Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Quarter and
Six Months Ended September 30, 2006
PHILADELPHIA--(BUSINESS WIRE)--Oct. 27, 2006--CSS Industries, Inc.
(NYSE: CSS) announced today the results of operations for the second
quarter and six months ended September 30, 2006. For the quarter ended
September 30, 2006, sales increased by 6% to $173,830,000 from
$164,043,000 in 2005. Net income increased 27% to $11,703,000, or
$1.08 per diluted share, compared to prior year net income of
$9,239,000, or $.84 per diluted share. For the six months ended
September 30, 2006, sales of $221,363,000 were relatively flat
compared to sales of $221,537,000 in 2005. Net income increased 11% to
$6,196,000, or $.57 per diluted share, compared to prior year net
income of $5,584,000, or $.51 per diluted share. Included in the
current year results is incremental stock option expense related to
the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 123R. Stock option expense for the quarter and six months ended
September 30, 2006 was $668,000, or $.05 per diluted share and
$1,412,000, or $.10 per diluted share, respectively. 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 6% increase in sales for the quarter ended September 30, 2006
was due, in part, to a shift of seasonal sales from the first quarter
to the second quarter compared to the prior year and increased
Christmas card sales to a major retailer. The 27% increase in second
quarter net income was the result of higher sales and improved
margins, primarily in our gift wrap and tissue product lines, net of
incremental stock option expense related to the adoption of SFAS No.
123R and increased selling, general and administrative costs primarily
related to incentive compensation.
Sales for the six months ended September 30, 2006 were relatively
flat with the prior year as increased Christmas card sales were offset
by the later timing of Christmas ribbon and bow shipments. Net income
improved 11% primarily as a result of improved gift wrap and tissue
margins, net of increased incentive compensation expense and
incremental stock option expense attributable to the adoption of the
new accounting rules.
"The improvement in earnings for the quarter and six months is
largely a result of the improved performance of our gift wrap and
tissue product lines, which was a major objective of management," said
Christopher J. Munyan, President and CEO. "As we enter our busiest
shipping months, we are encouraged by the results to date and expect
earnings to be in line with our previous guidance of $2.40 - $2.55 per
diluted share."
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 and costs relating to the imposition or retrospective
application of duties on imported products, 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, 2006 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, 2006 and 2005 and condensed consolidated
balance sheets as of September 30, 2006, March 31, 2006 and September
30, 2005 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,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
SALES $173,830 $164,043 $221,363 $221,537
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of sales 129,003 125,676 163,066 168,441
Selling, general and
administrative expenses 25,289 23,050 47,493 43,035
Interest expense, net 1,083 1,057 1,217 1,499
Other income (66) (130) (228) (135)
--------- --------- --------- ---------
155,309 149,653 211,548 212,840
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 18,521 14,390 9,815 8,697
INCOME TAX EXPENSE 6,818 5,151 3,619 3,113
--------- --------- --------- ---------
NET INCOME $ 11,703 $ 9,239 $ 6,196 $ 5,584
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic $ 1.11 $ .88 $ .59 $ .53
========= ========= ========= =========
Diluted $ 1.08 $ .84 $ .57 $ .51
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 10,559 10,496 10,528 10,455
========= ========= ========= =========
Diluted 10,838 11,017 10,831 10,966
========= ========= ========= =========
CASH DIVIDENDS PER SHARE OF
COMMON STOCK $ .12 $ .12 $ .24 $ .24
========= ========= ========= =========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, March 31, September 30,
2006 2006 2005
------------- --------- -------------
(Unaudited) (Audited) (Unaudited)
ASSETS
- --------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 11,182 $ 57,656 $ 6,937
Accounts receivable, net 140,450 35,582 126,723
Inventories 167,699 103,770 177,812
Deferred income taxes 7,328 7,898 8,720
Assets held for sale 1,599 - -
Other current assets 16,929 18,906 17,301
------------- --------- -------------
Total current assets 345,187 223,812 337,493
------------- --------- -------------
PROPERTY, PLANT AND EQUIPMENT,
NET 65,315 70,868 72,766
------------- --------- -------------
OTHER ASSETS
Intangible assets, net 35,327 35,374 35,421
Other 3,873 4,095 4,151
------------- --------- -------------
Total other assets 39,200 39,469 39,572
------------- --------- -------------
Total assets $ 449,702 $334,149 $ 449,831
============= ========= =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
- --------------------------------
CURRENT LIABILITIES
Notes payable $ 73,510 $ - $ 76,400
Current portion of long-term
debt 10,195 10,169 10,175
Accrued customer programs 11,992 10,791 13,401
Other current liabilities 75,219 41,370 78,190
------------- --------- -------------
Total current liabilities 170,916 62,330 178,166
------------- --------- -------------
LONG-TERM DEBT, NET OF CURRENT
PORTION 30,490 30,518 40,000
------------- --------- -------------
LONG-TERM OBLIGATIONS 3,211 3,533 3,233
------------- --------- -------------
DEFERRED INCOME TAXES 5,298 5,258 7,260
------------- --------- -------------
STOCKHOLDERS' EQUITY 239,787 232,510 221,172
------------- --------- -------------
Total liabilities and
stockholders' equity $ 449,702 $334,149 $ 449,831
============= ========= =============
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900