Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Year and
Quarter Ended March 31, 2006
PHILADELPHIA--(BUSINESS WIRE)--May 23, 2006--CSS Industries, Inc.
(NYSE:CSS) announced today the results of operations for the year and quarter
ended March 31, 2006. Sales for fiscal year 2006 decreased 2% to $525,494,000
from $536,362,000, while net income decreased 29% to $21,841,000, or $2.00 per
diluted share, from $30,692,000, or $2.45 per diluted share, in fiscal 2005.
Sales for the fourth quarter of 2006 decreased 10% to $52,161,000 from
$57,927,000 in fiscal 2005. The net loss increased in the fourth quarter to
$7,667,000, or $.73 per diluted share, from $4,485,000, or $.38 per diluted
share, in fiscal 2005. 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 sales decline of 2% in fiscal 2006 was primarily due to lower sales of
Christmas gift wrap, everyday ribbons and bows and boxed greeting cards.
Improved sales of seasonal tissue and gift bags partially offset the above sales
declines. Net income declined 29% in fiscal 2006 due primarily to the impact of
overall lower sales and poor operating performance of our gift wrap and tissue
product lines. This poor performance was primarily due to increased product and
energy costs, including increased fuel costs during our peak seasonal shipping
season. Incremental costs associated with recruitment and relocation of key
managers, severance associated with a workforce reduction and costs related to
closing a warehouse also contributed to lower than expected operating results.
Reduced customer program expenses and decreased incentive compensation partially
offset the above negative results.
Sales for the fourth quarter declined 10% as a result of a shift in
Valentine shipments from the fourth quarter to the third quarter in the current
fiscal year and lower everyday sales compared to the prior year. The net loss
increased 71% primarily as a result of lower sales, increased inventory
obsolescence reserves and severance costs related to a workforce reduction.
"Fiscal 2006 was a disappointing year, particularly in our gift wrap and
tissue product lines. We anticipate significant improvement in the profitability
of these product lines for fiscal 2007, primarily as a result of improved
management, improved sourcing of materials, and cost reduction initiatives,"
commented David J. M. Erskine, CSS President and CEO. "Assuming the successful
turnaround of the gift wrap and tissue product lines, we expect EPS to be in the
range of $2.40 to $2.55 per diluted share for the fiscal year ending March 31,
2007. This result includes estimated stock option expense of approximately $.19
per diluted share as a result of the adoption in fiscal 2007 of Financial
Accounting Standards Board Statement No. 123R."
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 months and years
ended March 31, 2006 and 2005 and condensed consolidated balance sheets as of
March 31, 2006 and 2005 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED RESULTS OF OPERATIONS
----------------------------------
(In thousands, except
per share amounts)
Year Ended Three Months Ended
March 31, March 31,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
SALES $525,494 $536,362 $52,161 $57,927
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales 399,605 397,538 41,797 44,268
Selling, general
and administrative
expenses 90,248 89,997 23,343 21,013
Interest expense,
net 3,279 2,374 297 342
Rental and other
income, net (354) (665) (172) (22)
----------- ----------- ----------- -----------
492,778 489,244 65,265 65,601
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES 32,716 47,118 (13,104) (7,674)
INCOME TAX EXPENSE
(BENEFIT) 10,875 16,426 (5,437) (3,189)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $21,841 $30,692 $(7,667) $(4,485)
=========== =========== =========== ===========
NET INCOME (LOSS) PER
COMMON SHARE
Basic $2.08 $2.58 $(.73) $(.38)
=========== =========== =========== ===========
Diluted $2.00 $2.45 $(.73) $(.38)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING
Basic 10,482 11,886 10,477 11,799
=========== =========== =========== ===========
Diluted 10,935 12,544 10,477 11,799
=========== =========== =========== ===========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
March 31, March 31,
2006 2005
----------- -----------
ASSETS
--------
CURRENT ASSETS
Cash and cash equivalents $57,656 $57,333
Accounts receivable, net 35,582 37,273
Inventories 103,770 101,867
Deferred income taxes 7,898 8,199
Other current assets 18,906 13,945
----------- -----------
Total current assets 223,812 218,617
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 70,868 75,402
----------- -----------
OTHER ASSETS
Intangible assets, net 35,374 35,468
Other 4,095 4,419
----------- -----------
Total other assets 39,469 39,887
----------- -----------
Total assets $334,149 $333,906
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES
Notes payable $- $-
Current portion of long-term debt 10,216 10,442
Other current liabilities 52,114 56,297
----------- -----------
Total current liabilities 62,330 66,739
----------- -----------
LONG-TERM DEBT 30,518 40,000
----------- -----------
LONG-TERM OBLIGATIONS 3,533 3,607
----------- -----------
DEFERRED INCOME TAXES 5,258 7,071
----------- -----------
STOCKHOLDERS' EQUITY 232,510 216,489
----------- -----------
Total liabilities and stockholders'
equity $334,149 $333,906
=========== ===========
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900