Back

CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 2007

CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 2007


CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the second quarter and six months ended September 30, 2007. For the quarter ended September 30, 2007, sales decreased by 1% to $172,882,000 from $173,830,000 in 2006. Net income increased 16% to $13,535,000, or $1.22 per diluted share, compared to prior year net income of $11,703,000, or $1.08 per diluted share. For the six months ended September 30, 2007, sales of $219,684,000 decreased 1% compared to sales of $221,363,000 in 2006. Net income increased 47% to $9,108,000, or $.82 per diluted share, compared to prior year net income of $6,196,000, or $.57 per diluted share. The Company's highly seasonal business results in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters.

 

The 1% decline in sales for the quarter and six months ended September 30, 2007 is primarily the result of reduced boxed greeting card sales to warehouse clubs and lower sales of educational products, partially offset by the earlier timing of certain Christmas product line shipments, particularly gift wrap. Net income improved 16% for the quarter and 47% for the six months ended September 30, 2007 largely due to the reduced cost structure resulting from the restructuring program implemented in November of 2006, which combined the operations of the Company's Cleo Inc and Berwick Offray LLC subsidiaries, as well as lower interest expense on reduced borrowings compared to the prior year.

The Board of Directors of the Company recently approved a systems integration plan designed to standardize the enterprise resource planning ("ERP") systems, master data and business processes across all CSS businesses. Oracle Corp.'s JD Edwards EnterpriseOne is currently utilized at the Company's Paper Magic Group and was selected as the ERP solution for all of CSS. The Company believes this project, which is expected to be implemented in phases over two and one-half years, will provide a sound, cost effective foundation for the future growth of CSS, as well as provide the systems and business process infrastructure for future acquisitions and operating efficiencies. The incremental cash outlay for this initiative over a two and one-half year period is projected to be $8,100,000. During fiscal 2008, the Company expects the cash outlay to be $4,500,000 with no material impact on the income statement.

"We are pleased to announce that quarterly and six month results are in line with our expectations. Furthermore, we continue to believe that estimated full year earnings for fiscal 2008 will be within our previously announced range of $2.45 â€" $2.60 per diluted share," commented Christopher J. Munyan, CSS' President and CEO. "The recent approval by our Board of Directors of the systems integration plan is an important step toward standardizing best business practices across our businesses," continued Mr. Munyan.

CSS is a consumer products company primarily engaged in the design and sale of seasonal and all occasion products, principally to mass market retailers. These products include gift wrap, gift bags, gift boxes, boxed greeting cards, gift tags, decorative tissue paper, decorations, classroom exchange Valentines, decorative ribbons and bows, Halloween masks, costumes, make-ups and novelties, Easter egg dyes and novelties, and craft and educational products.

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements relating to expected future earnings and financial performance and expected future benefits and costs associated with the project relating to the standardization of the Company's ERP systems. 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 conditions, increased competition, 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 the combination of the operations of the Company's Cleo and Berwick Offray subsidiaries, including the risk that the restructuring related savings may not meet the expected amounts previously reported, risks associated with the Company's ERP systems standardization project, including the risk that the cost of the project will exceed expectations, the risk that the expected benefits of the project will not be realized and the risk that implementation of the project will interfere with and adversely affect the Company's operations and financial performance, risks associated with the expiration on December 31, 2007 of the collective bargaining agreement between the Company's Cleo subsidiary and the labor union representing certain production and maintenance employees employed at Cleo's Memphis, Tennessee facility, including the risk that a new collective bargaining agreement may not be reached prior to the expiration of the current collective bargaining agreement, the risk that customers may become insolvent, 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 in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 and elsewhere in the Company's SEC filings. 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 quarters and six months ended September 30, 2007 and 2006 and condensed consolidated balance sheets as of September 30, 2007, March 31, 2007 and September 30, 2006 follow:

 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)

 
(In thousands, except per share amounts) Three Months Ended
September 30,


  Six Months Ended
September 30,


 
  2007

  2006

  2007

  2006

 
SALES $172,822   $173,830   $219,684   $221,363  
 
 
 
 
 
COSTS AND EXPENSES
Cost of sales 126,683   129,003   160,202   163,066  
Selling, general and administrative expenses 25,158   25,289   45,841   47,493  
Interest expense (income), net 284   1,083   (90)   1,217  
Other income (159 ) (66 ) (401 ) (228 )
 
 
 
 
  151,966   155,309   205,552   211,548  
 
 
 
 
INCOME BEFORE INCOME TAXES 20,916   18,521   14,132   9,815  
 
INCOME TAX EXPENSE 7,381   6,818   5,024   3,619  
 
 
 
 
NET INCOME $ 13,535   $ 11,703   $ 9,108   $ 6,196  
 
 
 
 
 
NET INCOME PER COMMON SHARE
Basic $1.25   $1.11   $.84   $.59  
 
 
 
 
Diluted $1.22   $1.08   $.82   $.57  
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 10,857   10,559   10,869   10,528  
 
 
 
 
Diluted 11,129   10,838   11,161   10,831  
 
 
 
 
 
CASH DIVIDENDS PER SHARE OF COMMON STOCK $.14   $.12   $.28   $.24  
 
 
 
 
 

 
CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
  September 30,
2007

  March 31,
2007

  September 30,
2006

 
  (Unaudited)   (Audited)   (Unaudited)  
ASSETS
 
CURRENT ASSETS
Cash and cash equivalents $ 6,004   $100,091   $ 11,182  
Accounts receivable, net 147,482   37,169   140,450  
Inventories 140,014   82,138   167,699  
Deferred income taxes 8,130   8,645   7,328  
Assets held for sale 2,564   2,564   1,599  
Other current assets 14,103   13,665   16,929  
 
 
 
Total current assets 318,297   244,272   345,187  
 
 
 
PROPERTY, PLANT AND EQUIPMENT, NET 54,753   58,897   65,315  
 
 
 
OTHER ASSETS
Goodwill 30,952   30,952   30,952  
Intangible assets, net 4,298   4,328   4,375  
Other 3,685   4,621   3,873  
 
 
 
Total other assets 38,935   39,901   39,200  
 
 
 
Total assets $411,985   $343,070   $449,702  
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Notes payable $ 20,100   $ -   $ 73,510  
Current portion of long-term debt 10,210   10,195   10,195  
Accrued customer programs 11,749   10,290   11,992  
Other current liabilities 76,304   35,478   75,219  
 
 
 
Total current liabilities 118,363   55,963   170,916  
 
 
 
LONG-TERM DEBT, NET OF CURRENT PORTION 20,276   20,392   30,490  
 
 
 
LONG-TERM OBLIGATIONS 6,308   3,221   3,211  
 
 
 
DEFERRED INCOME TAXES 1,147   2,384   5,298  
 
 
 
STOCKHOLDERS' EQUITY 265,891   261,110   239,787  
 
 
 
Total liabilities and stockholders equity $411,985   $343,070   $449,702  
 
 
 
 

 


 

 


FOR FURTHER INFORMATION CONTACT:
Clifford E. Pietrafitta
Chief Financial Officer
(215) 569-9900