CSS INDUSTRIES, INC. REPORTS SALES AND OPERATING RESULTS FOR THE QUARTER ENDED JUNE 30, 2008


CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the first quarter ended June 30, 2008. Sales increased 17% to $54,647,000 from $46,802,000 in 2007. The net loss increased slightly to $4,496,000 compared to a prior year net loss of $4,427,000. The loss per diluted share increased to $(.44) per diluted share from $(.41) per diluted share in the prior year as a result of lower shares outstanding due to stock repurchases over the last six months. The Company's highly seasonal orientation results in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters.

The increase in sales during the fiscal quarter is due to sales of C.R. Gibson, which was acquired on December 3, 2007. Excluding sales from the C.R. Gibson business, sales declined 7%, primarily due to lower sales of tissue paper and gift wrap and the later timing of Halloween shipments compared to the prior year. The increased net loss in the first fiscal quarter was primarily the result of higher interest expense, partially offset by favorable margins and lower selling, general and administrative expenses at certain of our operations. Included in the current year loss per diluted share for the quarter is expense of $.03 per diluted share related to a restructuring program announced in January 2008 to close three Pennsylvania based facilities and $.03 per diluted share related to the impact of recent stock repurchases. C.R. Gibson did not contribute significantly to the Company's earnings before interest in the first quarter as a large portion of its earnings are projected to occur in the last three quarters of the fiscal year.

"As expected, the economic environment has been a challenge for our businesses. However, our previously announced restructuring program, stock repurchases and the performance of C.R. Gibson are all expected to have a positive impact on the Company's results this year," commented Christopher J. Munyan, CSS President and CEO. "Although it is early in the year, we continue to believe that earnings for fiscal 2009 will be in the range of $2.40 to $2.55 per diluted share," continued Mr. Munyan.

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution 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-up and novelties, Easter egg dyes and novelties, craft products, educational products, memory books, stationery, journals, notecards, infant and wedding photo albums and 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, including, among others, statements relating to expected future earnings and financial performance; expected future benefits from the Company's restructuring plan involving the closure of its facilities in Elysburg, Pennsylvania and Troy, Pennsylvania; expected future benefits associated with the Company's stock repurchases; and the expected future benefits from our acquisition of the C.R. Gibson business. 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 acquisitions, including acquisition integration costs; risks associated with the restructuring plan to close the Company's facilities in Elysburg, Pennsylvania and Troy, Pennsylvania, including the risk that the restructuring related savings may be less than and/or costs may exceed the presently expected amounts and the risk that the closures will adversely affect the Company's ability to fulfill its customers orders on time; risks associated with the Company's enterprise resource planning 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; 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 more fully in the Company's annual report on Form 10-K for the fiscal year ended March 31, 2008 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 quarters ended June 30, 2008 and 2007 and consolidated condensed balance sheets as of June 30, 2008, March 31, 2008 and June 30, 2007 follow:

 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

 
(In thousands, except per share data) Three Months Ended
June 30,


 
 
  2008

  2007

 
SALES $54,647   $46,802  
 
 
 
COSTS AND EXPENSES
Cost of sales 37,713   33,519  
Selling, general and administrative expenses 23,550   20,683  
Interest expense (income), net 284   (374)  
Other income, net (66 ) (242 )
 
 
  61,481   53,586  
 
 
LOSS BEFORE INCOME TAXES (6,834 ) (6,784 )
 
INCOME TAX BENEFIT (2,338 ) (2,357 )
 
 
NET LOSS $(4,496 ) $(4,427 )
 
 
 
BASIC AND DILUTED NET LOSS PER COMMON SHARE $(.44 ) $(.41 )
 
 
WEIGHTED AVERAGE BASIC AND DILUTED SHARES OUTSTANDING 10,255   10,882  
 
 


 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) Jun 30,
2008

(Unaudited)
  Mar 31,
2008

(Audited)
  Jun 30,
2007

(Unaudited)
 
 
ASSETS
 
CURRENT ASSETS
Cash and cash equivalents $ 7,213   $ 28,109   $ 53,303  
Accounts receivable, net 43,700   39,144   37,891  
Inventories 143,387   105,532   125,012  
Deferred income taxes 6,519   7,276   7,973  
Assets held for sale 3,461   3,590   2,564  
Other current assets 15,003   16,242   15,466  
 
 
 
Total current assets 219,283   199,893   242,209  
 
 
 
PROPERTY, PLANT AND EQUIPMENT, NET 51,695   50,632   56,759  
 
 
 
OTHER ASSETS
Goodwill 48,361   48,361   30,952  
Intangible assets, net 42,401   42,454   4,313  
Other 3,128   3,701   3,678  
 
 
 
Total other assets 93,890   94,516   38,943  
 
 
 
Total assets $364,868   $345,041   $337,911  
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Notes payable $ 29,700   $ â€"   $ â€"  
Current portion of long-term debt 10,249   10,246   10,207  
Accrued customer programs 7,762   9,438   7,929  
Other current liabilities 44,815   44,209   34,234  
Total current liabilities 92,526   63,893   52,370  
LONG-TERM DEBT, NET OF CURRENT PORTION 10,129   10,192   20,330  
LONG-TERM OBLIGATIONS 6,235   6,121   6,146  
DEFERRED INCOME TAXES 2,108   2,482   1,238  
STOCKHOLDERS' EQUITY 253,870   262,353   257,827  
Total liabilities and stockholders' equity $364,868   $345,041   $337,911  
 
 
 
 

 

 


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