Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Quarter and Six Months
Ended September 30, 2004
PHILADELPHIA--(BUSINESS WIRE)--Oct. 26, 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 Six Months Ended
September 30, 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, March 31, September 30,
2004 2004 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 SHAREHOLDERS'
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
------------- ---------- -------------
SHAREHOLDERS' EQUITY 256,189 249,152 232,963
------------- ---------- -------------
Total liabilities and
shareholders' equity $ 463,111 $ 370,397 $ 474,279
============= ========== =============
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900