Exhibit 99.1
CSS Industries, Inc. Reports Sales and Earnings for
the Quarter and Six Months Ended September 30, 2007
PHILADELPHIA--(BUSINESS WIRE)--Oct. 25, 2007--CSS Industries, Inc.
(NYSE:CSS) announced today the results of operations for the second quarter and
six months ended September 30, 2007. For the quarter ended September 30, 2007,
sales decreased by 1% to $172,882,000 from $173,830,000 in 2006. Net income
increased 16% to $13,535,000, or $1.22 per diluted share, compared to prior year
net income of $11,703,000, or $1.08 per diluted share. For the six months ended
September 30, 2007, sales of $219,684,000 decreased 1% compared to sales of
$221,363,000 in 2006. Net income increased 47% to $9,108,000, or $.82 per
diluted share, compared to prior year net income of $6,196,000, or $.57 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 1% decline in sales for the quarter and six months ended September 30,
2007 is primarily the result of reduced boxed greeting card sales to warehouse
clubs and lower sales of educational products, partially offset by the earlier
timing of certain Christmas product line shipments, particularly gift wrap. Net
income improved 16% for the quarter and 47% for the six months ended September
30, 2007 largely due to the reduced cost structure resulting from the
restructuring program implemented in November of 2006, which combined the
operations of the Company's Cleo Inc and Berwick Offray LLC subsidiaries, as
well as lower interest expense on reduced borrowings compared to the prior year.
The Board of Directors of the Company recently approved a systems
integration plan designed to standardize the enterprise resource planning
("ERP") systems, master data and business processes across all CSS businesses.
Oracle Corp.'s JD Edwards EnterpriseOne is currently utilized at the Company's
Paper Magic Group and was selected as the ERP solution for all of CSS. The
Company believes this project, which is expected to be implemented in phases
over two and one-half years, will provide a sound, cost effective foundation for
the future growth of CSS, as well as provide the systems and business process
infrastructure for future acquisitions and operating efficiencies. The
incremental cash outlay for this initiative over a two and one-half year period
is projected to be $8,100,000. During fiscal 2008, the Company expects the cash
outlay to be $4,500,000 with no material impact on the income statement.
"We are pleased to announce that quarterly and six month results are in
line with our expectations. Furthermore, we continue to believe that estimated
full year earnings for fiscal 2008 will be within our previously announced range
of $2.45 - $2.60 per diluted share," commented Christopher J. Munyan, CSS'
President and CEO. "The recent approval by our Board of Directors of the systems
integration plan is an important step toward standardizing best business
practices across our businesses," continued Mr. Munyan.
CSS is a consumer products company primarily engaged in the design and sale
of seasonal and all occasion products, principally to mass market retailers.
These products include gift wrap, gift bags, gift boxes, boxed greeting cards,
gift tags, decorative tissue paper, decorations, classroom exchange Valentines,
decorative ribbons and bows, Halloween masks, costumes, make-ups and novelties,
Easter egg dyes and novelties, and craft and educational products.
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 and expected future benefits and costs associated with the project
relating to the standardization of the Company's ERP systems. 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 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
savings may not meet the expected amounts previously reported, risks associated
with the Company's ERP systems standardization project, including the risk that
the cost of the project will exceed expectations, the risk that the expected
benefits of the project will not be realized and the risk that implementation of
the project will interfere with and adversely affect the Company's operations
and financial performance, risks associated with the expiration on December 31,
2007 of the collective bargaining agreement between the Company's Cleo
subsidiary and the labor union representing certain production and maintenance
employees employed at Cleo's Memphis, Tennessee facility, including the risk
that a new collective bargaining agreement may not be reached prior to the
expiration of the current collective bargaining agreement, 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, 2007 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, 2007 and 2006 and condensed consolidated balance sheets as
of September 30, 2007, March 31, 2007 and September 30, 2006 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,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
SALES $172,882 $173,830 $219,684 $221,363
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of sales 126,683 129,003 160,202 163,066
Selling, general and
administrative expenses 25,158 25,289 45,841 47,493
Interest expense (income),
net 284 1,083 (90) 1,217
Other income (159) (66) (401) (228)
--------- --------- --------- ---------
151,966 155,309 205,552 211,548
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 20,916 18,521 14,132 9,815
INCOME TAX EXPENSE 7,381 6,818 5,024 3,619
--------- --------- --------- ---------
NET INCOME $ 13,535 $ 11,703 $ 9,108 $ 6,196
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic $ 1.25 $ 1.11 $ .84 $ .59
========= ========= ========= =========
Diluted $ 1.22 $ 1.08 $ .82 $ .57
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 10,857 10,559 10,869 10,528
========= ========= ========= =========
Diluted 11,129 10,838 11,161 10,831
========= ========= ========= =========
CASH DIVIDENDS PER SHARE OF
COMMON STOCK $ .14 $ .12 $ .28 $ .24
========= ========= ========= =========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
- ----------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------
(In thousands)
September 30, March 31, September 30,
2007 2007 2006
------------- ------------- -------------
(Unaudited) (Audited) (Unaudited)
ASSETS
- ----------------------------
CURRENT ASSETS
Cash and cash
equivalents $ 6,004 $ 100,091 $ 11,182
Accounts receivable, net 147,482 37,169 140,450
Inventories 140,014 82,138 167,699
Deferred income taxes 8,130 8,645 7,328
Assets held for sale 2,564 2,564 1,599
Other current assets 14,103 13,665 16,929
------------- ------------- -------------
Total current assets 318,297 244,272 345,187
------------- ------------- -------------
PROPERTY, PLANT AND
EQUIPMENT, NET 54,753 58,897 65,315
------------- ------------- -------------
OTHER ASSETS
Goodwill 30,952 30,952 30,952
Intangible assets, net 4,298 4,328 4,375
Other 3,685 4,621 3,873
------------- ------------- -------------
Total other assets 38,935 39,901 39,200
------------- ------------- -------------
Total assets $ 411,985 $ 343,070 $ 449,702
============= ============= =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
- ----------------------------
CURRENT LIABILITIES
Notes payable $ 20,100 $ - $ 73,510
Current portion of long-
term debt 10,210 10,195 10,195
Accrued customer
programs 11,749 10,290 11,992
Other current
liabilities 76,304 35,478 75,219
------------- ------------- -------------
Total current
liabilities 118,363 55,963 170,916
------------- ------------- -------------
LONG-TERM DEBT, NET OF
CURRENT PORTION 20,276 20,392 30,490
------------- ------------- -------------
LONG-TERM OBLIGATIONS 6,308 3,221 3,211
------------- ------------- -------------
DEFERRED INCOME TAXES 1,147 2,384 5,298
------------- ------------- -------------
STOCKHOLDERS' EQUITY 265,891 261,110 239,787
------------- ------------- -------------
Total liabilities and
stockholders' equity $ 411,985 $ 343,070 $ 449,702
============= ============= =============
CONTACT: CSS Industries, Inc.
Clifford E. Pietrafitta
Chief Financial Officer
215-569-9900