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CSS News CSS Industries, Inc. Announces Restructuring Plan and Appointment of Paper Magic President

PHILADELPHIA--(BUSINESS WIRE)--CSS Industries, Inc. (NYSE:CSS) announced today that its Board of Directors has approved a restructuring plan, effective immediately, 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. The Company believes that these actions will improve profitability and efficiency through the elimination of redundant back office functions, certain senior management positions and excess manufacturing capacity. Annual pre-tax savings from these initiatives, once fully implemented, are expected to be approximately $3.3 million or $0.19 per diluted share, primarily as a result of personnel cost savings and reduced facility costs. The Company expects the majority of these savings to be realized in the Company’s next fiscal year beginning April 1, 2007. In addition, the Company believes that the combination of these operations will provide enhanced operational and sourcing savings opportunities, and will allow the Company to better coordinate merchandising and product initiatives in the affected subsidiaries’ complementary product lines.

The restructuring plan includes pre-tax expenses of approximately $5.1 million, primarily related to severance and recruiting costs and asset write-downs. The restructuring costs include approximately $4.1 million of cash expenses with the remainder representing non-cash charges. These costs will be recorded in the second half of fiscal 2007 and the first half of fiscal 2008. The cost of the restructuring plan will decrease fiscal 2007 operating results by approximately $4.8 million, or approximately $0.28 per diluted share.

“The decision to combine the management of Cleo and Berwick Offray was a difficult but important strategic event for CSS,” said Christopher J. Munyan, CSS’ President and Chief Executive Officer. “We believe that the value of this combination will extend beyond the identified cost savings, and that our customers will benefit through more efficient operations and sourcing.”

“The executive management team will include executives from both companies and will be led by Scott Shea, currently President of Berwick Offray, who will serve as President of the combined operations,” said Mr. Munyan.

In addition to the restructuring plan, the Company also announced that Robert Collins was promoted, effective immediately, to the position of President at its Paper Magic Group, Inc. subsidiary. Mr. Collins has served as Paper Magic’s Vice President of Manufacturing since 2003, and replaces Frank Macero who recently retired.

“Bob has been an integral part of a strong management team at Paper Magic, and has been responsible for manufacturing, distribution and supply chain management. Recently, Bob has been driving the Paper Magic sourcing strategy,” said Mr. Munyan. “We look forward to Bob’s continued success in his new role.”

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 Inc and Berwick Offray LLC subsidiaries, including restructuring costs, 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.