EXHIBIT 99.1
CSS Industries, Inc. Reports Sales and Earnings for the Nine Months and
Quarter Ended December 31, 2006
PHILADELPHIA--(BUSINESS WIRE)--Jan. 25, 2007--CSS Industries, Inc.
(NYSE:CSS) announced today the results of operations for the nine
months and third quarter ended December 31, 2006. For the nine months
ended December 31, 2006, sales increased by 3% to $485,428,000 from
$473,333,000 in 2005. Net income of $29,486,000, or $2.71 per diluted
share, was relatively flat compared to prior year net income of
$29,508,000, or $2.69 per diluted share. For the quarter ended
December 31, 2006, sales increased by 5% to $264,065,000 from
$251,796,000 in the prior year, while net income decreased 3% to
$23,290,000, or $2.13 per diluted share, compared to prior year net
income of $23,924,000, or $2.18 per diluted share. As previously
announced, the Company implemented a restructuring plan during the
quarter to combine the operations of its Cleo Inc and Berwick Offray
LLC subsidiaries, to close Cleo's Maysville, Kentucky production
facility and to exit a non-material, non-core business. In connection
with this restructuring plan, the Company incurred incremental,
non-recurring costs of $1,663,000, net of tax, during the third
quarter and nine months ended December 31, 2006, a portion of which is
classified as restructuring expenses on the Company's Consolidated
Statement of Operations. Excluding costs relating to the restructuring
plan and incremental stock option expense related to the Company's
adoption of Statement of Financial Accounting Standards ("SFAS") No.
123R, net income increased 11% to $32,780,000, or $3.02 per diluted
share, and 7% to $25,503,000, or $2.33 per diluted share, for the nine
months and quarter ended December 31, 2006, respectively. 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 nine months ended December 31, 2006
was primarily due to higher sales of Christmas gift wrap and boxed
greeting cards, partially offset by lower sales of all-occasion cards,
tissue, gift bags and ribbons and bows. The increase in net income for
the nine months ended December 31, 2006, excluding the incremental,
non-recurring costs related to the restructuring plan and the
incremental costs related to the Company's adoption of SFAS No. 123R,
was primarily attributable to improved margins on gift wrap, gift bag
and tissue product lines and the impact of higher sales of Christmas
boxed greeting cards, partially offset by increased selling, general
and administrative expenses, primarily related to increased incentive
compensation expense. The increase in sales for the quarter ended
December 31, 2006 was primarily the result of increased sales of gift
wrap, Christmas boxed greeting cards and ribbons and bows, partially
offset by lower sales of all-occasion cards, tissue, gift tags and
gift bags. The increase in net income for the quarter ended December
31, 2006, excluding the incremental, non-recurring costs related to
the restructuring plan and the incremental costs related to the
Company's adoption of SFAS No. 123R, was primarily due to higher
margins achieved on tissue, gift wrap and gift bag product lines,
partially offset by increased incentive compensation expense.
"We are pleased with the continued improvement in earnings during
the quarter and nine months ended December 31, 2006 which improved 7%
and 11%, respectively, over the prior year, absent the charges related
to the restructuring plan and the new rules regarding the expensing of
stock options. This improvement is largely a result of our continued
focus on our gift wrap and tissue product lines," said Christopher J.
Munyan, President and CEO. "As previously announced, we anticipate
that the restructuring plan will reduce earnings per diluted share by
approximately $.28 for the full fiscal year. Exclusive of these
restructuring costs, we continue to expect earnings to be in line with
our previous guidance of $2.40 - $2.55 per diluted share this fiscal
year, although probably towards the lower end of such range."
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, risks associated with the
combination of the operations of the Company's Cleo and Berwick Offray
subsidiaries, including the risk that the restructuring related costs
may exceed the expected amounts, 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 statements of operations for the three and nine
months ended December 31, 2006 and 2005 and condensed consolidated
balance sheets as of December 31, 2006, March 31, 2006 and December
31, 2005 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
SALES $ 264,065 $ 251,796 $ 485,428 $ 473,333
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Cost of sales 197,695 189,367 360,761 357,808
Selling, general and
administrative
expenses 26,424 23,867 73,917 66,868
Restructuring expenses 1,745 3 1,745 37
Interest expense, net 1,446 1,483 2,663 2,982
Other income, net (130) (47) (358) (182)
---------- ---------- ---------- ----------
227,180 214,673 438,728 427,513
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 36,885 37,123 46,700 45,820
INCOME TAX EXPENSE 13,595 13,199 17,214 16,312
---------- ---------- ---------- ----------
NET INCOME $ 23,290 $ 23,924 $ 29,486 $ 29,508
========== ========== ========== ==========
NET INCOME PER COMMON
SHARE
Basic $ 2.19 $ 2.27 $ 2.79 $ 2.81
========== ========== ========== ==========
Diluted $ 2.13 $ 2.18 $ 2.71 $ 2.69
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 10,641 10,538 10,565 10,483
========== ========== ========== ==========
Diluted 10,931 10,979 10,863 10,967
========== ========== ========== ==========
CASH DIVIDENDS PER SHARE
OF COMMON STOCK $ .12 $ .12 $ .36 $ .36
========== ========== ========== ==========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, March 31, December 31,
2006 2006 2005
------------ --------- ------------
ASSETS
- --------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 10,303 $ 57,656 $ 18,376
Accounts receivable, net 223,944 35,582 200,194
Inventories 66,455 103,770 84,931
Deferred income taxes 7,718 7,898 8,782
Asset held for sale 2,796 - -
Other current assets 13,234 18,906 13,826
------------ --------- ------------
Total current assets 324,450 223,812 326,109
------------ --------- ------------
PROPERTY, PLANT AND EQUIPMENT,
NET 61,307 70,868 71,652
------------ --------- ------------
OTHER ASSETS
Intangible assets, net 35,304 35,374 35,398
Other 3,806 4,095 4,073
------------ --------- ------------
Total other assets 39,110 39,469 39,471
------------ --------- ------------
Total assets $ 424,867 $334,149 $ 437,232
============ ========= ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
- ---------------------------------
CURRENT LIABILITIES
Notes payable $ 42,400 $ - $ 57,900
Current portion of long-term
debt 10,195 10,169 10,238
Accrued customer programs 16,516 10,791 17,446
Accrued restructuring
expenses 1,232 4 17
Other current liabilities 61,498 41,366 68,136
------------ --------- ------------
Total current liabilities 131,841 62,330 153,737
------------ --------- ------------
LONG-TERM DEBT, NET OF CURRENT
PORTION 20,441 30,518 30,560
------------ --------- ------------
LONG-TERM OBLIGATIONS 3,300 3,533 3,541
------------ --------- ------------
DEFERRED INCOME TAXES 5,080 5,258 7,430
------------ --------- ------------
STOCKHOLDERS' EQUITY 264,205 232,510 241,964
------------ --------- ------------
Total liabilities and
stockholders' equity $ 424,867 $334,149 $ 437,232
============ ========= ============
CSS Industries, Inc.
Reconciliation of Certain Non-GAAP Measures
(Unaudited)
(In thousands, except per share amounts)
Management believes that presentation of results of operations
adjusted to eliminate the affects of incremental, non-recurring costs
related to a restructuring plan and the impact of the Company's
adoption of SFAS No. 123R in fiscal 2007, provides useful information
to investors because it enhances comparability between the current
year and prior year reporting periods.
Nine Months Ended December 31, 2006
------------------------------------
Diluted
Income Before Earnings
Income Taxes Net Income Per Share
------------- ---------- ---------
As Reported $ 46,700 $ 29,486 $ 2.71
- - Restructuring Expenses 1,745 1,102 .10
- - Inventory Write-downs due to
Facility Closure 570 360 .03
- - Other Incremental Costs Related
to Restructuring Plan 319 201 .02
- - Expensing Stock Options - SFAS
No. 123R 2,131 1,631 .15
------------- ---------- ---------
Non-GAAP Measurement $ 51,465 $ 32,780 $ 3.02
============= ========== =========
Three Months Ended December 31, 2006
------------------------------------
Diluted
Income Before Earnings
Income Taxes Net Income Per Share
------------- ---------- ---------
As Reported $ 36,885 $ 23,290 $ 2.13
- - Restructuring Expenses 1,745 1,102 .10
- - Inventory Write-downs due to
Facility Closure 570 360 .03
- - Other Incremental Costs Related
to Restructuring Plan 319 201 .02
- - Expensing Stock Options - SFAS
No. 123R 719 550 .05
------------- ---------- ---------
Non-GAAP Measurement $ 40,238 $ 25,503 $ 2.33
============= ========== =========
Diluted earnings per share for the nine months ending December 31,
2006 does not add due to rounding.
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta, 215-569-9900