FOR IMMEDIATE RELEASE
October 25, 2005

CSS INDUSTRIES, INC. REPORTS SALES AND EARNINGS FOR THE QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 2005

CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the second quarter and six months ended September 30, 2005. For the quarter ended September 30, 2005, sales decreased by 10% to $164,043,000 from $181,711,000 in 2004. Net income decreased 41% to $9,239,000, or $.84 per diluted share, compared to prior year net income of $15,613,000, or $1.24 per diluted share. For the six months ended September 30, 2005, sales decreased by 4% to $221,537,000 from $231,266,000 in 2004. Net income decreased 50% to $5,584,000, or $.51 per diluted share, compared to prior year net income of $11,206,000, or $.89 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 reduction in sales is largely due to customer requested shipment dates of Christmas orders moving from September to October. The reduction in net income is due primarily to the customer requested shift of sales from September into October and lower margins. Gross margins through the second quarter of fiscal 2006 are three percentage points below the same six month period in fiscal 2005. While a portion of this decrease is expected to reverse in the second half of the year, margins will be lower on a year over year basis due primarily to both increased material and fuel costs and to an unfavorable mix of product margins compared to the prior year.

“The shortfall in earnings per share through September 30, 2005 as described above is partially attributable to the timing of shipments and the mix of product margins generated compared to the prior year. Notwithstanding these timing issues, our current expectation for the year is now zero to five percent EPS growth over the prior year which is lower than our previous guidance of 13% to 18%,” said David Erskine, President and CEO. “Reduced sales and margins expectations for certain non-seasonal product lines account for almost half of the reduced expectation. Other significant factors include higher than expected seasonal production costs, increased fuel costs related to Hurricane Rita and the cost of certain executive changes.”

“I am pleased to announce the promotion of Christopher J. Munyan to Executive Vice President and Chief Operating Officer of CSS Industries. This change is in line with our objective of increasing the executive bench strength and orderly management of executive succession at CSS,” said Mr. Erskine. “For the last six years, Chris has managed the successful growth and increased profitability of our Berwick Offray subsidiary as its President and we look forward to his increased contributions as he assumes this important new role at CSS.”

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. 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, the impact to the Company’s operations attributable to Hurricanes Katrina and Rita, currency risks and other risks associated with international markets, risks associated with acquisitions, including acquisition integration costs, the Company’s ability to integrate and derive the expected benefits from recent acquisitions, 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, 2005 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, 2005 and 2004 and condensed consolidated balance sheets as of September 30, 2005, March 31, 2005 and September 30, 2004 follow:

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)

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


Three Months Ended
September 30,


2005

2004

2005

2004

SALES $164,043      $181,711      $221,537      $231,266




COSTS AND EXPENSES
     Cost of sales 125,676      132,553      168,441 168,614
     Selling, general and administrative expenses 23,050      24,588      43,035      44,763
     Interest expense, net 1,057      709      1,499      1,126
     Other income (130 )     (457 )     (135 )     (692 )




149,653      $157,393      $212,840      $213,811




INCOME BEFORE INCOME TAXES 14,390      24,318      8,697      17,455
 
INCOME TAX EXPENSE 5,151      8,705      3,113      6,249




NET INCOME $    9,239      $  15,613      $    5,584      $  11,206




 
NET INCOME PER COMMON SHARE
     Basic $.88      $1.31      $.53      $.94




     Diluted $.84      $1.24      $.51      $.89




 
WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic 10,496      11,961      10,455      11,919




     Diluted 11,017      12,619      10,966      12,641




 
CASH DIVIDENDS PER SHARE OF COMMON STOCK $.12      $.10      $.24      $.20




 

COMPREHENSIVE INCOME
     Net income $9,239      $15,613      $5,584 $11,206
     Foreign currency translation adjustment 3      3           5




     Comprehensive income $9,242      $15,616      $5,584      $11,211







CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)Sept 30,
2005

(Unaudited)
Mar 31,
2005

(Audited)
Sept 30,
2004

(Unaudited)
 
ASSETS
 
CURRENT ASSETS
     Cash and cash equivalents $    6,937      $  57,333      $    6,140
     Accounts receivable, net 126,723      37,273      151,987
     Inventories 177,812      101,867      164,536
     Deferred income taxes 8,720      8,199      7,341
     Other current assets 17,301      13,945      15,782



         Total current assets 337,493      218,617      345,786



PROPERTY, PLANT AND EQUIPMENT, NET 72,766      75,402      76,975



OTHER ASSETS
     Goodwill 30,952      30,952      30,952
     Intangible assets, net 4,469      4,516      4,592
     Other 4,151      4,419      4,806



         Total other assets 39,572      39,887      40,350



         Total assets $449,831      $333,906      $463,111




 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
     Notes payable $  76,400      $        —      $  37,880
     Current portion of long-term debt 10,175      10,442      518
     Accrued customer programs 13,401      13,628      15,941
     Other current liabilities 78,190      42,669      92,691



         Total current liabilities 178,166      66,739      147,030



LONG-TERM DEBT, NET OF CURRENT PORTION 40,000      40,000      50,056



LONG-TERM OBLIGATIONS 3,233      3,607      3,513



DEFERRED INCOME TAXES 7,260      7,071      6,323



STOCKHOLDERS' EQUITY 221,172      216,489      256,189



         Total liabilities and stockholders' equity $449,831      $333,906      $463,111






FOR FURTHER INFORMATION CONTACT:
Vincent A. Paccapaniccia
Chief Financial Officer
tele: (215) 569-9900

 
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