CSS Industries (CSS) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
(Amounts in Thousands)

	As Reported			Pro Forma Adjustments						Pro Forma
	June 30, 2011			Seasonal Wrap			Transaction			June 30, 2011
CURRENT ASSETS
Cash and cash equivalents	$	4,426		$	(548	)(D)	$	200	(A)	$	4,078
Accounts receivable, net of allowances		46,612			(841	)(D)		—			45,771
Inventories		107,953			(19,152	)(D)		—			88,801
Deferred income taxes		3,787			—			—			3,787
Assets held for sale		1,323			—			—			1,323
Other current assets		20,312			(777	)(D)		500	(A)		20,035
Current assets of discontinued operations		—			21,318	(D)		—			21,318
Total current assets		184,413			—			700			185,113
NET PROPERTY, PLANT AND EQUIPMENT		31,577			—			—			31,577
DEFERRRED INCOME TAXES		8,575			—			—			8,575
OTHER ASSETS
Goodwill		17,233			—			—			17,233
Intangible assets, net of accumulated amortization		30,980			—			—			30,980
Other		4,641			—			5,000	(A)		9,641
Total other assets		52,854			—			5,000			57,854
Total assets	$	277,419		$	—		$	5,700		$	283,119
CURRENT LIABILITIES
Current portion of long-term debt	$	—		$	—		$	—		$	—
Accounts payable		25,145			(635	)(D)		—			24,510
Accrued income taxes		—			—			805	(B)		805
Accrued payroll and other compensation		6,063			(1,099	)(D)		—			4,964
Accrued customer programs		4,409			(250	)(D)		—			4,159
Accrued restructuring		3,015			(3,015	)(D)		—			0
Accrued other expenses		5,972			(752	)(D)		—			5,220
Current liabilities of discontinued operations		—			5,751	(D)		3,460	(B)		9,211
Total current liabilities		44,604			—			4,265			48,869
LONG-TERM DEBT, NET OF CURRENT PORTION		—			—			—			—
OTHER LONG-TERM OBLIGATIONS		5,790			(1,096	)(D)		—			4,694
OTHER LONG-TERM OBLIGATIONS OF DISCONTINUED OPERATIONS		—			1,096	(D)		—			1,096
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—			—
Common stock		1,470			—			—			1,470
Additional paid-in capital		51,747			—			—			51,747
Retained earnings		310,685			—			1,435	(B)		312,120
Accumulated other comprehensive loss, net of tax		(7	)		—			—			(7	)
Common stock in treasury		(136,870	)		—			—			(136,870	)
Total stockholders’ equity		227,025			—			1,435			228,460
Total liabilities and stockholders’ equity	$	277,419		$	—		$	5,700		$	283,119

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
(Amounts in Thousands)

	As Reported			Pro Forma Adjustments						Proforma
	March 31, 2011			Seasonal Wrap			Transaction			March 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$	50,407		$	(1,830	)(D)	$	200	(A)	$	48,777
Accounts receivable, net of allowances		42,615			(204	)(D)		—			42,411
Inventories		80,767			(11,674	)(D)		—			69,093
Deferred income taxes		4,051			—			—			4,051
Assets held for sale		1,323			—			—			1,323
Other current assets		13,151			(1,206	)(D)		500	(A)		12,445
Current assets of discontinued operations		—			14,914	(D)		—			14,914
Total current assets		192,314			—			700			193,014
NET PROPERTY, PLANT AND EQUIPMENT		32,345						—			32,345
DEFERRRED INCOME TAXES		8,854			—			—			8,854
OTHER ASSETS
Goodwill		17,233			—			—			17,233
Intangible assets, net of accumulated amortization		31,408			—			—			31,408
Other		4,769			—			5,000	(A)		9,769
Total other assets		53,410			—			5,000			58,410
Total assets	$	286,923		$	—		$	5,700		$	292,623
CURRENT LIABILITIES
Current portion of long-term debt	$	66		$	—		$	—		$	66
Accounts payable		25,509			(695	)(D)		—			24,814
Accrued income taxes		309			—			(1,188)	(C)		(879	)
Accrued payroll and other compensation		8,061			(1,050	)(D)		—			7,011
Accrued customer programs		4,726			(447	)(D)		—			4,279
Accrued restructuring		—			—			—			—
Accrued other expenses		6,747			(636	)(D)		—			6,111
Current liabilities of discontinued operations		—			2,828	(D)		9,000	(C)		11,828
Total current liabilities		45,418			—			7,812			53,230
LONG-TERM DEBT, NET OF CURRENT PORTION		—						—			—
OTHER LONG-TERM OBLIGATIONS		5,846			(1,082	)(D)		—			4,764
OTHER LONG-TERM OBLIGATIONS OF DISCONTINUED OPERATIONS		—			1,082	(D)		—			1,082
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock		—			—			—			—
Common stock		1,470			—			—			1,470
Additional paid-in capital		51,311			—			—			51,311
Retained earnings		320,024			—			(2,112)	(C)		317,912
Accumulated other comprehensive loss, net of tax		(7	)		—			—			(7	)
Common stock in treasury		(137,139	)		—			—			(137,139	)
Total stockholders’ equity		235,659			—			(2,112	)		233,547
Total liabilities and stockholders’ equity	$	286,923		$	—		$	5,700		$	292,623

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statement of Operations, which are an integral part of this data.

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CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
(Amounts in Thousands, Except Per Share Amounts)

	As Reported			Pro Forma			Pro Forma
	Quarter Ended			Adjustments			Quarter Ended
	June 30, 2011			Seasonal Wrap			June 30, 2011
NET SALES	$	55,040		$	(471)	(D)	$	54,569
COSTS AND EXPENSES
Cost of sales		43,286			(2,853)	(D)		40,433
Selling, general and administrative expense		20,450			(909)	(D)		19,541
Restructuring expenses, net		3,060			(3,042)	(D)		18
Interest expense, net		43						43
Other expense (income), net		24			(6)	(D)		18
		66,863			(6,810	)		60,053
(LOSS) INCOME BEFORE INCOME TAXES		(11,823	)		6,339			(5,484	)
INCOME TAX (BENEFIT) EXPENSE		(4,254	)		2,217	(E)		(2,037	)
NET (LOSS) INCOME	$	(7,569	)	$	4,122		$	(3,447	)
NET LOSS PER COMMON SHARE
Basic and Diluted	$	(0.78	)				$	(0.35	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and Diluted		9,735						9,735

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

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CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
(Amounts in Thousands, Except Per Share Amounts)

	As Reported			Pro Forma			Pro Forma
	Quarter Ended			Adjustments			Quarter Ended
	June 30, 2010			Seasonal Wrap			June 30, 2010
NET SALES	$	53,288		$	(349)	(D)	$	52,939
COSTS AND EXPENSES
Cost of sales		39,555			(50)	(D)		39,505
Selling, general and administrative expense		22,352			(867)	(D)		21,485
Restructuring expenses, net		41			—			41
Interest expense, net		209			—			209
Other expense (income), net		68			(56)	(D)		12
		62,225			(973	)		61,252
(LOSS) INCOME BEFORE INCOME TAXES		(8,937	)		624			(8,313	)
INCOME TAX (BENEFIT) EXPENSE		(3,200	)		218	(E)		(2,982	)
NET (LOSS) INCOME	$	(5,737	)	$	406		$	(5,331	)
NET LOSS PER COMMON SHARE
Basic and Diluted	$	(0.59	)				$	(0.55	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and Diluted		9,683						9,683

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

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CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
(Amounts in Thousands, Except Per Share Amounts)

	As Reported			Pro Forma			Pro Forma
	Year Ended			Adjustments			Year Ended
	March 31, 2011			Seasonal Wrap			March 31, 2011
NET SALES	$	450,700		$	(67,040)	(D)	$	383,660
COSTS AND EXPENSES
Cost of sales		336,446			(67,364)	(D)		269,082
Selling, general and administrative expense		93,062			(7,028)	(D)		86,034
Impairment of tangible assets		11,051			(10,738)	(D)		313
Restructuring expenses, net		164			—			164
Interest expense, net		1,348			—			1,348
Other income, net		(122	)		—			(122	)
		441,949			(85,130	)		356,819
INCOME BEFORE INCOME TAXES		8,751			18,090			26,841
INCOME TAX EXPENSE		3,140			6,507	(E)		9,647
NET INCOME	$	5,611		$	11,583		$	17,194
NET INCOME PER COMMON SHARE
Basic	$	0.58					$	1.77
Diluted	$	0.58					$	1.77
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		9,703						9,703
Diluted		9,715						9,715

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

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CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
(Amounts in Thousands, Except Per Share Amounts)

	As Reported			Pro Forma			Pro Forma
	Year Ended			Adjustments			Year Ended
	March 31, 2010			Seasonal Wrap			March 31, 2010
NET SALES	$	448,450		$	(72,739)	(D)	$	375,711
COSTS AND EXPENSES
Cost of sales		337,852			(71,542)	(D)		266,310
Selling, general and administrative expense		95,667			(8,599)	(D)		87,068
Impairment of goodwill and intangible assets		44,315			—			44,315
Restructuring expenses, net		207			—			207
Interest expense, net		1,885			—			1,885
Other income, net		(489	)		—			(489	)
		479,437			(80,141	)		399,296
(LOSS) INCOME BEFORE INCOME TAXES		(30,987	)		7,402			(23,585	)
INCOME TAX (BENEFIT) EXPENSE		(7,248	)		2,647	(E)		(4,601	)
NET (LOSS) INCOME	$	(23,739	)	$	4,755		$	(18,984	)
NET LOSS PER COMMON SHARE
Basic	$	(2.46	)				$	(1.97	)
Diluted	$	(2.46	)				$	(1.97	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		9,637						9,637
Diluted		9,637						9,637

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

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CSS Industries, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
(Amounts in Thousands, Except Per Share Amounts)

	As Reported		Pro Forma			Pro Forma
	Year Ended		Adjustments			Year Ended
	March 31, 2009		Seasonal Wrap			March 31, 2009
NET SALES	$	482,424	$	(85,261)	(D)	$	397,163
COSTS AND EXPENSES
Cost of sales		356,115		(73,246)	(D)		282,869
Selling, general and administrative expense		96,723		(9,284)	(D)		87,439
Restructuring expenses, net		1,138					1,138
Interest expense, net		2,551					2,551
Other expense, net		7					7
		456,534		(82,531	)		374,003
INCOME (LOSS) BEFORE INCOME TAXES		25,890		(2,730	)		23,160
INCOME TAX EXPENSE (BENEFIT)		8,904		(900)	(E)		8,004
NET INCOME (LOSS)	$	16,986	$	(1,830	)	$	15,156
NET INCOME PER COMMON SHARE
Basic	$	1.71				$	1.53
Diluted	$	1.70				$	1.52
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		9,909					9,909
Diluted		9,990					9,990

See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheets and Statements of Operations, which are an integral part of this data.

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Notes to Unaudited Pro Forma Consolidated Balance Sheets and
Statements of Operations

1. Basis of Presentation

The unaudited pro forma consolidated financial statements as of and for the respective periods presented are based on the historical audited financial statements of CSS Industries, Inc. (the “Company”) contained in its Annual Report on Form 10-K for the year ended March 31, 2011 and the unaudited historical financial statements included in its quarterly report on Form 10-Q for the quarter ended June 30, 2011 after giving effect to pretax expenses of up to $9,000,000 ($5,540,000 of which were incurred in the quarter ended June 30, 2011) that the Company expects to incur in its fiscal year ending March 31, 2012 related to the previously announced plan to close the Cleo manufacturing facility located in Memphis, Tennessee and the sale of its seasonal wrap business (collectively, the “Transaction”), which was completed on September 9, 2011, and using the assumptions and adjustments described in the accompanying notes. The accompanying unaudited pro forma consolidation balance sheet and unaudited pro forma consolidated statements of operations have been prepared to assist in analysis of the financial effects of the Transaction, including the reclassification of operating results and assets and liabilities as discontinued operations.

The unaudited pro forma consolidated balance sheet as of June 30, 2011 is presented as if the Transaction had occurred on June 30, 2011. The unaudited pro forma consolidated balance sheet as of March 31, 2011 is presented as if the Transaction had occurred on March 31, 2011.

The unaudited pro forma consolidated statements of operations for the quarters ended June 30, 2011 and June 20, 2010, and for the years ended March 31, 2011, 2010 and 2009 are presented as if the Transaction had occurred on April 1, 2008 and do not assume interest income on the proceeds.

The unaudited pro forma consolidated balance sheets and statements of operations are based upon available information and assumptions that the Company believes are reasonable under the circumstances and are prepared to illustrate the estimated effects of the Transaction. You should read this information in conjunction with the Company’s audited historical consolidated financial statements as of March 31, 2011 and for the years ended March 31, 2011, 2010 and 2009, included in the CSS Industries, Inc. annual report on Form 10-K for the year ended March 31, 2011 and the Company’s unaudited historical consolidated financial statements as of June 30, 2011 and for the quarters ended June 30, 2011 and 2010 included in the CSS Industries, Inc. quarterly report on Form 10-Q for the quarter ended June 30, 2011.

The unaudited pro forma consolidated balance sheets and statements of operations have been provided for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have been achieved had the Transaction occurred as of or for the periods presented, nor are they necessarily indicative of the Company’s future operating results or financial position.

2. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma consolidated statements of operations and the unaudited pro forma consolidated balance sheets.

(A)	The pro forma adjustment reflects the consideration received from the Transaction of $7,500,000 ($2,000,000 of cash and $5,500,000 of notes receivable) less estimated transaction fees of approximately $1,800,000.
(B)	The pro forma adjustment reflects the net consideration offset by the balance of the exit costs estimated to be incurred during the balance of the year ended March 31, 2012 as detailed below:

Gross consideration	$	7,500,000
Less: Transaction fees		1,800,000
Less: Balance of exit costs		3,460,000
		2,240,000
Tax effect		805,000
	$	1,435,000

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(C) The pro forma adjustment reflects the net consideration offset by the exit costs estimated to be incurred during the year ended March 31, 2012 as detailed below:

Gross consideration	$	7,500,000
Less: Transaction fees		1,800,000
Less: Exit costs		9,000,000
		(3,300,000	)
Tax effect		(1,188,000	)
	$	(2,112,000	)

(D)

These pro forma adjustments reclassify assets and liabilities and eliminate revenue and expenses which (i) are directly attributable to the seasonal wrap business and (ii) will not continue after the completion of the 2011 Christmas season. Operating results for the quarter ended June 30, 2011 include $2,498,000 related to the write down of inventory to net realizable value in cost of sales and staff termination costs of $3,042,000 in restructuring expenses.

(E)

The pro forma adjustments consider the general intra-period allocation rules for income taxes.

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