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FOR IMMEDIATE RELEASE
October 26, 2004
CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 2004
CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the second quarter and six months ended September 30, 2004. For the quarter ended September 30, 2004, sales increased by 1% to $181,711,000 from $179,162,000 in 2003. Net income increased 10% to $15,613,000, or $1.24 per diluted share, compared to prior year net income of $14,216,000, or $1.15 per diluted share. For the six months ended September 30, 2004, sales decreased by 3% to $231,266,000 from $237,452,000 in 2003. Net income increased 10% to $11,206,000, or $.89 per diluted share, compared to a prior year net income of $10,177,000, or $.83 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 decrease in sales for the six months ended September 30, 2004 was primarily the result of the absence of sales related to a product line, which was sold in July of 2003, and lower sales of ribbons and bows which is substantially due to timing of shipments compared to a year ago. This sales decline was partially offset by higher sales of other Christmas products. The increase in net income was a result of improved margins, integration savings related to recent acquisitions and lower interest expense compared to the prior year which more than offset the impact of the sales decline. In September 2004, the U.S. Commerce Department issued its preliminary determination in the anti-dumping duty investigation on certain tissue paper products imported from China. As a result of this determination, the Company and other importers will be required to post bond or a cash deposit upon importation of these products at rates reflecting the Commerce Department's estimate of the duties that may be imposed on these products. The actual amount of these duties, if imposed, may be higher or lower, depending on the outcome of the investigations being carried out by the Commerce Department and the U.S. International Trade Commission. These investigations are expected to conclude in February 2005 and March 2005, respectively. The Company's exposure relative to earnings for fiscal 2005 is estimated to be in the range of approximately $.02 to $.15 per diluted share. The Company is vigorously contesting the imposition of these duties. "We are pleased with the results through the first half of our fiscal year. Our results for the six-months ended September 30, 2004 are in line with our expectations and support our previous guidance of EPS growth for fiscal year 2005 of approximately 10%, excluding the impact of any duties that may be imposed," noted David Erskine, President and CEO. "However, to reflect the potential impact of duties, we are revising our prior guidance of EPS growth for the 2005 fiscal year to a range of approximately 5% to 10%. We are developing alternative sourcing plans designed to avoid duties on imported tissue in the future," he continued. 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, 2004. CSS' consolidated results of operations for the quarters ended September 30, 2004 and 2003 and consolidated condensed balance sheets as of September 30, 2004, March 31, 2004 and September 30, 2003 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 | | | 2004 | 2003 | 2004 | 2003 | | | | SALES | $181,711 | $179,162 | $231,266 | $237,452 | | | | COSTS AND EXPENSES | | Cost of sales | 132,553 | 131,114 | 168,614 | 174,275 | | Selling, general and administrative expenses | 24,588 | 24,910 | 44,763 | 45,988 | | Interest expense, net | 709 | 984 | 1,126 | 1,689 | | Other Income | (457) | (198) | (692) | (502) | | | | | 157,393 | 156,810 | 213,811 | 221,450 | | | | INCOME BEFORE INCOME TAXES | 24,318 | 22,352 | 17,455 | 16,002 | | | | INCOME TAX EXPENSE | 8,705 | 8,136 | 6,249 | 5,825 | | |
| NET INCOME | $15,613 | $14,216 | $11,206 | $10,177 | | | | NET INCOME PER COMMON SHARE | | Basic | $1.31 | $1.21 | $.94 | $.87 | | Diluted | $1.24 | $1.15 | $.89 | $.83 | | WEIGHTED AVERAGE SHARES OUTSTANDING | | | | Basic | 11,961 | 11,748 | 11,919 | 11,682 | | Diluted | 12,619 | 12,366 | 12,641 | 12,254 | | | | CASH DIVIDENDS PER SHARE OF COMMON STOCK | $.10 | $.08 | $.20 | $.147 |
| | COMPREHENSIVE INCOME | | Net income | $15,613 | $14,216 | $11,206 | $10,177 | | Change in fair value of interest rate swap agreements, net | - | 121 | - | 120 | | Foreign currency translation adjustment | 3 | 17 | 5 | 17 | | Comprehensive income | $15,616 | $14,354 | $11,211 | $10,314 | CSS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) | | September 30,
2004 | March 31,
2004 | September 30,
2003 | | | (Unaudited) | (Audited) | (Unaudited) | | | | ASSETS | | | | | | | CURRENT ASSETS | | Cash and cash equivalents | $ 6,140 | $ 93,191 | $ 8,635 | | Accounts receivable, net | 151,987 | 40,460 | 157,048 | | Inventories | 164,536 | 94,459 | 162,407 | | Deferred income taxes | 7,341 | 7,937 | 6,715 | | Other current assets | 15,782 | 12,987 | 17,425 | | | | Total current assets | 345,786 | 249,034 | 352,230 | | | | PROPERTY, PLANT AND EQUIPMENT, NET | 76,975 | 81,193 | 81,019 | | | | OTHER ASSETS | | Intangible Assets | 35,544 | 35,619 | 37,033 | | Other | 4,806 | 4,551 | 3,997 | | | | Total other assets | 40,350 | 40,170 | 41,030 | | | | Total assets | $463,111 | $370,397 | $474,279 | | | | LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | CURRENT LIABILITIES | | Notes payable | $ 37,880 | $ 12,385 | $ 76,600 | | Other current liabilities | 109,150 | 48,836 | 102,455 | | | | Total current liabilities | 147,030 | 61,221 | 179,055 | | | | LONG-TERM DEBT, NET OF CURRENT PORTION | 50,056 | 50,251 | 50,000 | | | | LONG-TERM OBLIGATIONS | 3,513 | 3,631 | 4,012 | | | | DEFERRED INCOME TAXES | 6,323 | 6,142 | 8,249 | | | | SHAREHOLDER'S EQUITY | 256,189 | 249,152 | 232,963 | | | | Total liabilities and shareholders' equity | $463,111 | $370,397 | $474,279 |
FOR FURTHER INFORMATION CONTACT:
Vincent A. Paccapaniccia
Chief Financial Officer
tele: (215) 569-9900
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