CSS Industries, Inc. Reports Results of Operations for the Quarter Ended June 30, 2013

PHILADELPHIA--()--CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the quarter ended June 30, 2013. As previously announced, the Company divested the Halloween portion of its Paper Magic Group, Inc. (“PMG”) business during the second quarter of fiscal 2013. Halloween sales in the first quarter of fiscal 2013 totaled approximately $8,841,000 and contributed approximately $0.04 of earnings per diluted share (“EPS”). Due to the divestiture, this level of sales and earnings did not recur.

Sales for the first quarter of fiscal 2014 decreased 22.8% to $47,117,000 from $61,067,000 in the first quarter of fiscal 2013. Approximately $8,324,000 of the lower sales level is due to the divestiture of the Halloween business as discussed above, with the balance of the lower sales level primarily due to the timing of certain recurring product shipments to two customers that shipped in the first quarter of fiscal 2013 that are expected to ship again later this fiscal year. Loss from continuing operations before income taxes for the first quarter of fiscal 2014 was ($2,571,000) compared to ($1,333,000) in the first quarter of fiscal 2013. Loss from continuing operations for the first quarter of fiscal 2014 was ($1,667,000), or ($0.18) per diluted share, versus ($867,000), or ($0.09) per diluted share, in the first quarter of the prior fiscal year. Net loss for the first quarter of fiscal 2014, including discontinued operations, was ($1,667,000), or ($0.18) per diluted share, versus ($904,000), or ($0.09) per diluted share, in the first quarter of fiscal 2013. As discussed above, the sale of the Halloween business contributed approximately $0.04 of EPS in the first quarter of the prior fiscal year that did not recur in the first quarter of fiscal 2014 due to the divestiture. The Company’s seasonal orientation has historically resulted in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters.

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of seasonal and all occasion social expression products, principally to mass market retailers. These seasonal and all occasion products include decorative ribbons and bows, boxed greeting cards, gift tags, gift wrap, gift bags, gift boxes, gift card holders, decorative tissue paper, decorations, classroom exchange Valentines, floral accessories, Easter egg dyes and novelties, craft and educational products, stickers, memory books, stationery, journals, note cards, infant and wedding photo albums, scrapbooks, and other gift items that commemorate life’s celebrations.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the expected dollar amount and timing of future shipments. 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, the risk that the actual dollar amount and timing of expected future shipments may differ from the Company’s current expectations and that such shipments may not occur due to factors outside the control of the Company; general market and economic conditions; increased competition (including competition from foreign products which may be imported at less than fair value and from foreign products which may benefit from foreign governmental subsidies); 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 acquisitions, including acquisition integration costs and the risk that the Company may not be able to integrate and derive the expected benefits from such acquisitions; the risk that customers may become insolvent, may delay payments or may impose deductions or penalties on amounts owed to the Company; 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 more fully in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2013 and elsewhere in the Company’s filings with the Securities and Exchange Commission. 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 ended June 30, 2013 and 2012 and condensed consolidated balance sheets as of June 30, 2013, March 31, 2013 and June 30, 2012 follow:

 

CSS INDUSTRIES, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 
(In thousands, except per share amounts)
Three Months Ended
June 30,
2013   2012
 
Sales $ 47,117   $ 61,067  
 
Costs and expenses
Cost of sales 32,658 43,869
Selling, general and administrative expenses 17,004 18,570
Interest (income) expense, net 20 (53 )
Other expense, net   6     14  

 

  49,688     62,400  
 
Loss from continuing operations before income taxes (2,571 ) (1,333 )
 
Income tax benefit   (904 )   (466 )
 
Loss from continuing operations (1,667 ) (867 )
 
Loss from discontinued operations, net of tax   -     (37 )
 
Net loss $ (1,667 ) $ (904 )
 
Basic and diluted net loss per common share:
Continuing operations $ (0.18 ) $ (0.09 )
Discontinued operations $ -   $ (0.00 )
Total $ (0.18 ) $ (0.09 )
 
Weighted average basic and diluted shares outstanding   9,505     9,642  
 
Cash dividends per share of common stock $ 0.15   $ 0.15  
 

     

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
 
June 30, March 31, June 30,
2013 2013 2012
(Unaudited) (Audited) (Unaudited)

ASSETS

 
Current assets
Cash and cash equivalents $ 67,038 $ 87,108 $ 37,444
Accounts receivable, net 40,488 43,133 55,521
Inventories 81,843 62,598 89,816
Deferred income taxes 4,079 4,520 3,241
Other current assets 16,669 13,073 18,400
Current assets of discontinued operations   -   2   142
 
Total current assets   210,117   210,434   204,564
 
PROPERTY, PLANT AND EQUIPMENT, NET   28,046   27,956   29,249
 
DEFERRED INCOME TAXES   3,204   3,974   420
 
OTHER ASSETS
Goodwill 14,522 14,522 17,233
Intangible assets, net 27,590 28,004 29,275
Other   4,352   4,290   6,642
 
Total other assets   46,464   46,816   53,150
 
Total assets $ 287,831 $ 289,180 $ 287,383
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
CURRENT LIABILITIES
Accrued customer programs $ 3,772 $ 4,015 $ 3,833
Other current liabilities 33,591 30,718 39,059
Current liabilities of discontinued operations   567   644   981
 
Total current liabilities   37,930   35,377   43,873
 
LONG-TERM OBLIGATIONS   4,709   4,825   4,516
 
STOCKHOLDERS' EQUITY   245,192   248,978   238,994
 
Total liabilities and stockholders' equity $ 287,831 $ 289,180 $ 287,383
 

Contacts

CSS Industries, Inc.
Vincent A. Paccapaniccia
Chief Financial Officer
215-569-9900

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Contacts

CSS Industries, Inc.
Vincent A. Paccapaniccia
Chief Financial Officer
215-569-9900