Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Quarter and
Six Months Ended September 30, 2005
PHILADELPHIA--(BUSINESS WIRE)--Oct. 25, 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 Six Months Ended
September 30, 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)
September 30, March 31, September 30,
2005 2005 2004
------------- ------------- -------------
(Unaudited) (Audited) (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
============= ============= =============
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900