EXHIBIT 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Year and Quarter Ended
March 31, 2004
PHILADELPHIA--(BUSINESS WIRE)--May 25, 2004--CSS Industries, Inc.
(NYSE:CSS) announced today the results of operations for the year and quarter
ended March 31, 2004. Sales for fiscal year 2004 increased 1% to $539,349,000
from $532,815,000, while net income before cumulative effect of change in
accounting principle increased 15% to $29,850,000, or $2.42 per diluted share,
from $25,846,000, or $2.09 per diluted share, in fiscal 2003. Sales for the
fourth quarter of 2004 decreased 3% to $54,503,000 from $56,124,000 in fiscal
2003. The net loss increased in the fourth quarter to $7,724,000, or $.65 per
diluted share, from $6,492,000, or $.56 per diluted share, in fiscal 2003. 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." Upon adoption and effective with the beginning of
fiscal 2003, the Company recorded a non-cash write-off of goodwill and negative
goodwill in the amount of $8,813,000, net of taxes, or $.71 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 year ended March 31, 2004 was primarily a
result of the inclusion for the full year of Crystal Creative Products, Inc.
("Crystal"), acquired on October 18, 2002. Excluding Crystal, sales decreased
$13,769,000, or 3% as a result of lower sales of seasonal products caused by the
overall sluggish retail environment, partially offset by increased everyday
product sales. The increase in net income per diluted share before the
cumulative effect of the change in accounting principle from $2.09 to $2.42 is
due primarily to improved profitability of our recently acquired businesses and
Halloween product lines as well as a decline in bad debt expense. For the
quarter, sales declined 3% due to lower Easter sales and the absence of a
significant new merchandising program for a major customer included in the
fourth quarter of fiscal 2003. This sales decline was partially offset by
increased everyday greeting card sales. The pre-tax loss for the fourth quarter
increased 16% due to lower sales volume, the write-off of equipment which will
no longer be utilized and increased provisions for inactive inventory.
"We are pleased to have continued the trend of the last few years and
delivered EPS growth in excess of 15%," commented David J. M. Erskine, CSS
President and CEO. "Fiscal 2005 will be a strategically important year in the
continuing development of CSS. The Company will invest in new product
initiatives, a new Hong Kong office and showrooms, and in continuing to
rationalize our asset base. Despite the up-front costs of these initiatives and
the cautious purchasing patterns of our mass merchant customers, we expect to
generate EPS growth for next year of approximately 10%. Some increase in
inflation is incorporated in our planning, however, a significant resurgence
could negatively impact our results."
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 months and year ended
March 31, 2004 and 2003 and condensed consolidated balance sheets as of March
31, 2004 and 2003 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except
per share amounts)
Three Months Ended Year Ended
March 31, March 31,
------------------- -------------------
2004 2003 2004 2003
-------- -------- -------- --------
(Unaudited)(Unaudited)(Unaudited)
SALES $54,503 $56,124 $539,349 $532,815
-------- -------- -------- --------
COSTS AND EXPENSES
Cost of sales 44,750 43,575 393,806 392,588
Selling, general and
administrative expenses 21,572 22,855 96,270 97,241
Interest expense, net 528 758 3,402 3,661
Rental and other income,
net (116) (546) (426) (685)
-------- -------- -------- --------
66,734 66,642 493,052 492,805
-------- -------- -------- --------
(LOSS) INCOME BEFORE INCOME
TAXES (12,231) (10,518) 46,297 40,010
INCOME TAX (BENEFIT) EXPENSE (4,507) (4,026) 16,447 14,164
-------- -------- -------- --------
(LOSS) INCOME BEFORE
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (7,724) (6,492) 29,850 25,846
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE,
NET OF TAX - - - (8,813)
-------- -------- -------- --------
NET (LOSS) INCOME $(7,724) $(6,492) $29,850 $17,033
======== ======== ======== ========
BASIC NET (LOSS) INCOME PER
COMMON SHARE
Before cumulative effect
of accounting change $(.65) $(.56) $2.54 $2.19
Cumulative effect of
accounting change - - - (.74)
-------- -------- -------- --------
Basic net (loss) income
per common share $(.65) $(.56) $2.54 $1.45
======== ======== ======== ========
DILUTED NET (LOSS) INCOME
PER COMMON SHARE
Before cumulative effect
of accounting change $(.65) $(.56) $2.42 $2.09
Cumulative effect of
accounting change - - - (.71)
-------- -------- -------- --------
Diluted net (loss) income
per common share $(.65) $(.56) $2.42 $1.38
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING
BASIC 11,839 11,529 11,755 11,784
======== ======== ======== ========
DILUTED 11,839 11,529 12,346 12,338
======== ======== ======== ========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, March 31,
2004 2003
-------- --------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 93,191 $ 51,981
Accounts receivable, net 40,460 47,583
Inventories 94,459 106,648
Income tax receivable - 2,398
Deferred income taxes 7,937 6,226
Other current assets 12,987 13,771
-------- --------
Total current assets 249,034 228,607
-------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 81,193 82,731
-------- --------
OTHER ASSETS
Intangible assets, net 35,619 36,045
Other 4,551 4,578
-------- --------
Total other assets 40,170 40,623
-------- --------
Total assets $370,397 $351,961
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ - $ -
Other current liabilities 61,221 73,497
-------- --------
Total current liabilities 61,221 73,497
-------- --------
LONG-TERM DEBT 50,251 50,063
-------- --------
LONG-TERM OBLIGATIONS 3,631 3,684
-------- --------
DEFERRED INCOME TAXES 6,142 3,856
-------- --------
STOCKHOLDERS' EQUITY 249,152 220,861
-------- --------
Total liabilities and stockholders'
equity $370,397 $351,961
======== ========
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900