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FOR IMMEDIATE RELEASE
October 23, 2003
CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS
CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the second quarter and six months ended September 30, 2003. For the quarter ended September 30, 2003, sales increased by 2% to $179,162,000 from $175,452,000 in 2002. Net income increased 29% to $14,216,000, or $1.15 per diluted share, compared to prior year net income of $11,012,000, or $.91 per diluted share. For the six months ended September 30, 2003, sales increased by 5% to $237,452,000 from $226,009,000 in 2002. Net income before cumulative effect of change in accounting principle increased 53% to $10,177,000, or $.83 per diluted share, compared to $6,672,000 in the prior year, or $.52 per diluted share. The prior year results have been restated to reflect a three for two stock split. In addition, the prior year results reflect 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 $.69 per diluted 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 for the six months ended September 30, 2003 was the result of the inclusion of Crystal Creative Products, Inc. ("Crystal"), acquired on October 18, 2002. Excluding Crystal, sales decreased $4,679,000, or 2%, due primarily to decreased sales of Halloween products and the later timing of certain Christmas shipments. In addition to Crystal's modest contribution to earnings in the quarter and six months ended September 30, 2003, improved margins due to lower material costs and favorable production efficiencies as well as lower selling, general and administrative expenses ("SG&A") of the other businesses resulted in the increase in earnings. The decrease in SG&A for the quarter and six months ended September 30, 2003 was partially due to a decline in bad debt expense of $1,100,000 related to the settlement of our Kmart bankruptcy claim and the collection of additional funds under a pre-existing claims put agreement with an unrelated financial institution. "We remain pleased with the Company's results through the first half of the year and have an increased level of confidence in our previous guidance of approximately 10% EPS growth for the full year," 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 three and six months ended September 30, 2003 and 2002 and consolidated condensed balance sheets as of September 30, 2003, March 31, 2003 and September 30, 2002 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 | | | 2003 | 2002 | 2003 | 2002 | | | | SALES | $179,162 | $175,452 | $237,452 | $226,009 | | | | COSTS AND EXPENSES | | Cost of sales | 130,295 | 131,512 | 172,981 | 167,717 | | Selling, general and administrative expenses | 25,729 | 25,482 | 47,282 | 46,480 | | Interest expense, net | 984 | 1,132 | 1,689 | 1407 | | Rental and other expense (income), net | (198) | 120 | (502) | 21 | | | | | 156,810 | 158,246 | 221,450 | 215,583 | | | | INCOME BEFORE INCOME TAXES | 22,352 | 17,206 | 16,002 | 10,426 | | | | INCOME TAX EXPENSE | 8,136 | 6,194 | 5,825 | 3,754 | | | | INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | 14,216 | 11,012 | 10,177 | 6,672 | | | | CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX | - | - | - | (8,813) | | | | NET INCOME | $14,216 | $11,012 | $10,177 | $(2,141) | | | | BASIC NET INCOME (LOSS) PER COMMON SHARE | | Before cumulative effect of accounting change | 1.21 | 0.97 | 0.87 | 0.55 | | Cumulative effect of accounting change | - | - | - | (.73) | | Basic net income (loss) per common share | $1.21 | $0.97 | $0.87 | $(0.18) | | | | DILUTED NET INCOME (LOSS) PER COMMON SHARE | | Before cumulative effect of accounting change | 1.15 | 0.91 | 0.83 | 0.52 | | Cumulative effect of accounting change | - | - | - | (.69) | | Basic net income (loss) per common share | $1.15 | $0.91 | $0.83 | $(0.17) | | | | WEIGHTED AVERAGE SHARES OUTSTANDING | | BASIC | 11,748 | 11,381 | 11,682 | 12,033 | | DILUTED | 12,366 | 12,078 | 12,254 | 12,717 | CSS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) | | September 30,
2003
(Unaudited) | March 31,
2003
(Unaudited) | September 30,
2002
(Unaudited) | | | | ASSETS | | | | | | | CURRENT ASSETS | | Cash and temporary investments | 8,635 | 51,981 | 3,263 | | Accounts receivable, net | 157,048 | 47,583 | 149,978 | | Inventories | 162,407 | 106,648 | 157,676 | | Income tax receivable | - | 2,398 | - | | Deferred income taxes | 6,715 | 6,226 | 6,408 | | Other current assets | 17,425 | 13,771 | 11,234 | | | | Total current assets | 352,230 | 228,607 | 328,559 | | | | PROPERTY, PLANT AND EQUIPMENT, NET | 81,019 | 82,731 | 78,642 | | | | OTHER ASSETS | | Intangible Assets | 37,033 | 36,045 | 25,939 | | Other | 3,997 | 4,578 | 5,211 | | | | Total other assets | 41,030 | 40,623 | 31,150 | | | | Total assets | $474,279 | $351,961 | $438,351 | | | | LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | CURRENT LIABILITIES | | Notes payable | 76,600 | - | 134,600 | | Other current liabilities | 102,455 | 69,645 | 97,980 | | | | Total current liabilities | 179,055 | 69,645 | 232,580 | | | | LONG-TERM OBLIGATIONS | 50,000 | 50,063 | 117 | | | | DEFERRED INCOME TAXES | 4,012 | 3,684 | 2,190 | | | | SHAREHOLDER'S EQUITY | 8,249 | 7,706 | 4,919 | | | | Total liabilities and shareholders' equity | $474,279 | $351,961 | $438,351 |
FOR FURTHER INFORMATION CONTACT:
Vincent A. Paccapaniccia
Chief Financial Officer
tele: (215) 569-9900
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