Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for the
Quarter and Nine Months Ended December 31, 2005
PHILADELPHIA--(BUSINESS WIRE)--Jan. 30, 2006--CSS Industries, Inc.
(NYSE:CSS) announced today the results of operations for the third quarter and
nine months ended December 31, 2005. For the quarter ended December 31, 2005,
sales increased by 2% to $251,796,000 from $247,169,000 in the prior year. Net
income was essentially flat at $23,924,000 compared to prior year net income of
$23,971,000, while earnings per share increased 14% to $2.18 per diluted share
from $1.91 per diluted share in the prior year. The increase in earnings per
diluted share was the result of stock repurchases in March 2005 and fiscal 2006.
For the nine months ended December 31, 2005, sales decreased by 1% to
$473,333,000 from $478,435,000 in 2004. Net income decreased 16% to $29,508,000
compared to prior year net income of $35,177,000. For the nine months ended
December 31, 2005, earnings per diluted share declined 4% to $2.69 per diluted
share from $2.79 per diluted share as lower earnings were partially offset by a
13% reduction in the number of diluted shares outstanding due to the repurchase
of stock in March 2005 and during fiscal 2006. 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 quarter ended December 31, 2005 was primarily
the result of customer requested shifts of Christmas shipments from September to
October as well as the earlier timing of Valentine shipments from the fourth
quarter to the third quarter in the current fiscal year. The decrease in net
income for the quarter ended December 31, 2005 was primarily due to increased
product and freight costs related to our gift wrap and tissue product lines,
offset by higher sales, including the effect of a reduction in customer program
expense. The decrease in sales for the nine months ended December 31, 2005 was
primarily due to lower sales of Christmas gift wrap, boxed greeting cards and
everyday ribbons and bows, partially offset by improved sales of gift bags and
tissue as well as the earlier shipment of Valentine products as described above.
The decrease in net income for the nine months ended December 31, 2005 was
primarily attributable to the impact of this lower sales volume and higher
product and freight costs related to our gift wrap and tissue product lines,
partially offset by the effect of a reduction in customer program expense and
decreased selling, general and administrative expenses, primarily related to
incentive compensation.
"Our previous guidance of earnings per share growth for fiscal 2006 was
zero to five percent over the prior year. Results for the quarter did not meet
our expectations primarily as a result of product cost increases and excessive
delivery costs related to our gift wrap and tissue product lines. These factors,
combined with reduced expectations for sales in non-seasonal product lines, have
led us to reduce our earnings per share guidance for the full year. We now
expect earnings per share for the full year to decline between 5% and 10%
compared to last year. Significant management changes have been made to address
the primary causes of this poor performance," said David Erskine, President and
CEO.
CSS is a consumer products company primarily engaged in the manufacture and
sale to mass market retailers of seasonal, social expression products, including
gift wrap, gift bags, boxed greeting cards, gift tags, tissue paper, paper and
vinyl decorations, classroom exchange Valentines, decorative ribbons and bows,
Halloween masks, costumes, make-ups and novelties, educational products and
Easter egg dyes and novelties.
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 and product costs, including
labor-related and energy costs, currency risks and other risks associated with
international markets, 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 three and nine months ended
December 31, 2005 and 2004 and consolidated condensed balance sheets as of
December 31, 2005, March 31, 2005 and December 31, 2004 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED RESULTS OF OPERATIONS
----------------------------------
(Unaudited)
(In thousands, except
per share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
SALES $251,796 $247,169 $473,333 $478,435
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of sales 189,367 184,656 357,808 353,270
Selling, general and
administrative
expenses 23,870 24,221 66,905 68,984
Interest expense, net 1,483 906 2,982 2,032
Other expense (income),
net (47) 49 (182) (643)
---------- ---------- ---------- ----------
214,673 209,832 427,513 423,643
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 37,123 37,337 45,820 54,792
INCOME TAX EXPENSE 13,199 13,366 16,312 19,615
---------- ---------- ---------- ----------
NET INCOME $23,924 $23,971 $29,508 $35,177
========== ========== ========== ==========
NET INCOME PER COMMON
SHARE
Basic $2.27 $2.01 $2.81 $2.95
========== ========== ========== ==========
Diluted $2.18 $1.91 $2.69 $2.79
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 10,538 11,952 10,483 11,929
========== ========== ========== ==========
Diluted 10,979 12,523 10,967 12,607
========== ========== ========== ==========
CASH DIVIDENDS PER SHARE
OF COMMON STOCK $.12 $.10 $.36 $.30
========== ========== ========== ==========
- ----------------------------------------------------------------------
COMPREHENSIVE INCOME
Net income $23,924 $23,971 $29,508 $35,177
Foreign currency
translation adjustment - (8) - (3)
---------- ---------- ---------- ----------
Comprehensive income $23,924 $23,963 $29,508 $35,174
========== ========== ========== ==========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Unaudited)
(In thousands)
December March December
31, 2005 31, 2005 31, 2004
---------- ---------- ----------
ASSETS
- -------------------------------------
CURRENT ASSETS
Cash and cash equivalents $18,376 $57,333 $18,845
Accounts receivable, net 200,194 37,273 214,715
Inventories 84,931 101,867 81,652
Deferred income taxes 8,782 8,199 7,491
Other current assets 13,826 13,945 13,719
---------- ---------- ----------
Total current assets 326,109 218,617 336,422
---------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET 71,652 75,402 77,681
---------- ---------- ----------
OTHER ASSETS
Intangible assets, net 35,398 35,468 35,506
Other 4,073 4,419 4,852
---------- ---------- ----------
Total other assets 39,471 39,887 40,358
---------- ---------- ----------
Total assets $437,232 $333,906 $454,461
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
CURRENT LIABILITIES
Notes payable $57,900 $- $19,000
Current portion of long-term debt 10,238 10,442 10,000
Other current liabilities 85,599 56,297 95,609
---------- ---------- ----------
Total current liabilities 153,737 66,739 124,609
---------- ---------- ----------
LONG-TERM DEBT, NET OF CURRENT
PORTION 30,560 40,000 40,000
---------- ---------- ----------
LONG-TERM OBLIGATIONS 3,541 3,607 3,602
---------- ---------- ----------
DEFERRED INCOME TAXES 7,430 7,071 6,451
---------- ---------- ----------
STOCKHOLDERS' EQUITY 241,964 216,489 279,799
---------- ---------- ----------
Total liabilities and
stockholders' equity $437,232 $333,906 $454,461
========== ========== ==========
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900