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FOR IMMEDIATE RELEASE
July 24, 2003
CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS
CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the first quarter ended June 30, 2003. Sales increased by 15% to $58,290,000 from $50,557,000 in 2002. The loss before cumulative effect of change in accounting principle decreased to $4,039,000, or $.35 per diluted share, compared to a prior year result of $4,340,000, or $.35 per diluted share. The prior year results have been restated to reflect a three for two stock split and also include the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No.142”). Upon adoption of SFAS No. 142 and effective with the beginning of its prior fiscal year, April 1, 2002, the Company recorded a non-cash write-off of goodwill and negative goodwill in the amount of $8,813,000, net of taxes, or $.70 per share. 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 was primarily the result of the inclusion of Crystal Creative Products, Inc. (“Crystal”), acquired on October 18, 2002. Excluding Crystal, sales increased $446,000, or 1%, due to increased sales of educational and other everyday products, partially offset by the shift of Christmas shipments from the first quarter into the second quarter of fiscal 2004. Despite Crystal’s seasonal net loss for the quarter of $840,000, which approximated budget, higher margins and lower selling, general and administrative expenses of the other businesses resulted in a decreased loss before the cumulative effect of the change in accounting principle versus the same quarter in the prior year.
“We are pleased with the first quarter results of the Company. Although it is early in the year, these results support our previous guidance of EPS growth for fiscal year 2004 of approximately 10%,” noted David Erskine, President and CEO.
All statements other than statements of historical fact included in this press release are “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. 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, and other factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003. CSS’ consolidated results of operations for the quarters ended June 30, 2003 and 2002 and consolidated condensed balance sheets as of June 30, 2003, March 31, 2003 and June 30, 2002 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS (In thousands, except per share amounts) | | Three Months Ended
July 30 | | | | 2003 | 2002 | | | | | | SALES | $58,290 | $50,557 | | | | | | COSTS AND EXPENSES | | Cost of sales | 42,686 | 36,205 | | | | Selling, general and administrative expenses | 21,553 | 20,998 | | | | Interest expense (income), net | 705 | 275 | | | | Rental and other (income) expense, net | (304) | (141) | | | | | | | $64,640 | $57,337 | | | | | | (LOSS) INCOME BEFORE INCOME TAXES | (6,350) | (6,780) | | | | | | INCOME TAX (BENEFIT) EXPENSE | (2,311) | (2,440) | | | | | (LOSS) INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE | -- | (8,813) | | | | | CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX | - | - | | | | | | NET (LOSS) INCOME | $(4,039) | $(13,153) | | | | | | BASIC NET (LOSS) INCOME PER COMMON SHARE | | Before cumulative effect of accounting change | $(.35) | $(.35) | | | | Cumulative effect of accounting change | - | (.70) | | | | Basic net (loss) income per common share | $(.35) | $(1.05) | | | | | | DILUTED NET (LOSS) INCOME PER COMMON SHARE | | Before cumulative effect of accounting change | $(.84) | $(.67) | | | | Cumulative effect of accounting change | - | - | | | | Basic net (loss) income per common share | $(.84) | $(.67) | | | | | | WEIGHTED AVERAGE SHARES OUTSTANDING | | BASIC | 11,632 | 12,522 | | | | DILUTED | 11,632 | 12,522 | | |
CSS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) | | June 30,
2003
(Unaudited) | March 31,
2003
(Audited) | June 30,
2002
(Unaudited) | | | | ASSETS | | | | | | | CURRENT ASSETS | | Cash and temporary investments | 5,426 | 51,981 | 1,769 | | Accounts receivable, net | 45,739 | 47,583 | 37,816 | | Inventories | 163,033 | 106,648 | 151,675 | | Income tax receivable | 5,112 | 2,398 | 2,715 | | Deferred income taxes | 6,194 | 6,226 | 6,408 | | Other current assets | 14,475 | 13,771 | 10,256 | | | | Total current assets | 239,779 | 228,607 | 210,639 | | | | PROPERTY, PLANT AND EQUIPMENT, NET | 81,618 | 82,731 | 78,172 | | | | OTHER ASSETS | | Intangible Assets, Net | 36,017 | 36,045 | 25,983 | | Other | 4,247 | 4,578 | 3,965 | | | | Total other assets | 40,264 | 40,623 | 29,948 | | | | Total assets | $361,861 | $351,961 | $318,759 | | | | LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | CURRENT LIABILITIES | | Notes payable | | - | - | | Accrued customer programs | 12,963 | 13,334 | 9,413 | | Other current liabilities | 69,230 | 56,311 | 63,902 | | | | Total current liabilities | 82,193 | 69,645 | 123,835 | | | | LONG-TERM DEBT | 50,000 | 50,063 | 141 | | | | LONG-TERM OBLIGATIONS | 3,785 | 3,684 | 2,217 | | | | DEFERRED INCOME TAXES | 7,939 | 7,706 | 5,660 | | | | SHAREHOLDER'S EQUITY | 217,944 | 220,863 | 186,906 | | | | Total liabilities and shareholders' equity | $361,861 | $351,961 | $318,759 |
FOR FURTHER INFORMATION CONTACT:
Vincent A. Paccapaniccia
Chief Financial Officer
tele: (215) 569-9900
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