)

 

18,564

 

 

15,588

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

74

 

 

(416

)

 

205

 

 

(361

)

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(1,529

)

 

$

(2,401

)

 

$

18,769

 

 

$

15,227

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

   Continuing operations

$

(0.17

)

 

$

(0.21

)

 

$

1.98

 

 

$

1.63

 

   Discontinued operations

$

0.01

 

 

$

(0.04

)

 

$

0.02

 

 

$

(0.04

)

   Total

$

(0.16

)

 

$

(0.25

)

 

$

2.00

 

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

   Continuing operations

$

(0.17

)

 

$

(0.21

)

 

$

1.97

 

 

$

1.63

 

   Discontinued operations

$

0.01

 

 

$

(0.04

)

 

$

0.02

 

 

$

(0.04

)

   Total

$

(0.16

)

 

$

(0.25

)

 

$

1.99

 

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

   Basic

9,294

 

 

9,467

 

 

9,389

 

 

9,562

 

   Diluted

9,294

 

 

9,467

 

 

9,436

 

 

9,568

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share of common stock

$

0.15

 

 

$

0.15

 

 

$

0.60

 

 

$

0.60

 

 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

March 31,

 

March 31,

 

2014

 

 

2013

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

   Cash and cash equivalents

$

68,200

 

 

$

87,108

 

   Short-term investments

29,862

 

 

 

   Accounts receivable, net

44,243

 

 

43,133

 

   Inventories

59,252

 

 

62,598

 

   Deferred income taxes

4,414

 

 

4,520

 

   Other current assets

13,472

 

 

13,073

 

   Current assets of discontinued operations

1

 

 

2

 

 

 

 

 

 

 

      Total current assets

219,444

 

 

210,434

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT, NET

27,063

 

 

27,956

 

 

 

 

 

 

 

DEFERRED INCOME TAXES

1,965

 

 

3,974

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

   Goodwill

14,522

 

 

14,522

 

   Intangible assets, net

26,309

 

 

28,004

 

   Other

4,232

 

 

4,290

 

 

 

 

 

 

 

   Total other assets

45,063

 

 

46,816

 

 

 

 

 

 

 

      Total assets

$

293,535

 

 

$

289,180

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

   Accrued customer programs

$

4,820

 

 

$

4,015

 

   Other current liabilities

26,582

 

 

30,718

 

   Current liabilities of discontinued operations

233

 

 

644

 

 

 

 

 

 

 

      Total current liabilities

31,635

 

 

35,377

 

 

 

 

 

 

 

LONG-TERM OBLIGATIONS

4,684

 

 

4,825

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

257,216

 

 

248,978

 

 

 

 

 

 

 

      Total liabilities and stockholders' equity

$

293,535

 

 

$

289,180

 

 

 

 

CSS Industries, Inc.

Reconciliation of Certain Non-GAAP Measures

(Unaudited)

(in thousands, except per share amounts)

 

The following is a reconciliation and computation of income from continuing operations before income taxes, income tax expense, income from continuing operations and diluted income per share from continuing operations to exclude income from Halloween operations and charges incurred as a result of the divestiture of the Halloween portion of the Paper Magic Group, Inc. business:

 

 

 

Twelve Months Ended March 31, 2014

 

Income from Continuing Operations Before Income Taxes

 

Income Tax Expense

 

Income from Continuing Operations

 

Diluted Income Per Share, Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

$

27,700

 

 

$

9,136

 

 

$

18,564

 

 

$

1.97

 

   Included in operating results

52

 

 

18

 

 

34

 

 

 

Non-GAAP Measurement

$

27,752

 

 

$

9,154

 

 

$

18,598

 

 

$

1.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended March 31, 2013

 

Income from Continuing Operations Before Income Taxes

 

Income Tax Expense

 

Income from Continuing Operations

 

Diluted Income Per Share, Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

$

22,637

 

 

$

7,049

 

 

$

15,588

 

 

$

1.63

 

   Included in operating results

(2,701

)

 

(933

)

 

(1,768

)

 

(0.18

)

   Charges included in cost of sales

1,266

 

 

458

 

 

808

 

 

0.08

 

   Charges included in disposition of product line, net

5,798

 

 

1,178

 

 

4,620

 

 

0.48

 

Non-GAAP Measurement

$

27,000

 

 

$

7,752

 

 

$

19,248

 

 

$

2.01

 

 

 

Management believes that presentation of results of operations adjusted for the affects of the disposition of the Halloween product line provides useful information to investors with respect to the Company's operating results for the twelve months ended March 31, 2014 and March 31, 2013 because it enhances comparability between the reporting periods.


FOR FURTHER INFORMATION CONTACT:
Vincent A. Paccapaniccia
Chief Financial Officer
(215) 569-9900