CSS News CSS Industries, Inc. Reports Sales and Operating Results for the Quarter Ended June 30, 2006
PHILADELPHIA--(BUSINESS WIRE)--July 27, 2006--CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the first quarter ended June 30, 2006. Sales decreased 17% to $47,533,000 from $57,494,000 in 2005. The net loss increased to $5,507,000, or $.52 per diluted share, compared to a prior year net loss of $3,655,000, or $.35 per diluted share. Included in the current year loss is incremental stock option expense of $744,000, or $.05 per diluted share related to the adoption of Statement of Financial Accounting Standards ("SFAS") No. 123R . 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 reduction in sales is largely due to the later timing of seasonal direct import sales of Halloween and Christmas products. Net of these seasonal timing issues, lower sales of everyday ribbon and bow products were partially offset by increased sales of all occasion greeting cards and school products. The increased loss in the first quarter was primarily the result of lower sales volume and the impact of expensing stock options due to the first quarter adoption of SFAS No. 123R.
"Due to the seasonal nature of our business, the first quarter of the fiscal year is a relatively quiet one from the standpoint of financial results. Over the past three months, management has continued our focus on improving the performance of our gift wrap and tissue product lines. At this time, we are encouraged that the significant improvement planned for the current fiscal year is on track," commented Christopher J. Munyan, CSS President and CEO. "Although it is early in the year, our current information supports our previous earnings guidance of $2.40 to $2.55 per diluted share. This result includes estimated stock option expense of approximately $.20 per diluted share as a result of the adoption of the new accounting rules," continued Mr. Munyan.
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, 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 ended June 30, 2006 and 2005 and consolidated condensed balance sheets as of June 30, 2006, March 31, 2006 and June 30, 2005 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)
(In thousands, except
per share data)
Three Months Ended
June 30,
-------------------
2006 2005
--------- ---------
SALES $47,533 $57,494
--------- ---------
COSTS AND EXPENSES
Cost of sales 34,063 42,765
Selling, general and administrative expenses 22,204 19,985
Interest expense, net 134 442
Other income, net (162) (5)
--------- ---------
56,239 63,187
--------- ---------
LOSS BEFORE INCOME TAXES (8,706) (5,693)
INCOME TAX BENEFIT (3,199) (2,038)
--------- ---------
NET LOSS $(5,507) $(3,655)
========= =========
BASIC AND DILUTED NET LOSS PER COMMON SHARE $(.52) $(.35)
========= =========
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
OUTSTANDING 10,496 10,415
========= =========
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
June 30, March 31, June 30,
2006 2006 2005
----------- ----------- -----------
(Unaudited) (Audited) (Unaudited)
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $4,794 $57,656 $4,916
Accounts receivable, net 36,457 35,582 45,404
Inventories 149,165 103,770 147,932
Deferred income taxes 7,043 7,898 7,834
Asset held for sale 1,425 - -
Other current assets 18,583 18,906 15,540
----------- ----------- -----------
Total current assets 217,467 223,812 221,626
----------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 67,747 70,868 74,704
----------- ----------- -----------
OTHER ASSETS
Intangible assets, net 35,351 35,374 35,445
Other 3,964 4,095 4,203
----------- ----------- -----------
Total other assets 39,315 39,469 39,648
----------- ----------- -----------
Total assets $324,529 $334,149 $335,978
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
CURRENT LIABILITIES
Notes payable $- $- $4,400
Current portion of long-term
debt 10,195 10,169 10,187
Accrued customer programs 9,264 10,791 11,695
Other current liabilities 38,519 41,370 47,797
----------- ----------- -----------
Total current liabilities 57,978 62,330 74,079
----------- ----------- -----------
LONG-TERM DEBT, NET OF CURRENT
PORTION 30,551 30,518 40,000
----------- ----------- -----------
LONG-TERM OBLIGATIONS 3,505 3,533 3,648
----------- ----------- -----------
DEFERRED INCOME TAXES 5,198 5,258 7,141
----------- ----------- -----------
STOCKHOLDERS' EQUITY 227,297 232,510 211,110
----------- ----------- -----------
Total liabilities and
stockholders' equity $324,529 $334,149 $335,978
=========== =========== ===========
