10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-2661

________________________________________

CSS INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

________________________________________

Delaware	13-1920657
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

450 Plymouth Road, Suite 300, Plymouth Meeting, PA	19462
(Address of principal executive offices)	(Zip Code)

(610) 729-3959

(Registrant’s telephone number, including area code)

________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such period that the registrant was required to submit and post such files).   x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨  Yes    x  No

As of October 21, 2016, there were 9,077,782 shares of common stock outstanding which excludes shares which may still be issued upon exercise of stock options or upon vesting of restricted stock unit grants.

CSS INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

	PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations – Three- and six months ended September 30, 2016 and 2015	3
Condensed Consolidated Balance Sheets – September 30, 2016, March 31, 2016 and September 30, 2015	4
Consolidated Statements of Cash Flows – Six months ended September 30, 2016 and 2015	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
Part II - OTHER INFORMATION
Item 6. Exhibits	20
Signatures	21

2

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Six Months Ended September 30,
	2016			2015			2016			2015
Sales	$	101,291		$	111,477		$	146,609		$	155,705
Costs and expenses
Cost of sales	69,691			73,686			102,712			105,472
Selling, general and administrative expenses	20,921			20,100			38,495			37,400
Interest income, net	(4		)	(10		)	(93		)	(82		)
Other (income) expense, net	(387		)	48			(478		)	—
	90,221			93,824			140,636			142,790
Income before income taxes	11,070			17,653			5,973			12,915
Income tax expense	4,078			6,424			2,267			4,754
Net income	$	6,992		$	11,229		$	3,706		$	8,161
Net income per common share:
Basic	$	0.77		$	1.23		$	0.41		$	0.88
Diluted	$	0.77		$	1.22		$	0.41		$	0.87
Weighted average shares outstanding:
Basic	9,076			9,148			9,065			9,245
Diluted	9,107			9,237			9,111			9,345
Cash dividends per share of common stock	$	0.20		$	0.18		$	0.40		$	0.36

See notes to consolidated financial statements.

3

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	September 30, 2016		March 31, 2016		September 30, 2015
Assets
Current assets
Cash and cash equivalents	$	30,241	$	19,927	$	27,745
Short-term investments	—		59,806		24,929
Accounts receivable, net of allowances of $1,524, $1,363 and $1,375	91,577		45,144		95,080
Inventories	93,701		73,022		79,265
Other current assets	12,741		12,792		10,587
Total current assets	228,260		210,691		237,606
Property, plant and equipment, net	27,204		27,053		25,769
Deferred income taxes	2,363		3,193		4,413
Other assets
Goodwill	19,677		19,974		15,820
Intangible assets, net	41,160		42,183		31,770
Other	6,657		6,832		5,810
Total other assets	67,494		68,989		53,400
Total assets	$	325,321	$	309,926	$	321,188
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	27,790	$	14,463	$	27,165
Accrued payroll and other compensation	7,070		9,016		7,368
Accrued customer programs	3,622		3,275		3,920
Accrued income taxes	551		—		3,173
Other current liabilities	9,823		7,051		9,641
Total current liabilities	48,856		33,805		51,267
Long-term obligations	4,590		4,631		4,295
Stockholders’ equity	271,875		271,490		265,626
Total liabilities and stockholders’ equity	$	325,321	$	309,926	$	321,188

See notes to consolidated financial statements.

4

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	3,706		$	8,161
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization	4,270			4,102
Accretion of investment discount	(194		)	(160		)
Provision for accounts receivable allowances	2,553			1,530
Deferred tax provision	799			745
Share-based compensation expense	688			867
Gain on bargain purchase	(376		)	—
Loss on sale of assets	43			—
Changes in assets and liabilities:
Accounts receivable	(48,987		)	(54,558		)
Inventory	(19,815		)	(13,774		)
Other assets	(48		)	(293		)
Accounts payable	13,652			13,942
Other accrued liabilities	1,683			2,077
Total adjustments	(45,732		)	(45,522		)
Net cash used for operating activities	(42,026		)	(37,361		)
Cash flows from investing activities:
Maturities of investment securities	60,000			70,000
Purchase of held-to-maturity investment securities	—			(24,924		)
Purchase of a business	(1,125		)	—
Purchase of property, plant and equipment	(2,831		)	(2,817		)
Purchase of intangibles	(100		)	—
Proceeds from sale of fixed assets	311			23
Net cash provided by investing activities	56,255			42,282
Cash flows from financing activities:
Dividends paid	(3,634		)	(3,321		)
Purchase of treasury stock	—			(10,000		)
Exercise of stock options, net of tax withholdings	(32		)	—
Payments for tax withholding on net restricted stock settlements	(527		)	(518		)
Tax effect on stock awards	278			234
Net cash used for financing activities	(3,915		)	(13,605		)
Net increase (decrease) in cash and cash equivalents	10,314			(8,684		)
Cash and cash equivalents at beginning of period	19,927			36,429
Cash and cash equivalents at end of period	$	30,241		$	27,745

See notes to consolidated financial statements.

5

CSS INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2017” refers to the fiscal year ending March 31, 2017.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Nature of Business

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of all occasion and seasonal social expression products, principally to mass market retailers. These all occasion and seasonal products include decorative ribbons and bows, classroom exchange Valentines, infant products, journals, buttons, boxed greeting cards, gift tags, gift card holders, gift bags, gift wrap, decorations, floral accessories, craft and educational products, Easter egg dyes and novelties, memory books, scrapbooks, stickers, stationery, and other items that commemorate life’s celebrations. The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively higher sales levels and operating profits in the second and third quarters of the Company’s fiscal year, which ends March 31, thereby causing significant fluctuations in the quarterly results of operations of the Company.

The Company's principal operating subsidiaries include Berwick Offray LLC ("Berwick Offray"), Paper Magic Group, Inc. ("Paper Magic") and C.R. Gibson, LLC ("C.R. Gibson").

Reclassification

Certain prior period amounts have been reclassified to conform with the current year classification.

Foreign Currency Translation and Transactions

Translation adjustments are charged or credited to a separate component of stockholders’ equity. Gains and losses on foreign currency transactions are not material and are included in other (income) expense, net in the consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Judgments and assessments of uncertainties are required in applying the Company’s accounting policies in many areas. Such estimates pertain to revenue recognition, the valuation of inventory and accounts receivable, the assessment of the recoverability of goodwill and other intangible and long-lived assets, income tax accounting, the valuation of share-based awards and resolution of litigation and other proceedings. Actual results could differ from these estimates.

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Short-Term Investments

The Company categorized and accounted for its short-term investment holdings as held-to-maturity securities. This categorization was based upon the Company's positive intent and ability to hold these securities until maturity. There were no short-term investments at September 30, 2016. Short-term investments at March 31, 2016 consisted of commercial paper with an amortized cost of $59,806,000 and matured in the first half of fiscal 2017. Short-term investments at September 30, 2015 consisted of commercial paper with an amortized cost of $24,929,000 and matured in fiscal 2016. Held-to-maturity securities are recorded at amortized cost which approximated fair value at March 31, 2016 and September 30, 2015.

Inventories

The Company records inventory when title is transferred, which occurs upon receipt or prior to receipt dependent on supplier shipping terms. The Company adjusts unsaleable and slow-moving inventory to its estimated net realizable value. Substantially all of the Company’s inventories are stated at the lower of first-in, first-out (FIFO) cost or market. The remaining portion of the inventory is valued at the lower of last-in, first-out (LIFO) cost or market. Inventories consisted of the following (in thousands):

	September 30, 2016		March 31, 2016		September 30, 2015
Raw material	$	10,919	$	11,392	$	11,376
Work-in-process	14,474		17,745		13,603
Finished goods	68,308		43,885		54,286
	$	93,701	$	73,022	$	79,265

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include the following (in thousands):

	September 30, 2016			March 31, 2016			September 30, 2015
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements	34,612			34,317			33,754
Machinery, equipment and other	89,630			87,675			86,722
	126,750			124,500			122,984
Less - Accumulated depreciation and amortization	(99,546		)	(97,447		)	(97,215		)
Net property, plant and equipment	$	27,204		$	27,053		$	25,769

Depreciation expense was $1,290,000 and $1,419,000 for the quarters ended September 30, 2016 and 2015, respectively, and was $2,647,000 and $2,824,000 for the six months ended September 30, 2016 and 2015, respectively.

Long-Lived Assets including Goodwill and Other Intangible Assets

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscal year. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangibles might be impaired. During the six months ended September 30, 2016, there were no such events or circumstances.

The Company uses a dual approach to determine the fair value of its reporting units, including both a market approach and an income approach. The Company believes the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported.

Other indefinite-lived intangible assets consist primarily of tradenames, which are also required to be tested annually for impairment. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite-lived intangible assets, are reviewed for impairment when events or circumstances indicate the carrying value of an asset

7

group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the six months ended September 30, 2016, there were no such events or circumstances. See Note 5 for further information on other intangible assets.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.

The Company recognizes the impact of an uncertain tax position if it is more likely than not that such position will be sustained on audit, based solely on the technical merits of the position.

Revenue Recognition

The Company recognizes revenue from product sales when the goods are shipped, title and risk of loss have been transferred to the customer and collection is reasonably assured. Provisions for returns, allowances, rebates to customers and other adjustments are provided in the same period that the related sales are recorded.

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2016 and 2015 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income	$	6,992	$	11,229	$	3,706	$	8,161
Denominator:
Weighted average shares outstanding for basic net income per common share	9,076		9,148		9,065		9,245
Effect of dilutive stock options	31		89		46		100
Adjusted weighted average shares outstanding for diluted net income per common share	9,107		9,237		9,111		9,345
Basic net income per common share	$	0.77	$	1.23	$	0.41	$	0.88
Diluted net income per common share	$	0.77	$	1.22	$	0.41	$	0.87

The Company has excluded 508,000 shares and 258,000 shares, consisting of outstanding stock options and unearned restricted stock units, in computing diluted net income per common share for the three- and six months ended September 30, 2016 and 2015, respectively, because their effects were antidilutive.

(2) BUSINESS ACQUISITION

On July 8, 2016, a subsidiary of the Company completed the acquisition of substantially all of the assets and business of Lawrence Schiff Silk Mills, Inc. ("Schiff") for $1,125,000 in cash. Schiff was a leading U.S. manufacturer and distributor of narrow woven ribbon prior to its April 2016 Chapter 11 bankruptcy filing. The acquisition was accounted for using the acquisition method and resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $1,501,000 exceeding the amount paid.

8

The following table summarizes the preliminary fair values of the net assets acquired at the date of acquisition (in thousands):

Inventory	$	865
Property, plant and equipment	350
Intangible assets	500
Total assets acquired	1,715
Deferred tax liability	(214		)
Net assets acquired	$	1,501

In connection with this bargain purchase, the Company recorded a gain of approximately $376,000 which is included in other (income) expense, net in the consolidated statements of operations in the quarter ended September 30, 2016.

(3) SHARE-BASED COMPENSATION

2013 Equity Compensation Plan

Under the terms of the Company’s 2013 Equity Compensation Plan (“2013 Plan”), the Company may grant incentive stock options, non-qualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees and non-employee directors. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at the discretion of the Company, but in no event greater than ten years from the date of grant, and at the date of grant the Company has discretion to determine the date or dates on which granted options become exercisable. Under the 2013 Plan, a committee of the Company's Board of Directors (the "Board") approves grants to officers and other employees, and the Board approves grants to non-employee directors. Service-based stock options outstanding as of September 30, 2016 become exercisable at the rate of 25% per year commencing one year after the date of grant. Market-based stock options outstanding as of September 30, 2016 become exercisable only if certain market conditions and service requirements are satisfied, and the date(s) on which they become exercisable will depend on the period in which such market conditions and service requirements are met, if at all, except that vesting and exercisability are accelerated upon a change of control. Outstanding service-based restricted stock units ("RSUs") granted to employees vest at the rate of 50% of the shares underlying the grant at each of the third and fourth anniversaries of the date on which the award was granted. Service-based RSUs granted to directors and outstanding as of September 30, 2016 vest on July 31, 2017. Market-based RSUs outstanding at September 30, 2016 will vest only if certain market conditions and service requirements have been met, and the date(s) on which they vest will depend on the period in which such market conditions and service requirements are met, if at all, except that vesting and redemption are accelerated upon a change of control. At September 30, 2016, there were 640,338 shares available for grant under the 2013 Plan.

The fair value of each stock option and market-based RSU granted under the above plan was estimated on the date of grant using either a Black-Scholes option pricing model (service-based awards) or a Monte Carlo simulation model (market-based awards) with the following average assumptions:

	Stock Options				RSUs
	Six Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	1.66	%	1.96	%	1.20	%	1.29	%
Volatility	35.12	%	36.90	%	33.08	%	36.86	%
Dividend yield	2.91	%	2.59	%	2.99	%	2.60	%
Expected life of option (in years)	4.75		4.75

The fair value of each service-based RSU granted to employees was estimated on the day of grant based on the closing price of the Company's common stock reduced by the present value of the expected dividend stream during the vesting period using the risk-free interest rate. The fair value of each service-based RSU granted to directors, for which dividend equivalents are paid upon vesting of the underlying awards, was estimated on the day of grant based on the closing price of the Company's common stock.

During the six months ended September 30, 2016 and 2015, the Company granted 151,350 and 134,100 stock options, respectively, with a weighted average fair value of $6.25 and $7.35, respectively. During the six months ended September 30, 2016 and 2015, the Company granted 66,602 and 44,100 RSUs, respectively, with a weighted average

9

fair value of $21.47 and $18.46, respectively. As of September 30, 2016, there were 566,825 and 179,687 outstanding stock options and RSUs, respectively.

As of September 30, 2016, there was $1,727,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.9 years. As of September 30, 2016, there was $2,013,000 of total unrecognized compensation cost related to non-vested RSUs granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.2 years.

On August 11, 2015, the Company granted 10,000 RSUs to the new Chair of the Company's Board of Directors. The RSUs will become vested and convertible into a lump sum cash payment equal to the then fair market value of corresponding shares of common stock of the Company if, and only to the extent that, certain service-based vesting conditions and other terms and conditions are satisfied by August 15, 2017, or upon occurrence of a change of control. The RSUs are classified as liability awards because they will be paid in cash upon vesting. The RSU award liability is measured at its fair market value at the end of each reporting period and, therefore, will fluctuate based on the performance of the Company's stock. The total amount accrued related to this grant as of September 30, 2016 was $144,000 and is included in accrued payroll and other compensation in the condensed consolidated balance sheet. The total amount accrued related to this grant as of September 30, 2015 was $17,000 and is included in long-term obligations in the condensed consolidated balance sheet. During the six months ended September 30, 2016 and 2015, dividend equivalents of $4,000 and $2,000 were paid in cash related to this liability classified award and were charged to selling, general and administrative expenses.

Compensation cost related to stock options and RSUs (inclusive of the liability classified awards described above) recognized in operating results (included in selling, general and administrative expenses) was $307,000 and $410,000 in the quarters ended September 30, 2016 and 2015, respectively, and $749,000 and $867,000 in the six months ended September 30, 2016 and 2015, respectively.

(4) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations on sales denominated in a foreign currency. Derivatives are not used for trading or speculative activities. Firmly committed transactions and the related receivables may be hedged with forward exchange contracts. Gains and losses arising from foreign currency forward contracts are recorded in other (income) expense, net as offsets of gains and losses resulting from the underlying hedged transactions. A realized gain of $12,000 and $14,000 was recorded in the three- and six months ended September 30, 2016, respectively. A realized gain of $9,000 was recorded in the three- and six months ended September 30, 2015. As of September 30, 2016 and 2015, the notional amount of open foreign currency forward contracts was $1,564,000 and $1,656,000, respectively. The related unrealized gain was $14,000 and $97,000 at September 30, 2016 and 2015, respectively. The Company believes it does not have significant counterparty credit risks as of September 30, 2016.

The following table shows the fair value of the foreign currency forward contracts designated as hedging instruments and included in the Company’s condensed consolidated balance sheet (in thousands):

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2016		September 30, 2015
Foreign currency forward contracts	Other current assets	$	14	$	97

(5) INTANGIBLE ASSETS

On September 30, 2016, the Company sold a manufacturing facility that was acquired as part of the acquisition of substantially all of the assets and business of Blumenthal Lansing Company, LLC ("Blumenthal") on February 2, 2016. As the proceeds received from the sale of the building were in excess of the estimated fair value of the building recorded in the transaction, the Company recorded an adjustment to increase property, plant and equipment and reduce goodwill, in the amount of approximately $297,000, in order to properly reflect the fair value of the building as of the acquisition date.

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The following table shows the change in goodwill for the six months ended September 30, 2016 (in thousands):

Balance at March 31, 2016	$	19,974
Decrease in goodwill - Blumenthal	(297		)
Balance at September 30, 2016	$	19,677

With the acquisition of substantially all of the assets and business of Schiff on July 8, 2016, the Company recorded intangible assets of $500,000 relating to customer lists which are being amortized over the estimated useful life of five years. Additionally, in an unrelated transaction, the Company recorded customer lists of $100,000 which were acquired during the second quarter of fiscal 2017 and are being amortized over two years.

The gross carrying amount and accumulated amortization of other intangible assets is as follows (in thousands):

	September 30, 2016				March 31, 2016				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	15,553	$	—	$	15,553	$	—	$	12,953	$	—
Customer relationships	39,757		14,940		39,157		13,444		29,957		12,183
Patents	1,164		767		1,164		708		1,164		650
Trademarks	403		348		403		333		403		318
Non-compete	530		192		530		139		530		86
	$	57,407	$	16,247	$	56,807	$	14,624	$	45,007	$	13,237

Amortization expense related to intangible assets was $820,000 and $639,000 for the quarters ended September 30, 2016 and 2015, respectively, and was $1,623,000 and $1,278,000 for the six months ended September 30, 2016 and 2015. Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2017 and each of the succeeding four years is projected to be as follows (in thousands):

Remainder of fiscal 2017	$	1,681
Fiscal 2018	3,362
Fiscal 2019	3,305
Fiscal 2020	3,244
Fiscal 2021	3,056

(6) TREASURY STOCK TRANSACTIONS

Under a stock repurchase program authorized by the Company's Board, the Company repurchased 352,789 shares of the Company’s common stock for approximately $10,000,000 during the six months ended September 30, 2015. There were no repurchases of the Company's common stock by the Company during the six months ended September 30, 2016. As of September 30, 2016, the Company had 303,166 shares remaining available for repurchase under the Board’s authorizations.

(7) COMMITMENTS AND CONTINGENCIES

CSS and its subsidiaries are involved in ordinary, routine legal proceedings that are not considered by management to be material. In the opinion of Company counsel and management, the ultimate liabilities resulting from such legal proceedings will not materially affect the consolidated financial position of the Company or its results of operations or cash flows.

(8) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The Company uses certain derivative financial instruments as part of its risk management strategy to reduce foreign currency risk. The Company recorded all derivatives on the condensed consolidated balance sheet at fair value based on quotes obtained from financial institutions as of September 30, 2016.

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The Company maintains a Nonqualified Supplemental Executive Retirement Plan ("SERP") for qualified employees and invests assets to mirror the obligations under this Plan. The invested funds are maintained at a third party financial institution in the name of CSS and are invested in publicly traded mutual funds. There have been no contributions provided under the SERP since fiscal 2007 and there are four employees who maintain account balances as of September 30, 2016. The Company maintains separate accounts for each participant to reflect deferred contribution amounts and the related gains or losses on such deferred amounts. The investments are included in other current assets and the related liability is recorded as deferred compensation and included in long-term obligations in the condensed consolidated balance sheet. The fair value of the investments is based on the market price of the mutual funds as of September 30, 2016.

The Company maintains two life insurance policies in connection with deferred compensation arrangements with two former executives. The cash surrender value of the policies is recorded in other long-term assets in the condensed consolidated balance sheets and is based on quotes obtained from the insurance company as of September 30, 2016.

To increase consistency and comparability in fair value measurements, the Financial Accounting Standards Board ("FASB") established a fair value hierarchy that prioritizes the inputs to valuation techniques into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The Company’s recurring assets and liabilities recorded on the condensed consolidated balance sheet are categorized based on the inputs to the valuation techniques as follows:

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Examples of Level 2 inputs include quoted prices for identical or similar assets or liabilities in non-active markets and pricing models whose inputs are observable for substantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2016 and March 31, 2016 (in thousands):

			Fair Value Measurements at September 30, 2016 Using
	September 30, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	296	$	296	$	—	$	—
Foreign exchange contracts	14		—		14		—
Cash surrender value of life insurance policies	1,166		—		1,166		—
Total assets	$	1,476	$	296	$	1,180	$	—
Liabilities
Deferred compensation plans	$	296	$	296	$	—	$	—
Total liabilities	$	296	$	296	$	—	$	—

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			Fair Value Measurements at March 31, 2016 Using
	March 31, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	278	$	278	$	—	$	—
Cash surrender value of life insurance policies	1,153		—		1,153		—
Total assets	$	1,431	$	278	$	1,153	$	—
Liabilities
Deferred compensation plans	$	278	$	278	$	—	$	—
Total liabilities	$	278	$	278	$	—	$	—

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value in the condensed consolidated balance sheets as such amounts are a reasonable estimate of their fair values due to the short-term nature of these instruments. Short-term investments included held-to-maturity securities that were recorded at amortized cost, which approximates fair value (Level 2), because their short-term maturity results in the interest rates on these securities approximating current market interest rates.

Nonrecurring Fair Value Measurements

The Company’s nonfinancial assets which are measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangible assets and certain other assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. In making the assessment of impairment, recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to future net cash flows estimated by the Company to be generated by such assets. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are recorded at the lower of their carrying value or estimated net realizable value.

As discussed in Note 2, the Company acquired substantially all of the assets and business of Schiff on July 8, 2016 and determined that the aggregate preliminary fair value of acquired intangible assets, consisting of customer relationships, was $500,000. The Company estimated the fair value of the acquired intangible assets using discounted cash flow techniques which included an estimate of future cash flows discounted to present value with an appropriate risk-adjusted discount rate (Level 3). As discussed in Note 5, the Company acquired certain customer lists in the amount of $100,000 during the second quarter of fiscal 2016. The Company estimated the fair value of the acquired customer lists as the amount paid to acquire such customer lists (Level 2).

Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if events or circumstances indicate a condition of impairment may exist. Impairment testing is conducted through valuation methods that are based on assumptions for matters such as interest and discount rates, growth projections and other future business conditions (Level 3). These valuation methods require a significant degree of management judgment concerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fair value as determined by the valuation models. As of September 30, 2016, the Company believes that no impairments exist.

(9) RECENT ACCOUNTING PRONOUNCEMENTS

In August 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies and provides guidance on eight cash flow classification issues and is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either liability or equity, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted.

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The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 requires lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements, with certain practical expedients available. The standard also requires certain quantitative and qualitative disclosures. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"), which requires entities to present all deferred tax liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The Company adopted ASU 2015-17 on a retrospective basis in the fourth quarter of fiscal 2016. The adoption of ASU 2015-17 resulted in a $4,652,000 reduction in current deferred tax assets, a $4,413,000 increase in noncurrent deferred tax assets, and a $239,000 reduction in noncurrent deferred tax liabilities as of September 30, 2015.

In September 2015, the FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. This guidance was effective for the Company beginning April 1, 2016 and will be applied prospectively to adjustments arising after that date. There was no impact of adopting this standard at the date of adoption.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"). ASU 2015-11 amends the guidelines for the measurement of inventory from lower of cost or market to the lower of cost and net realizable value (NRV). NRV is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Under existing standards, inventory is measured at lower of cost or market, which requires the consideration of replacement cost, NRV and NRV less an amount that approximates a normal profit margin. This ASU eliminates the requirement to determine and consider replacement cost or NRV less a normal profit margin for inventory measurement. The new standard is effective prospectively for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the effect that ASU 2015-11 will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard also requires expanded disclosures regarding the qualitative and quantitative information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for fiscal years beginning after December 15, 2016. The standard permits the use of either a full retrospective or a modified retrospective approach. The Company is evaluating the method by which it will adopt ASU 2014-09 and the impact it will have on its consolidated financial statements and related disclosures.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

STRATEGIC OVERVIEW

The strategy of CSS is to build on existing relationships with craft, seasonal and celebrations customers by expanding and diversifying its product lines and thereby growing presence in the largest retailers in North America. This will include acquiring companies which fit into appropriate acquisition parameters. We actively meet with craft, seasonal and celebrations companies to review and assess potential acquisition targets.

Approximately 61% of the Company's annual sales are attributable to all occasion products with the remainder attributable to seasonal (Christmas, Valentine's Day and Easter) products. Seasonal products are sold primarily to mass market retailers, and the Company has relatively high market share in many of these categories. Most of these markets have shown little growth and in some cases have declined in recent years. The Company continues to confront significant price pressure as its competitors source certain products from overseas and its customers increase direct sourcing from overseas factories. Increasing customer concentration has augmented their bargaining power, which has also contributed to price pressure. In recent fiscal years, the Company has experienced lower sales in Christmas boxed greeting cards and gift tags.

The Company has taken several measures to respond to sales volume, cost and price pressures. The Company believes it continues to have strong core Christmas product offerings which has allowed it to compete effectively in this competitive market. In addition, the Company is pursuing new product initiatives related to craft, all occasion and seasonal products, including new licensed and non-licensed product offerings. CSS continually invests in product and packaging design and product knowledge to assure that it can continue to provide unique added value to its customers. In addition, CSS maintains a purchasing office in Hong Kong to be able to provide foreign-sourced products at competitive prices. CSS continually evaluates the efficiency and productivity of its North American production and distribution facilities and of its back office operations to maintain its competitiveness.

On July 8, 2016, a subsidiary of the Company completed the acquisition of substantially all of the assets of Lawrence Schiff Silk Mills, Inc. ("Schiff") for approximately $1,125,000 in cash. Schiff was a leading U.S. manufacturer and distributor of narrow woven ribbon prior to its April 2016 Chapter 11 bankruptcy filing. The acquisition was accounted for using the acquisition method and resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $1,501,000 exceeding the amount paid. In connection with this bargain purchase, the Company recorded a gain of approximately $376,000 which is included in other (income) expense, net in the consolidated statements of operations in the quarter ended September 30, 2016.

On February 2, 2016, a subsidiary of the Company completed the acquisition of substantially all of the business and assets of Blumenthal Lansing Company, LLC ("Blumenthal") for approximately $19,626,000 in cash, including transaction costs of approximately $81,000. The Company also incurred costs of approximately $1,028,000 in fiscal 2016, primarily related to severance. Blumenthal was the leading provider of buttons to the sewing and craft markets in the United States, selling to mass market retailers and wholesale distributors that service independent retail stores. As of September 30, 2016, a portion of the purchase price is being held in escrow for certain post-closing adjustments and indemnification obligations. The acquisition was accounted for as a purchase, and $3,778,000, which is the excess of cost over fair value of the net tangible and identifiable intangible assets acquired, was recorded as goodwill in the accompanying condensed consolidated balance sheet. For tax purposes, goodwill resulting from this acquisition is deductible.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The significant accounting policies of the Company are described in the notes to the consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2016. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in many areas. Following are some of the areas requiring significant judgments and estimates: revenue; the assessment of the recoverability of goodwill and other intangible and long-lived assets; the valuation of inventory and accounts receivable; income tax accounting; the valuation of share-based awards and resolution of litigation and other proceedings. There have been no material changes to the critical accounting policies affecting the

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application of those accounting policies as noted in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2016.

RESULTS OF OPERATIONS

Seasonality

The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively higher sales levels and operating profits in the second and third quarters of the Company’s fiscal year, which ends March 31, thereby causing significant fluctuations in the quarterly results of operations of the Company.

Six Months Ended September 30, 2016 Compared to Six Months Ended September 30, 2015

Sales for the six months ended September 30, 2016 decreased 6% to $146,609,000 from $155,705,000 in the six months ended September 30, 2015 partially due to lower sales of Christmas products of $6,142,000, some of which is related to timing as a portion of our known Christmas 2016 sales volume is with retailers who have requested that product shipments occur during our third quarter, compared to product shipments that occurred during our second quarter in the prior year. The remaining sales decline is primarily attributable to a portion of our craft and floral ribbon sales volume, which in the prior year had shipped in our second quarter, now expected to ship in the last six months of fiscal 2017. These sales declines were partially offset by incremental sales of buttons of $5,657,000 related to the acquisition of substantially all of the business and assets of Blumenthal on February 2, 2016.

Cost of sales, as a percentage of sales, increased to 70% in the six months ended September 30, 2016 from 68% in the six months ended September 30, 2015 primarily due to the mix of product shipped in the current year compared to the prior year, and higher distribution and freight costs of $1,703,000 related to inefficiencies of two warehouse consolidation projects. The warehouse consolidation projects, which were substantially completed as of September 30, 2016, involved the closing of a distribution facility in El Paso, Texas in the fourth quarter of fiscal 2016 and the closing of a manufacturing and distribution facility in Lansing, Iowa, which was acquired as part of the Blumenthal acquisition, in the second quarter of fiscal 2017. The Company consolidated the distribution operations of the two closed facilities into the Company's existing distribution facilities in Florence, Alabama.

Selling, general and administrative expenses of $38,495,000 in the six months ended September 30, 2016 increased from $37,400,000 in the six months ended September 30, 2015 primarily due to incremental costs related to the Blumenthal acquisition of $1,641,000; higher legal and professional fees of $537,000 primarily relating to the Company's participation in "sunset" review proceedings conducted by the U.S. Department of Commerce and the U.S. International Trade Commission in connection with the fifth anniversary of the initiation of trade remedies on certain imported narrow woven ribbon products, which proceedings concluded in the Company's favor in August 2016 ("Sunset Review"); and higher product development costs of $419,000. Partially offsetting these increases were lower incentive compensation of $978,000 and lower severance of $251,000.

Interest income, net of $93,000 in the six months ended September 30, 2016 increased from $82,000 in the six months ended September 30, 2015 primarily due to higher rates of return on invested balances compared to the same quarter in the prior year.

Other income of $478,000 in the six months ended September 30, 2016 compared to $0 in the six months ended September 30, 2015 primarily due to the gain on bargain purchase of $376,000 related to the acquisition of substantially all of the assets and business of Schiff on July 8, 2016. The acquisition was accounted for using the acquisition method and resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $1,501,000 exceeding the amount paid of $1,125,000. There was no such gain recorded in the six months ended September 30, 2015. Also contributing to the increase were favorable foreign currency transactions recorded in the current year compared to the prior year.

Income taxes, as a percentage of income before income taxes, were 38% and 37% in the six months ended September 30, 2016 and 2015, respectively. The increase in income taxes, as a percentage of income before taxes, was primarily attributable to differences between the financial statement bases and tax bases of assets acquired in the Schiff acquisition in the current fiscal year.

Net income for the six months ended September 30, 2016 was $3,706,000, or $0.41 per diluted share compared to $8,161,000, or $0.87 per diluted share for the comparable period in 2015.

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Sales for the three months ended September 30, 2016 decreased 9% to $101,291,000 from $111,477,000 in the three months ended September 30, 2015 partially due to lower sales of Christmas products of $5,818,000, some of which is related to timing as a portion of our known Christmas 2016 sales volume is with retailers who have requested that product shipments occur during our third quarter, compared to product shipments that occurred during our second quarter in the prior year. The remaining sales decline is primarily attributable to a portion of our craft and floral ribbon sales volume, which in the prior year

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had shipped in our second quarter, now expected to ship in the last six months of fiscal 2017. These sales declines were partially offset by incremental sales of buttons of $2,549,000 related to the acquisition of substantially all of the business and assets of Blumenthal on February 2, 2016.

Cost of sales, as a percentage of sales, increased to 69% in the three months ended September 30, 2016 from 66% in the three months ended September 30, 2015 primarily due to the mix of product shipped in the current year compared to the prior year, and higher distribution and freight costs of $1,032,000 related to inefficiencies of two warehouse consolidation projects.

Selling, general and administrative expenses of $20,921,000 in the three months ended September 30, 2016 increased from $20,100,000 in the three months ended September 30, 2015 primarily due to incremental expenses related to the Blumenthal acquisition of $784,000; higher product development costs of $320,000; and higher legal and professional fees of $383,000, partially relating to the Company's participation in the Sunset Review. Partially offsetting these increases was lower incentive compensation of $916,000.

Interest income, net of $4,000 in the three months ended September 30, 2016 decreased from $10,000 in the three months ended September 30, 2015 primarily due to lower average balances of funds invested in short-term investments compared to the prior year.

Other income, net of $387,000 in the three months ended September 30, 2016 compared to other expense, net of $48,000 in the three months ended September 30, 2015. The increase in other income, net was primarily due to the gain on bargain purchase of $376,000 related to the the acquisition of substantially all of the assets and business of Schiff on July 8, 2016. There was no such gain recorded in the three months ended September 30, 2015.

Income taxes, as a percentage of income before income taxes, were 37% and 36% in the three months ended September 30, 2016 and 2015, respectively. The increase in income taxes, as a percentage of income before taxes, was primarily attributable to differences between the financial statement bases and tax bases of assets acquired in the Schiff acquisition during the second quarter of fiscal 2017.

Net income for the three months ended September 30, 2016 was $6,992,000, or $0.77 per diluted share compared to $11,229,000, or $1.22 per diluted share for the comparable period in 2015.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2016, the Company had working capital of $179,404,000 and stockholders’ equity of $271,875,000. Operating activities used net cash of $42,026,000 during the six months ended September 30, 2016 compared to $37,361,000 in the six months ended September 30, 2015. Net cash used for operating activities during the six months ended September 30, 2016 reflected our working capital requirements which resulted in an increase in accounts receivable of $48,987,000 primarily reflecting seasonal billings of current year Christmas accounts receivable, net of current year collections; an increase in inventory of $19,815,000 and an increase in accounts payable of $13,652,000 due to the normal seasonal inventory build for the fiscal 2017 shipping season, as well as higher inventory related to the Blumenthal and Schiff acquisitions, and higher levels of finished goods inventory to support new all occasion customer reset programs; and an increase in other accrued liabilities of $1,683,000. Included in net income for the six months ended September 30, 2016 were non-cash charges for depreciation and amortization of $4,270,000, provision for accounts receivable allowances of $2,553,000, deferred tax provision of $799,000, share-based compensation of $688,000 and gain on bargain purchase of $376,000. Net cash used for operating activities during the six months ended September 30, 2015 reflected our working capital requirements which resulted in an increase in accounts receivable of $54,558,000 primarily reflecting seasonal billings of current year Christmas accounts receivable, net of current year collections; an increase in inventory of $13,774,000 and an increase in accounts payable of $13,942,000 due to the normal seasonal inventory build for the fiscal 2016 shipping season; and an increase in other accrued liabilities of $2,077,000. Included in net income for the six months ended September 30, 2015 were non-cash charges for depreciation and amortization of $4,102,000, provision for accounts receivable allowances of $1,530,000, share-based compensation of $867,000 and a deferred tax provision of $745,000.

Our investing activities provided net cash of $56,255,000 in the six months ended September 30, 2016, consisting of the proceeds from held-to-maturity securities of $60,000,000, partially offset by capital expenditures of $2,831,000 and the purchase of a business of $1,125,000. In the six months ended September 30, 2015, our investing activities provided net cash of $42,282,000, consisting primarily of the proceeds from held-to-maturity securities of $70,000,000, partially offset by purchases of held-to-maturity securities of $24,924,000 and capital expenditures of $2,817,000.

Our financing activities used net cash of $3,915,000 in the six months ended September 30, 2016, consisting primarily of payments of cash dividends of $3,634,000. In the six months ended September 30, 2015, financing activities used net cash of $13,605,000, consisting primarily of purchases of treasury stock of $10,000,000 and payments of cash dividends of $3,321,000.

Under a stock repurchase program authorized by the Company's Board of Directors, the Company repurchased 352,789 shares of the Company’s common stock for $10,000,000 during the six months ended September 30, 2015. There were no

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repurchases of the Company's common stock by the Company during the six months ended September 30, 2016. As of September 30, 2016, the Company had 303,166 shares remaining available for repurchase under the Board’s authorization.

The Company relies primarily on cash generated from its operations and, if needed, seasonal borrowings under its revolving credit facility to meet its liquidity requirements throughout the year. Historically, a significant portion of the Company’s revenues have been seasonal, primarily Christmas related, with approximately 68% of sales recognized in the second and third quarters. As payment for sales of Christmas related products is usually not received until just before or just after the holiday selling season in accordance with general industry practice, working capital has historically increased in the second and third quarters, peaking prior to Christmas and dropping thereafter. Seasonal financing requirements are available under a revolving credit facility with two banks. Reflecting the seasonality of the Company’s business, the maximum credit available at any one time under the credit facility (“Commitment Level”) adjusts to $50,000,000 from February to June (“Low Commitment Period”), $100,000,000 from July to October (“Medium Commitment Period”) and $150,000,000 from November to January (“High Commitment Period”) in each respective year over the term of the facility. The Company has the option to increase the Commitment Level during part of any Low Commitment Period from $50,000,000 to an amount not less than $62,500,000 and not in excess of $125,000,000; provided, however, that the Commitment Level must remain at $50,000,000 for at least three consecutive months during each Low Commitment Period. The Company has the option to increase the Commitment Level during all or part of any Medium Commitment Period from $100,000,000 to an amount not in excess $125,000,000. Fifteen days prior written notice is required for the Company to exercise an option to increase the Commitment Level with respect to a particular Low Commitment Period or Medium Commitment Period. The Company may exercise an option to increase the Commitment Level no more than three times each calendar year. This financing facility is available to fund the Company's seasonal borrowing needs and to provide the Company with sources of capital for general corporate purposes, including acquisitions as permitted under the revolving credit facility. This facility is due to expire on March 16, 2020. At September 30, 2016, there were no borrowings outstanding under the Company’s revolving credit facility, and the Company did not borrow any amount under the facility during the six months ended September 30, 2016. The Company is in compliance with all financial debt covenants as of September 30, 2016. Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its future cash needs for at least the next 12 months.

As of September 30, 2016, the Company’s letter of credit commitments are as follows (in thousands):

	Less than 1 Year		1-3 Years	4-5 Years	After 5 Years	Total
Letters of credit	$	1,136	—	—	—	$	1,136

The Company has a reimbursement obligation with respect to stand-by letters of credit that guarantee the funding of workers compensation claims. The Company has no financial guarantees with any third parties or related parties other than with respect to certain obligations of its subsidiaries.

As of September 30, 2016, the Company is committed to pay guaranteed minimum royalties attributable to sales of certain licensed products. Reference is made to contractual obligations included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2016. There have been no significant changes to such contractual obligations.

In the ordinary course of business, the Company enters into arrangements with vendors to purchase merchandise in advance of expected delivery. These purchase orders do not contain any significant termination payments or other penalties if cancelled.

LABOR RELATIONS

With the exception of the bargaining unit at the ribbon manufacturing facility in Hagerstown, Maryland, which totaled 83 employees as of September 30, 2016, CSS employees are not represented by labor unions. Because of the seasonal nature of certain of its businesses, the number of production employees fluctuates during the year. The collective bargaining agreement with the labor union representing the Hagerstown-based production and maintenance employees remains in effect until December 31, 2017.

ACCOUNTING PRONOUNCEMENTS

See Note 9 to the consolidated financial statements for information concerning recent accounting pronouncements and the impact of those standards.

FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding product shipments expected to take place in the second half of fiscal 2017; the Company’s strategy to grow its presence in the largest retailers in North America by expanding and diversifying the Company’s product lines, including through acquisitions; pursuing new product initiatives within certain identified product categories; the expected

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future impact of legal proceedings; the anticipated effects of measures taken by the Company to respond to sales volume, cost and price pressures; the expected amount and timing of future amortization expense and future compensation expense relating to non-vested outstanding stock options and RSUs; and the Company’s belief that its sources of available capital are adequate to meet its future cash needs for at least the next 12 months. 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: uncertainties associated with forecasting future shipment volumes, including the risk that future shipments may fall short of management’s current estimates; 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); difficulties entering new markets and/or developing new and complementary products that drive incremental sales; information technology risks, such as cyber attacks and data breaches; 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; difficulties identifying and evaluating suitable acquisition opportunities; risks associated with acquisitions, including realization of intangible assets and recoverability of long-lived assets, and acquisition integration costs and the risk that the Company may not be able to integrate and derive the expected benefits from such acquisitions; risks associated with the Company’s warehouse consolidation projects, including the risk that expected efficiencies from the projects may not be realized in the timeframe currently anticipated by the Company; 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, customs laws and consumer product safety regulations; and other factors described more fully in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s activities expose it to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. The Company actively monitors these exposures and, where considered appropriate, manages these risks. The Company manages its exposure to foreign currency fluctuations by entering into foreign currency forward contracts to hedge the majority of firmly committed transactions and related receivables that are denominated in a foreign currency. The Company does not enter into contracts for trading purposes and does not use leveraged instruments. The market risks associated with debt obligations and other significant instruments as of September 30, 2016 have not materially changed from March 31, 2016 (see Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016).

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the Company’s management, with the participation of the Company’s President and Chief Executive Officer and Vice President – Finance and Interim Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the President and Chief Executive Officer and Vice President – Finance and Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the President and Chief Executive Officer and Vice President – Finance and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

(b) Changes in Internal Controls. There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) as promulgated by the Securities and Exchange Commission under the Exchange Act) during the second quarter of fiscal year 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 6. Exhibits

*10.1	CSS Industries, Inc. Change of Control Severance Pay Plan for Executive Management (as amended through August 1, 2016).
*10.2	Summary of Sales Commission Arrangement for Carey Edwards adopted August 1, 2016.
10.3	CSS Industries, Inc. 2013 Equity Compensation Plan, as amended and restated effective August 2, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on August 5, 2016).
*10.4	Form of Grant Instrument for Restricted Stock Units granted to Non-Employee Directors on August 2, 2016 under the Company's 2013 Equity Compensation Plan.
*Exhibit 31.1	Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
*Exhibit 31.2	Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
*Exhibit 32.1	Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
*Exhibit 32.2	Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
*101.INS	XBRL Instance Document.
*101.SCH	XBRL Schema Document.
*101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
*101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
*101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

*    Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CSS INDUSTRIES, INC.
	(Registrant)
Date: October 25, 2016	By:	/s/ Christopher J. Munyan
		Christopher J. Munyan
		President and Chief Executive Officer
		(principal executive officer)
Date: October 25, 2016	By:	/s/ David F. McHugh
		David F. McHugh
		Vice President – Finance and Interim Chief Financial Officer
		(principal financial and accounting officer)

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EX-10.1

Exhibit 10.1

Issued: 05/27/2009

Effective: 05/27/2009

Amended: 03/20/2012; 03/17/2015; 08/01/2016

CSS INDUSTRIES, INC.

CHANGE OF CONTROL SEVERANCE PAY PLAN

FOR EXECUTIVE MANAGEMENT

AND

SUMMARY PLAN DESCRIPTION

Effective May 27, 2009

(as amended through August 1, 2016)

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INTRODUCTION

The purpose of the CSS Industries, Inc. Change of Control Severance Pay Plan for Executive Management (the “Plan”) is to provide payments to certain key employees of CSS Industries, Inc. (“CSS”) and its subsidiaries whose employment is terminated for a reason covered by the Plan following a change of control of CSS. This document is designed to serve as both the Plan document and the summary plan description for the Plan. The legal rights and obligations of any person having an interest in the Plan are determined solely by the provisions of the Plan.

The Plan is intended to alleviate some of the financial hardship that eligible employees may experience when their employment is terminated for a reason covered by the Plan following a change of control. In essence, benefits under the Plan are intended to be supplemental unemployment benefits. The benefits under the Plan are not intended as deferred compensation and no individual shall have a vested right in such benefits.

CSS, as the Plan sponsor, has the sole discretion to determine whether an employee may be considered eligible for benefits under the Plan. All actions taken by CSS shall be in its role as the sponsor of the Plan, and not as a fiduciary. Nothing in the Plan will be construed to give any employee the right to receive severance payments or to continue in the employment of CSS and any of its subsidiaries. The Plan is unfunded, has no trustee, and is administered by the Plan Administrator. The Plan is intended to be an “employee welfare benefit plan” within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and 29 C.F.R. § 2510.3-2(b) and is to be administered as a “top-hat” welfare plan exempt from the substantive requirements of ERISA. Please review the section entitled “Amendment and Termination of the Plan” regarding CSS’ reservation of future rights.

The Plan shall be effective as of May 27, 2009, and supersedes all prior severance pay plans, policies, agreements or practices, whether formal or informal, written or unwritten, of CSS and its subsidiaries under which CSS or any of its subsidiaries would have provided severance benefits with respect to a change of control prior to the effective date of this Plan, with the exception of any individual employment contract that contains a severance pay provision that provides severance in excess of the amount an employee would be eligible to receive under this Plan. The Plan will continue until terminated as provided herein.

GENERAL INFORMATION

1. Plan Name:     CSS Industries, Inc. Change of Control Severance Pay Plan for Executive Management

2. Plan Number: 507

3. Plan Sponsor: CSS Industries, Inc.

450 Plymouth Road, Suite 300

Plymouth Meeting, PA 19462

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4. Employer Identification Number: 13-1920657

5. Type of Plan: Welfare Benefit – Severance Pay Plan

6. Plan Administrator: Change of Control Severance Pay Plan Administrator

CSS Industries, Inc.

450 Plymouth Road, Suite 300

Plymouth Meeting, PA 19462

7. Agent for Service of Legal Process: The Plan Administrator at the address above.

8. Sources of Contributions: The Plan is unfunded and CSS and the Participating Subsidiaries pay all Plan benefits from their assets.

9. Type of Administration: The Plan is administered by the Plan Administrator with benefits provided in accordance with the provisions of this Plan document.

10. Recordkeeping: The Plan and its records are kept on a fiscal year basis, April 1 through March 31. For the first plan year, the records are kept on the short plan year for the period between May 27, 2009 and March 31, 2010.

11. Participating Subsidiaries:    The subsidiaries and affiliates of CSS that participate in the Plan are identified in the attached Exhibit A.

DEFINITIONS

Adjusted Compensation: The sum of (i) your annual rate of base salary in effect as of the Employment Termination Date, excluding all extra pay, such as, but not limited to, incentive bonuses, overtime pay, commissions, car allowances or other allowances, Employer contributions to the Employer’s 401(k) plan and other deferred compensation arrangements elected by Plan participants and other Employer paid benefits; and (ii) the average of the annual bonus earned by you during the three (3) fiscal years prior to the fiscal year in which your Employment Termination Date occurs (or, if fewer, the period of fiscal years during which you were employed by the Employer prior to the Employment Termination Date).

Cause: You have: (i) been convicted of a felony; (ii) willfully and grossly neglected your job responsibilities; (iii) willfully engaged in misconduct in connection with the performance of your job responsibilities, which results in material damage to the Employer; or (iv) willfully failed to perform substantially your duties with the Employer (other than any such failure resulting from incapacity due to physical or mental illness) which has continued after a written demand for substantial performance is delivered to you by CSS’ Board of Directors which specifically identifies the manner in which such Board believes that you have not substantially performed your duties.

Change of Control: A “Change of Control” shall be deemed to have occurred if:

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(i) any “person” (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than persons who are stockholders on the effective date of the Plan) becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of CSS representing more than 50% of the voting power of the then outstanding securities of CSS; provided that a Change of Control shall not be deemed to occur as a result of a change of ownership resulting from the death of a stockholder, and a Change of Control shall not be deemed to occur as a result of a transaction in which CSS becomes a subsidiary of another corporation and in which the stockholders of CSS, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote);

(ii) the consummation of a merger or consolidation of CSS with another corporation where the stockholders of CSS, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); or

(iii) the consummation of a sale or other disposition of all or substantially all of the assets of CSS.

Code: Internal Revenue Code of 1986, as amended.

Committee: The Human Resources Committee of the Board of Directors of CSS.

CSS: CSS Industries, Inc.

Employer: CSS and any subsidiary of CSS that is designated by the Committee as a participating employer in the Plan and is listed on the attached Exhibit A.

Employment Termination Date: The date on which your employment relationship with the Employer is involuntarily terminated by the Employer or voluntarily terminated by you for Good Reason.

Executive Management Employee: For purposes of this Plan, (A) any employee of CSS who has the title of Chief Executive Officer, President, Chief Financial Officer, Chief Information Officer or General Counsel; and (B) any employee of CSS or any of its affiliates or subsidiaries who is designated as an Executive Management Employee from time to time by the Human Resources Committee of CSS’ Board of Directors, at the recommendation of CSS’ President.

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Good Reason: A “Good Reason” shall be deemed to have occurred if any of the following circumstances occurs upon the occurrence of, or within the two (2) year period following, a Change of Control:

(i) a material diminution in your authority, duties or responsibilities;

(ii) a material diminution in your base compensation;

(iii) a material diminution in the authority, duties or responsibilities of the supervisor to whom you are required to report; or

(iv) a material change in the geographic location at which you must provide services.

provided, however, that for you to terminate employment on account of Good Reason, you must provide written notice to us within ninety (90) days following the initial existence of the condition that constitutes Good Reason, and your Employer will have a thirty (30) day period to remedy the condition that constitutes Good Reason. If your Employer does not remedy the event constituting Good Reason within such thirty (30) day period, your employment will automatically terminate on the first business day immediately the expiration of such thirty (30) day cure period, unless your Employer determines to provide for an earlier Employment Termination Date.

Plan Administrator: The Committee, or such other person, committee or entity as may be designated by the Committee to administer the Plan in accordance with its terms.

Release: The release and discharge of the Employer and all affiliated persons and entities from any and all claims, demands and causes of action relating to your employment with the Employer, other than as to any vested benefits to which you may be entitled under any Employer benefit plan, which will be in such form as may be proscribed by the Employer, acting as plan sponsor and as a fiduciary, from time to time and with such modifications as the Employer deems appropriate for your individual situation. The foregoing Release also shall include a one (1) year non-competition covenant, a one (1) year non-solicitation covenant, and a perpetual confidentiality/non-disparagement covenant, all of which will be in such form as may be prescribed by the Employer, acting as plan sponsor and as a fiduciary, from time to time and with such modifications as the Employer deems appropriate for your individual situation.

Severance Pay: The severance benefits that will be offered to you if you incur a termination of employment with the Employer for a reason set forth in the Plan.

COVERAGE

You will be eligible to participate in this Plan if you are an Executive Management Employee on your Employment Termination Date or you were an Executive Management Employee prior to the occurrence of a Change of Control but your status as an Executive Management Employee was changed by the Employer in contemplation of the Change of Control

ELIGIBILITY

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A.When You Are Eligible

You are eligible for Severance Pay under this Plan if (A) during the two (2) year period on or after the occurrence of a Change of Control either (i) your employment with your Employer has been terminated by the Employer for any reason other than on account of Cause or you are not otherwise ineligible for Severance Pay as set forth in section B. below; or (ii) you terminate your employment with your Employer for Good Reason and you are not otherwise ineligible for Severance Pay as set forth in section B. below; and (B) you sign and do not revoke the Employer’s standard Release.

The foregoing in no way limits the right of the Employer to (i) terminate your employment and (ii) provide severance under other circumstances, in each case, as determined by the Employer in its sole and absolute discretion.

B.    When You Are Not Eligible

You are not eligible for Severance Pay under this Plan in any of the following circumstances:

1. You voluntary resign, including retirement, for any reason other than Good Reason.

2. You are discharged involuntarily for Cause, or the Employer discovers following your Employment Termination Date that you engaged in conduct that constitutes Cause during or after your Employment Termination Date.

3 You have an individual employment contract that contains a severance pay provision that provides severance in excess of the amount you would be eligible to receive under the Plan.

4. Prior to or on your last day of scheduled employment, you die.

5. Prior to notification of an Employment Termination Date, you would be entitled to benefits under any then applicable Employer-sponsored long-term disability plan if you were a participant in such plan, subject to the expiration of applicable waiting period.

6. Your Employment Termination Date occurs prior to a Change of Control or your Employment Termination Date occurs after the second anniversary of the Change of Control, except in the event in which the occurrence of the Good Reason condition first occurs prior to the second anniversary of the Change of Control.

7. You do not execute, or you revoke, the Release.

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8. You elect in writing to receive severance benefits under another severance pay plan then in effect and under which you may be eligible to receive severance benefits.

Notwithstanding any provision of the Plan to the contrary, the Committee, in its sole discretion and acting on behalf of the Employer as the Plan sponsor and not as a fiduciary, reserves the right to determine whether an employee satisfies the eligibility requirements for Severance Pay.

PLAN BENEFITS

If you are selected to receive Severance Pay under the Plan, as determined by the Committee, you will be eligible to receive payment of the following:

(i) any accrued and unpaid base pay and benefits due and owing to you for the period prior to your Employment Termination Date;

(ii) an amount equal to your Adjusted Compensation multiplied by 1.5 (2.0 in the case of CSS’ Chief Executive Officer); and

(iii) a pro rata bonus, based upon the period of time you were employed by the Employer during the Employer’s fiscal year in which the Employment Termination Date occurs, which payment shall be based upon 100% achievement of your target annual bonus opportunity for such fiscal year.

The foregoing amounts will be paid from the general assets of the Employer and will be paid to you in a cash lump sum payment within sixty (60) days after your Employment Termination Date, unless delay or a different form is required as described below. Your entitlement to Severance Pay under this Plan is expressly conditioned on your execution and non-revocation of the Release. If you do not execute the Release or you revoke the Release you will not be entitled to Severance Pay under this Plan. Severance Pay will be subject to all applicable federal, state and local tax withholding requirements.

All fringe benefits, including health and welfare, pension, life insurance, vacation and personal days, will cease on your Employment Termination Date, regardless of whether Severance Pay is made after that date.

If you receive Severance Pay under this Plan and elect health care continuation coverage under the Consolidated Omnibus Reconciliation Act (“COBRA”) following termination of your employment, the Employer will pay for a portion of the monthly COBRA premium, on the same basis as the Employer pays for a portion of such coverage for active employees, for a period of eighteen (18) months following your Employment Termination Date; provided, that in order to receive such continued coverage, you must pay to your Employer, at the same time that premium payments are due for the month, an amount equal to the full monthly premium payments required for such monthly coverage and your Employer will reimburse to you the amount of such monthly premium, less the amount that you would have been required to pay for such coverage if you were employed by your Employer at such time (the “Health Payment”), within ten (10) days following the due date of such premiums. In addition, unless delay is required as described below, on each date on which the monthly Health Payment is paid to you, your Employer will

6

pay to you an additional amount equal to the federal, state and local income and payroll taxes that you incur on each monthly Health Payment (the “Health Gross-Up Payment”). Your entitlement to the Health Payment and the Health Gross-Up Payment will continue until the earlier to occur of (i) the end of the eighteen (18) month period, (ii) you do not pay the full monthly premium for COBRA coverage, or (iii) you become eligible to receive comparable benefits from a new employer.

If you die before you have received Severance Pay to which you are entitled under the Plan, your Severance Pay will be paid to your estate within sixty (60) days from the date of your death.

When Benefits End

Severance Pay and any other benefits will be discontinued immediately if:

1. The Employer determines that you engaged in any of the actions defined above as “Cause,” even if such determination is made following your Employment Termination Date.

2. You breach any term of your Release, post-employment agreement, or other agreement relating to your employment.

CLAIMS PROCEDURE

Any request or claim for Severance Pay shall be deemed to be filed when a written request is made by the claimant or the claimant’s authorized representative which is reasonably calculated to bring the claim to the attention of the Plan Administrator.

The Plan Administrator, or its designee, shall advise the claimant or such claimant’s representative, in writing or in electronic form, of its decision within ninety (90) days of receipt of the claim for Severance Pay, unless special circumstances require an extension of such ninety (90) day period for not more than an additional ninety (90) days. Where such extension is necessary, the claimant shall be given written notice of the delay before the expiration of the initial ninety (90) day period, which notice shall set forth the reasons for the delay and the date the Plan Administrator expects to render its decision. If the extension is necessary because the claimant has failed to submit the information necessary to decide the claim, the Plan Administrator’s period for responding to such claim shall be tolled until the date the claimant responds to the request for additional information. The response shall:

1. be in writing or in electronic form,

2. be written in a manner calculated to be understood by the claimant, and

3. in the case of an adverse benefit determination:

a. set forth the specific reason(s) for the denial of benefits;

b. contain specific references to Plan provisions on which the denial is based;

7

c. describe any additional material and information, if any, necessary for the claim for benefits to be perfected, and an explanation of why such material or information is necessary; and

d. describe the Plan’s review procedures and the time limits applicable to such procedures, and include a statement of the claimant’s right to bring a civil action under section 502(a) of the ERISA following an adverse benefit determination on review.

If the claimant fails to appeal the Plan Administrator’s adverse benefit determination, in writing, within sixty (60) days after its receipt by the claimant, the Plan Administrator’s determination shall become final and conclusive.

If the claimant appeals the Plan Administrator’s adverse benefit determination in a timely fashion, the Plan Administrator shall reexamine all issues relevant to the original denial of benefits. Any such claimant or his or her duly authorized representative may review any relevant documents and records, free of charge, including documents and records that were relied upon in making the benefit determination, documents submitted, considered or generated in the course of making the benefit determination (even if such documents were not relied upon in making the benefit determination), and documents that demonstrate compliance, in making the benefit determination, with the Plan’s required administrative processes and safeguards. In addition, the claimant or his duly authorized representative may submit, in writing, any documents, records, comments or other information relating to such claim for benefits. In the course of the review, the Plan Administrator shall take into account all comments, documents, records and other information submitted by the claimant or his duly authorized representative relating to such claim, regardless of whether it was submitted or considered as part of the initial benefit determination.

The Plan Administrator shall advise the claimant or such claimant’s representative, in writing or in electronic form, of its decision within sixty (60) days of receipt of the written appeal, unless special circumstances require an extension of such sixty (60) day period for not more than an additional sixty (60) days. Where such extension is necessary, the claimant shall be given written notice of the delay before the expiration of the initial sixty (60) day period, which notice shall set forth the reasons for the delay and the date the Plan Administrator expects to render its decision. In the event of an adverse benefit determination on appeal, the Plan Administrator shall advise the claimant, in a manner calculated to be understood by the claimant of:

1. the specific reason(s) for the adverse benefit determination;

2. the specific Plan provisions on which the decision was based;

3. the claimant’s right to receive, upon request and free of charge, and reasonable access to, copies of all documents, records and other information relevant to such claim; and

8

4. a statement describing any voluntary appeals procedures offered by the Plan, the claimant’s right to obtain information about such procedures, and a statement of the claimant’s right to bring an action under section 502(a) of ERISA.

No person may bring an action for any alleged wrongful denial of Plan benefits in a court of law unless the claims procedures set forth above are exhausted and a final determination is made by the Plan Administrator. If you or other interested person challenges a decision of the Plan Administrator, a review by the court of law will be limited to the facts, evidence and issues presented to the Plan Administrator during the claims procedure set forth above. Facts and evidence that become known to you or other interested person after having exhausted the claims procedure must be brought to the attention of the Plan Administrator for reconsideration of the claims determination. Issues not raised with the Plan Administrator will be deemed waived.

The Employer shall reimburse you for all reasonable legal fees and related expenses incurred by you (A) in connection with this Plan and (B) (i) in contesting or disputing any termination of your employment or (ii) seeking to obtain or enforce any right or benefit provided by this Plan; provided, in each case, that you are successful on at least one (1) material issue raised in such contest, dispute or enforcement proceeding. If you are awarded the right to recover fees and expenses under this paragraph, the reimbursement of eligible fees or expenses shall be made within ten (10) business days after delivery of your written request for payment, accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require, but in no event later than the end of the Employer’s fiscal year after the year in which such rights are established.

PLAN ADMINISTRATION

The Plan Administrator of the Plan will be the named fiduciary of the Plan for purposes of ERISA. The Plan Administrator shall consist of one or more persons appointed by the Committee. The Plan Administrator may, however, delegate to any person, committee or entity any of its power or duties under the Plan.

The Plan Administrator will be the sole judge of the application and interpretation of the Plan, and will have the discretionary authority to construe the provisions of the Plan and to resolve disputed issues of fact. The Committee will have the sole authority to make determinations regarding eligibility for benefits. The decisions of the Plan Administrator and the Committee in all matters relating to the Plan that are within the scope of its authority (including, but not limited to, eligibility for benefits, Plan interpretations, and disputed issues of fact) will be final and binding on all parties.

SECTION 409A

Notwithstanding the other provisions hereof, this Plan is intended to comply with the requirements of section 409A of the Code, to the extent applicable, and this Plan shall be interpreted to avoid any penalty sanctions under section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with section 409A of the Code and regulations thereunder. If any payment or benefit

9

cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. All payments to be made upon a termination of employment under this Plan may only be made upon a “separation from service” under section 409A of the Code. For purposes of section 409A of the Code, each payment made under this Plan shall be treated as a separate payment and all installment payments shall be treated as a separate payment. In no event may you, directly or indirectly, designate the calendar year of payment.

To the maximum extent permitted under section 409A of the Code, the severance benefits payable under this Plan are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to you during the six (6) month period following your Employment Termination Date that does not qualify within either of the foregoing exceptions and constitutes deferred compensation subject to the requirements of section 409A of the Code, then such amounts shall hereinafter be referred to as the “Excess Amount.” If at the time of your Employment Termination Date, your Employer’s (or any entity required to be aggregated with the Employer under section 409A of the Code) stock is publicly-traded on an established securities market or otherwise and you are a “specified employee” (as defined in section 409A of the Code and determined in the sole discretion of the Employer (or any successor thereto) in accordance with the Employer’s (or any successor thereto) “specified employee” determination policy), then the Employer shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six (6) month period following your Employment Termination Date with the Employer (or any successor thereto) for six (6) months following your Employment Termination Date. The delayed Excess Amount shall be paid in a lump sum to you within thirty (30) days following the date that is six (6) months following your Employment Termination Date (or any successor thereto) and any installments payable to you after such six (6) month period shall continue in accordance with their original schedule. If you die during such six (6) month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of section 409A of the Code, such Excess Amount shall be paid to the personal representative of your estate within sixty (60) days after your death.

Notwithstanding the foregoing, if the severance benefits payable under this Plan constitute deferred compensation subject to section 409A of the Code and the Change of Control does not constitute a change in the ownership or effective control of CSS, or in the ownership of a substantial portion of the assets of CSS, within the meaning of section 409A of the Code, then the severance benefits payable to you under this Plan will be paid to you in the same form as severance benefits are payable to you under your Employer’s severance plan, if any, that covers terminations unrelated to a Change of Control.

The payment by the Employer of a portion of the applicable COBRA premium during the severance period is intended to qualify for the exception for deferred compensation as a medical benefit provided in accordance with the requirements of Treas. Reg. §1.409A-1(b)(9)(v)(B).

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SECTION 4999

Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Employer or its affiliates or the entity that causes the change in control to or for your benefit (whether pursuant to the terms of this Plan or otherwise) (the “Payments”) would be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to you under this Plan to the maximum amount that could be paid to you without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide you with a greater after tax amount than if such amounts were not reduced, then the amounts payable to you under this Plan shall be reduced (but not below zero) to the Safe Harbor Cap. To the extent necessary to fall within the Safe Harbor Cap, the amounts payable or benefits to be provided to you will be reduced such that the economic loss to you as a result of the reduction is minimized. In applying this principle, the reduction shall be made in a manner consistent with the requirements of section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a greater after tax result to you, no amounts payable under this Plan shall be reduced pursuant to this provision.

All determinations required to be made under this section shall be made by the public accounting firm that is retained by CSS as of the date immediately prior to the Change of Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to CSS and you within fifteen (15) business days of the receipt of notice from CSS or you that there has been a Payment, or such earlier time as is requested by CSS. Notwithstanding the foregoing, in the event (i) CSS’ Board of Directors shall determine prior to the Change of Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of CSS’ Board of Directors determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change of Control, CSS’ Board of Directors shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by CSS. If payments are reduced to the Safe Harbor Cap or the Accounting Firm determines that no Excise Tax is payable by you without a reduction in payments, the Accounting Firm shall provide a written opinion to you to such effect, that you are not required to report any Excise Tax on yourfederal income tax return, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. The determination by the Accounting Firm shall be binding upon the CSS and you (except as provided in the immediately succeeding paragraph).

If it is established pursuant to a final determination of a court or the Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, you by the Employer, which are in excess of

11

the limitations provided in this section (referred to hereinafter as an “Excess Payment”), you shall repay the Excess Payment to the Employer on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of your receipt of such Excess Payment until the date of such repayment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the determination, it is possible that Payments which will not have been made by the Employer should have been made (an “Underpayment”), consistent with the calculations required to be made under this section. In the event that it is determined (i) by the Accounting Firm, the Employer (which shall include the position taken by the Employer (which shall include the position taken by the Employer, or by CSS on a consolidated basis, on its respective federal income tax return) or the IRS or (ii) pursuant to a determination by a court, that an Underpayment has occurred, the Employer shall pay an amount equal to such Underpayment to you within ten (10) days of such determination together with interest on such amount at the applicable federal rate from the date such amount would have been paid to you until the date of payment. You shall cooperate, to the extent yourexpenses are reimbursed by the Employer, with any reasonable requests by the Employer or CSS in connection with any contests or disputes with the IRS in connection with the Excise Tax or the determination of the Excess Payment. Notwithstanding the foregoing, in the event that amounts payable under this Plan were reduced pursuant to the first paragraph of this section and the value of stock options is subsequently re-determined by the Accounting Firm (as defined below) within the context of Treasury Regulation §1.280G-1 Q/A 33 that reduces the value of the Payments attributable to such options, the Employer shall promptly pay you any amounts payable under this Plan that were not previously paid solely as a result of the first paragraph of this section up to the Safe Harbor Cap.

AMENDMENT AND TERMINATION OF THE PLAN

CSS reserves the right to amend or terminate the Plan, in whole or in part, at any time and for any reason; provided, however, that no such amendment or termination shall become effective until each employee eligible to receive Severance Pay under the Plan shall receive from CSS at least one (1) year prior written notice of such amendment or termination (so long as a Change of Control does not occur prior to the end of such one (1) year notice period), unless such amendment is necessary to comply with applicable law, in which case no written notice shall be necessary to make such amendment. An amendment to the Plan may not discontinue or change any payments to a terminated employee who commenced receiving Severance Pay under the Plan prior to the effective date of the amendment of the Plan. If the Plan is terminated, no further benefits will be payable under the Plan to any employee who has not commenced receiving Severance Pay prior to the effective date of such termination.

NONALIENATION OF BENEFITS

You do not have the power to transfer, assign, anticipate, mortgage or otherwise encumber any rights or any amounts payable under this Plan; nor will any such rights or amounts payable under this Plan be subject to seizure, attachment, execution, garnishment or other legal or equitable process, or for the payment of any debts, judgments, alimony, or separate maintenance, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. In the event you attempt to assign, transfer or dispose of such right, or if an attempt is

12

made to subject such right to such process, such assignment, transfer or disposition will be null and void.

ERISA RIGHTS STATEMENT

As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (“ERISA”). ERISA provides that all Plan participants will be entitled to:

Receive Information about the Plan and Benefits

• Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan, including a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

• Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Plan Administrator may make a reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of employees and other Plan participants and beneficiaries. No one, including your Employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

Enforcing Your Rights

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and you do not receive them within thirty (30) days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the Plan fiduciaries misuse the Plan’s money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should

13

pay court costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Assistance with Your Questions

If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquires, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, D.C. 20210 (web address: www.dol.gov/dol/pwba). You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publication hotline of the Employee Benefits Security Administration.

14

EXHIBIT “A”

PARTICIPATING EMPLOYERS

Berwick Offray LLC

Paper Magic Group, Inc.

C.R. Gibson, LLC

15

EX-10.2

Exhibit 10.2

CSS Industries, Inc.

(the “Company”)

Summary of Commission Arrangement with Carey Edwards

On August 1, 2016, the Human Resources Committee of the Company’s Board of Directors approved a sales commission arrangement under which sales commissions may be paid to the Company’s Executive Vice President of Sales, Carey Edwards, based on net sales generated from the sale and shipment of certain goods to certain customers during the period beginning August 1, 2016 and ending March 31, 2017 (the “program period”). The commission rates vary depending on the level of eligible net sales achieved during the program period and fall within a range of 2 to 3% of eligible net sales. Any commissions earned under this arrangement are subject to approval by the Human Resources Committee, and the amount so approved will be paid in June 2017.

EX-10.4

Exhibit 10.4

Time-Based Form – Director RSU Grant

CSS INDUSTRIES, INC.

2013 EQUITY COMPENSATION PLAN

RESTRICTED STOCK UNIT GRANT

This RESTRICTED STOCK UNIT GRANT, dated as of _______ __, 20__ (the “Date of Grant”), is delivered by CSS Industries, Inc. (the “Company”) to _______________ (the “Grantee”).

RECITALS

WHEREAS, the Board of Directors of the Company (the “Board”) has determined to grant to the Grantee, as a non-employee member on the Board, restricted stock units that will be convertible into shares of common stock of the Company, par value $0.10 per share, (the “Company Stock”) if certain terms and conditions are met; and

WHEREAS, the Board has determined that the restricted stock units granted to the Grantee shall be issued under the CSS Industries, Inc. 2013 Equity Compensation Plan (the “Plan”) and the terms and conditions of such restricted stock units shall be memorialized in this Restricted Stock Unit Grant (the “Grant”).

NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby, agree as follows:

1.     Grant of Stock Units. Subject to the terms and conditions set forth in this Grant and the Plan, the Board hereby grants to the Grantee ______ stock units (collectively, the “Restricted Stock Units”). The Restricted Stock Units will become vested and convertible into shares of Company Stock if, and only to the extent that, the vesting conditions set forth in Paragraph 3 of this Grant are satisfied. Each Restricted Stock Unit shall be a phantom right and shall be equivalent to one share of Company Stock on the Redemption Date (as defined in Paragraph 4 below).

2.     Restricted Stock Unit Account. The Company shall establish and maintain a Restricted Stock Unit account as a bookkeeping account on its records (the “Restricted Stock Unit Account”) for the Grantee and shall record in such Restricted Stock Unit Account the number of Restricted Stock Units granted to the Grantee pursuant to this Grant. The Grantee shall not have any interest in any fund or specific assets of the Company by reason of this Grant or the Restricted Stock Unit Account established for the Grantee.

3.Vesting.

(a)Except as provided in subparagraph (b) below, the Restricted Stock Units shall become vested on _____ __, 20__ (the “Vesting Date”), provided the Grantee continues to be Employed by, or providing services to, the Employer (as defined in the Plan) from the Date of Grant through the Vesting Date.

(b)Notwithstanding subparagraph (a) above, if while the Grantee is Employed by, or providing services to, the Employer, but prior to the Vesting Date, there is a Change of Control (as defined in the Plan), the unvested Restricted Stock Units shall become fully vested on the date of the Change of Control (the “Change of Control Date”).

(c)If at any time prior to the first to occur of the Vesting Date or Change of Control Date, the Grantee ceases to be Employed by, or providing services to, the Employer for any reason or no reason, all of the Restricted Stock Units subject to this Grant will be immediately forfeited and the Grantee shall have no rights with respect to the redemption of any portion of such forfeited Restricted Stock Units.

4.Redemption. The Grantee shall be entitled to receive a distribution with respect to the Grantee’s vested Restricted Stock Units that are credited to the Grantee’s Restricted Stock Unit Account pursuant to this Grant on the first vesting date as provided in Paragraph 3, which is the earlier of (i) the Vesting Date or (ii) the Change of Control Date. The date on which the vested Restricted Stock Units credited to the Restricted Stock Unit Account are distributable to the Grantee pursuant to the immediately preceding sentence is referred to as the “Redemption Date”. On, or within thirty (30) days following, the Redemption Date, all Restricted Stock Units that have become vested pursuant to Paragraph 3 will be redeemed and converted to an equivalent number of shares of Company Stock, and the Grantee shall receive a single sum distribution of such shares of Company Stock, which shall be issued under the Plan. Any Restricted Stock Units not vested because of the failure to satisfy the vesting conditions are forfeited as described in Paragraph 3 above.

5.Dividend Equivalents. Should any dividend, other than in shares of Company Stock, be declared and paid with respect to the shares of Company Stock during the period between the Date of Grant and the earlier of (a) the Redemption Date or (b) the date on which the Restricted Stock Units credited to the Grantee’s Restricted Stock Unit Account are forfeited, the Company shall credit to a dividend equivalent bookkeeping account (the “Dividend Equivalent Account”) the value of such dividends that would have been paid if the outstanding Restricted Stock Units credited to the Grantee’s Restricted Stock Unit Account at the time of the declaration of the dividend were outstanding shares of Company Stock. At the same time that the corresponding

2

Restricted Stock Units, if any, are converted to shares of Company Stock and distributed to the Grantee as set forth in Paragraph 4, the Company shall pay to the Grantee a lump sum cash payment equal to the value of the dividends credited to the Grantee’s Dividend Equivalent Account that correspond to such Restricted Stock Units that have become vested; provided, however, that any dividend equivalents that were credited to the Grantee’s Dividend Equivalent Account that are attributable to Restricted Stock Units that have been forfeited as provided in Paragraph 3 above shall be forfeited and not be payable to the Grantee. No interest shall accrue on any dividend equivalents credited to the Grantee’s Dividend Equivalent Account.

6.Change of Control. Except as provided in Paragraph 3(b) above, the provisions set forth in the Plan applicable to a Change of Control shall apply to the Restricted Stock Units, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan and is consistent with the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), if applicable.

7.Acknowledgment by Grantee. By accepting this Grant, the Grantee acknowledges that with respect to any right to redemption pursuant to this Grant, the Grantee is and shall be an unsecured general creditor of the Company without any preference as against other unsecured general creditors of the Company, and the Grantee hereby covenants for himself or herself, and anyone at any time claiming through or under the Grantee not to claim any such preference, and hereby disclaims and waives any such preference which may at any time be at issue, to the fullest extent permitted by applicable law. The Grantee also hereby acknowledges and agrees that the Grantee will indemnify the Employer (as defined in the Plan) and hold the Employer free and harmless of, from and against any and all losses, damage, obligation or liability, and all costs and expenses (including reasonable attorneys’ fees) incurred in connection therewith, which may be suffered or incurred on account or by reason of any act or omission of the Grantee or the Grantee’s heirs, executors, administrators, personal representatives, successors and assigns in breach or violation of the provisions of the Plan or the agreements of the Grantee set forth herein. The Grantee also acknowledges receipt of a copy of the Plan and agrees to be bound by the terms of the Plan and this Grant. The Grantee further agrees to be bound by the determinations and decisions of the Board with respect to this Grant and the Plan and the Grantee’s rights to benefits under this Grant and the Plan, and agrees that all such determinations and decisions of the Board shall be binding on the Grantee, his or her beneficiaries and any other person having or claiming an interest under this Grant and the Plan on behalf of the Grantee.

8.Restrictions on Issuance or Transfer of Shares of Company Stock.

(a)The obligation of the Company to deliver shares of Company Stock upon the redemption of the Restricted Stock Units shall be subject to the condition that if at any time the Board shall determine in its discretion that the listing, registration or qualification of the shares

3

of Company Stock upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of shares of Company Stock, the shares of Company Stock may not be issued in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The issuance of shares of Company Stock pursuant to this Grant is subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof.

(b)As a condition to receive any shares of Company Stock on the Redemption Date, the Grantee agrees to be bound by the Company’s policies regarding the transfer of the shares of Company Stock and understands that there may be certain times during the year in which the Grantee will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging, hypothecating or otherwise encumbering the shares of Company Stock.

(c)As soon as administratively practicable following the Redemption Date, a certificate representing the shares of Company Stock that are redeemed shall be issued to the Grantee.

9.Grant Subject to Plan Provisions. This Grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. In the event of any contradiction, distinction or difference between this Grant and the terms of the Plan, the terms of the Plan will control. Except as otherwise defined in this Grant, capitalized terms used in this Grant shall have the meanings set forth in the Plan. This Grant is subject to the interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares of Company Stock, (c) changes in capitalization of the Company, and (d) other requirements of applicable law. The Board shall have the authority to interpret and construe this Grant pursuant to the terms of the Plan, its decisions shall be conclusive as to any questions arising hereunder and the Grantee’s acceptance of this Grant is the Grantee’s agreement to be bound by the interpretations and decisions of the Board with respect to this Grant and the Plan.

10.No Rights as Stockholder. The Grantee shall not have any rights as a stockholder of the Company, including the right to any cash dividends (except as provided in Paragraph 5), or the right to vote, with respect to any Restricted Stock Units, unless and until the Restricted Stock Units are redeemed to shares of Company Stock, in which case such rights shall only apply after the Redemption Date.

4

11.No Rights to Continued Employment or Service. This Grant shall not confer upon the Grantee any right to be retained in the employment or service of the Employer and shall not interfere in any way with the right of the Employer to terminate the Grantee’s employment or service at any time. The right of the Employer to terminate at will the Grantee’s employment or service at any time for any reason is specifically reserved.

12.Assignment and Transfers. No Restricted Stock Units awarded to the Grantee under this Grant may be transferred, assigned, pledged, or encumbered by the Grantee and a Restricted Stock Unit shall be redeemed during the lifetime of the Grantee only for the benefit of the Grantee. Any attempt to transfer, assign, pledge, or encumber the Restricted Stock Unit by the Grantee shall be null, void and without effect. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company. This Grant may be assigned by the Company without the Grantee’s consent.

13.Taxation; Withholding. The distribution of shares of Company Stock and payment of dividend equivalents to the Grantee pursuant to this Grant is subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof. All obligations of the Company under this Grant shall be subject to the rights of the Company to withhold amounts required to be withheld for any taxes, if required by applicable law. The Grantee is solely responsible for the satisfaction of all taxes that may arise in connection with the Restricted Stock Units and dividend equivalents granted pursuant to this Grant.

14.Effect on Other Benefits. The value of shares of Company Stock distributed with respect to the Restricted Stock Units shall not be considered eligible earnings for purposes of any other plans maintained by the Company or any other Employer. Neither shall such value be considered part of the Grantee’s compensation for purposes of determining or calculating other benefits that are based on compensation, such as life insurance.

15.Applicable Law; Entire Agreement. The validity, construction, interpretation and effect of this Grant shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of laws provisions thereof. This Grant sets forth the entire agreement of the parties with respect to the subject matter hereof and may not be changed or terminated except by a writing signed by the Grantee and the Company. This Grant and any undertakings and indemnities delivered hereunder shall be binding upon and shall inure to the benefit of the Grantee and the Grantee’s heirs, distributees and personal representatives and to the Company, its successors and assigns.

16.Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the Secretary at the Company’s corporate headquarters, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll

5

records of the Company, or to such other address as the Grantee may designate to the Company in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

17.Section 409A of the Code. This Grant is intended to be exempt from the requirements of section 409A of the Code in reliance on the short-term deferral exception under section 409A of the Code. Notwithstanding the foregoing, if any Restricted Stock Units or dividend equivalents are subject to the requirements of section 409A of the Code it is intended that this Grant comply with the requirements of section 409A of the Code with respect to such Restricted Stock Units and dividend equivalents and this Grant shall be interpreted and administered to avoid any penalty sanctions under section 409A of the Code, including, any payment on “separation from service” or “change of control” shall only be paid on the occurrence of such to the extent that such “separation from service” or “change of control” qualifies as such under section 409A of the Code and its corresponding regulations. If any distribution cannot be provided or made at the time specified herein, then such distribution shall be provided in full at the earliest time thereafter when such sanctions cannot be imposed. In no event may the Grantee, directly or indirectly, designate the calendar year of distribution.

[SIGNATURE PAGE FOLLOWS]

6

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant effective as of the Date of Grant.

ATTEST	CSS INDUSTRIES, INC.
(Corporate Seal)
_________________________	By: ______________________________

I hereby accept the grant of Restricted Stock Units described in this Restricted Stock Unit Grant. I have read the terms of the Plan and this Restricted Stock Unit Grant, and agree to be bound by the terms of the Plan and this Restricted Stock Unit Grant and the interpretations of the Committee with respect thereto.

ACCEPTED:

By: ______________________________

[Name] (Grantee)

7

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher J. Munyan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSS Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 25, 2016

/s/ Christopher J. Munyan

Christopher J. Munyan,

President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David F. McHugh, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSS Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 25, 2016

/s/ David F. McHugh

David F. McHugh

Vice President – Finance and Interim Chief Financial Officer

(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher J. Munyan, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Christopher J. Munyan

Christopher J. Munyan

President and Chief Executive Officer

(principal executive officer)

October 25, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David F. McHugh, Vice President – Finance and Interim Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David F. McHugh

David F. McHugh

Vice President – Finance and Interim Chief Financial Officer

(principal financial officer)

October 25, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Sep. 30, 2016	Oct. 21, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	CSS
Entity Registrant Name	CSS INDUSTRIES INC
Entity Central Index Key	0000020629
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		9,077,782

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Sales	$ 101,291	$ 111,477	$ 146,609	$ 155,705
Costs and expenses
Cost of sales	69,691	73,686	102,712	105,472
Selling, general and administrative expenses	20,921	20,100	38,495	37,400
Interest income, net	(4)	(10)	(93)	(82)
Other (income) expense, net	(387)	48	(478)	0
Total costs and expenses	90,221	93,824	140,636	142,790
Income before income taxes	11,070	17,653	5,973	12,915
Income tax expense	4,078	6,424	2,267	4,754
Net income	$ 6,992	$ 11,229	$ 3,706	$ 8,161
Net income per common share:
Basic (in dollars per share)	$ 0.77	$ 1.23	$ 0.41	$ 0.88
Diluted (in dollars per share)	$ 0.77	$ 1.22	$ 0.41	$ 0.87
Weighted average shares outstanding:
Basic (in shares)	9,076	9,148	9,065	9,245
Diluted (in shares)	9,107	9,237	9,111	9,345
Cash dividends per share of common stock (in dollars per share)	$ 0.2	$ 0.18	$ 0.4	$ 0.36

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Current assets
Cash and cash equivalents	$ 30,241	$ 19,927	$ 27,745
Short-term investments	0	59,806	24,929
Accounts receivable, net of allowances of $1,524, $1,363 and $1,375	91,577	45,144	95,080
Inventories	93,701	73,022	79,265
Other current assets	12,741	12,792	10,587
Total current assets	228,260	210,691	237,606
Property, plant and equipment, net	27,204	27,053	25,769
Deferred income taxes	2,363	3,193	4,413
Other assets
Goodwill	19,677	19,974	15,820
Intangible assets, net	41,160	42,183	31,770
Other	6,657	6,832	5,810
Total other assets	67,494	68,989	53,400
Total assets	325,321	309,926	321,188
Current liabilities
Accounts payable	27,790	14,463	27,165
Accrued payroll and other compensation	7,070	9,016	7,368
Accrued customer programs	3,622	3,275	3,920
Accrued income taxes	551	0	3,173
Other current liabilities	9,823	7,051	9,641
Total current liabilities	48,856	33,805	51,267
Long-term obligations	4,590	4,631	4,295
Stockholders’ equity	271,875	271,490	265,626
Total liabilities and stockholders’ equity	$ 325,321	$ 309,926	$ 321,188

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 1,524	$ 1,363	$ 1,375

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 3,706	$ 8,161
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization	4,270	4,102
Accretion of investment discount	(194)	(160)
Provision for accounts receivable allowances	2,553	1,530
Deferred tax provision	799	745
Share-based compensation expense	688	867
Gain on bargain purchase	(376)	0
Loss on sale of assets	43	0
Changes in assets and liabilities:
Accounts receivable	(48,987)	(54,558)
Inventory	(19,815)	(13,774)
Other assets	(48)	(293)
Accounts payable	13,652	13,942
Other accrued liabilities	1,683	2,077
Total adjustments	(45,732)	(45,522)
Net cash used for operating activities	(42,026)	(37,361)
Cash flows from investing activities:
Maturities of investment securities	60,000	70,000
Purchase of held-to-maturity investment securities	0	(24,924)
Purchase of a business	(1,125)	0
Purchase of property, plant and equipment	(2,831)	(2,817)
Purchase of intangibles	(100)	0
Proceeds from sale of fixed assets	311	23
Net cash provided by investing activities	56,255	42,282
Cash flows from financing activities:
Dividends paid	(3,634)	(3,321)
Purchase of treasury stock	0	(10,000)
Exercise of stock options, net of tax withholdings	(32)	0
Payments for tax withholding on net restricted stock settlements	(527)	(518)
Tax effect on stock awards	278	234
Net cash used for financing activities	(3,915)	(13,605)
Net increase (decrease) in cash and cash equivalents	10,314	(8,684)
Cash and cash equivalents at beginning of period	19,927	36,429
Cash and cash equivalents at end of period	$ 30,241	$ 27,745

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Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2017” refers to the fiscal year ending March 31, 2017.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Nature of Business

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of all occasion and seasonal social expression products, principally to mass market retailers. These all occasion and seasonal products include decorative ribbons and bows, classroom exchange Valentines, infant products, journals, buttons, boxed greeting cards, gift tags, gift card holders, gift bags, gift wrap, decorations, floral accessories, craft and educational products, Easter egg dyes and novelties, memory books, scrapbooks, stickers, stationery, and other items that commemorate life’s celebrations. The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively higher sales levels and operating profits in the second and third quarters of the Company’s fiscal year, which ends March 31, thereby causing significant fluctuations in the quarterly results of operations of the Company.

The Company's principal operating subsidiaries include Berwick Offray LLC ("Berwick Offray"), Paper Magic Group, Inc. ("Paper Magic") and C.R. Gibson, LLC ("C.R. Gibson").

Reclassification

Certain prior period amounts have been reclassified to conform with the current year classification.

Foreign Currency Translation and Transactions

Translation adjustments are charged or credited to a separate component of stockholders’ equity. Gains and losses on foreign currency transactions are not material and are included in other (income) expense, net in the consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Judgments and assessments of uncertainties are required in applying the Company’s accounting policies in many areas. Such estimates pertain to revenue recognition, the valuation of inventory and accounts receivable, the assessment of the recoverability of goodwill and other intangible and long-lived assets, income tax accounting, the valuation of share-based awards and resolution of litigation and other proceedings. Actual results could differ from these estimates.

Short-Term Investments

The Company categorized and accounted for its short-term investment holdings as held-to-maturity securities. This categorization was based upon the Company's positive intent and ability to hold these securities until maturity. There were no short-term investments at September 30, 2016. Short-term investments at March 31, 2016 consisted of commercial paper with an amortized cost of $59,806,000 and matured in the first half of fiscal 2017. Short-term investments at September 30, 2015 consisted of commercial paper with an amortized cost of $24,929,000 and matured in fiscal 2016. Held-to-maturity securities are recorded at amortized cost which approximated fair value at March 31, 2016 and September 30, 2015.

Inventories

The Company records inventory when title is transferred, which occurs upon receipt or prior to receipt dependent on supplier shipping terms. The Company adjusts unsaleable and slow-moving inventory to its estimated net realizable value. Substantially all of the Company’s inventories are stated at the lower of first-in, first-out (FIFO) cost or market. The remaining portion of the inventory is valued at the lower of last-in, first-out (LIFO) cost or market. Inventories consisted of the following (in thousands):

	September 30, 2016		March 31, 2016		September 30, 2015
Raw material	$	10,919	$	11,392	$	11,376
Work-in-process	14,474		17,745		13,603
Finished goods	68,308		43,885		54,286
	$	93,701	$	73,022	$	79,265

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include the following (in thousands):

	September 30, 2016			March 31, 2016			September 30, 2015
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements	34,612			34,317			33,754
Machinery, equipment and other	89,630			87,675			86,722
	126,750			124,500			122,984
Less - Accumulated depreciation and amortization	(99,546		)	(97,447		)	(97,215		)
Net property, plant and equipment	$	27,204		$	27,053		$	25,769

Depreciation expense was $1,290,000 and $1,419,000 for the quarters ended September 30, 2016 and 2015, respectively, and was $2,647,000 and $2,824,000 for the six months ended September 30, 2016 and 2015, respectively.

Long-Lived Assets including Goodwill and Other Intangible Assets

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscal year. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangibles might be impaired. During the six months ended September 30, 2016, there were no such events or circumstances.

The Company uses a dual approach to determine the fair value of its reporting units, including both a market approach and an income approach. The Company believes the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported.

Other indefinite-lived intangible assets consist primarily of tradenames, which are also required to be tested annually for impairment. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite-lived intangible assets, are reviewed for impairment when events or circumstances indicate the carrying value of an asset group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the six months ended September 30, 2016, there were no such events or circumstances. See Note 5 for further information on other intangible assets.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.

The Company recognizes the impact of an uncertain tax position if it is more likely than not that such position will be sustained on audit, based solely on the technical merits of the position.

Revenue Recognition

The Company recognizes revenue from product sales when the goods are shipped, title and risk of loss have been transferred to the customer and collection is reasonably assured. Provisions for returns, allowances, rebates to customers and other adjustments are provided in the same period that the related sales are recorded.

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2016 and 2015 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income	$	6,992	$	11,229	$	3,706	$	8,161
Denominator:
Weighted average shares outstanding for basic net income per common share	9,076		9,148		9,065		9,245
Effect of dilutive stock options	31		89		46		100
Adjusted weighted average shares outstanding for diluted net income per common share	9,107		9,237		9,111		9,345
Basic net income per common share	$	0.77	$	1.23	$	0.41	$	0.88
Diluted net income per common share	$	0.77	$	1.22	$	0.41	$	0.87

The Company has excluded 508,000 shares and 258,000 shares, consisting of outstanding stock options and unearned restricted stock units, in computing diluted net income per common share for the three- and six months ended September 30, 2016 and 2015, respectively, because their effects were antidilutive.

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Business Acquisition

6 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Business Acquisition

BUSINESS ACQUISITION

On July 8, 2016, a subsidiary of the Company completed the acquisition of substantially all of the assets and business of Lawrence Schiff Silk Mills, Inc. ("Schiff") for $1,125,000 in cash. Schiff was a leading U.S. manufacturer and distributor of narrow woven ribbon prior to its April 2016 Chapter 11 bankruptcy filing. The acquisition was accounted for using the acquisition method and resulted in a bargain purchase due to the fair value of the net assets acquired of approximately $1,501,000 exceeding the amount paid.

The following table summarizes the preliminary fair values of the net assets acquired at the date of acquisition (in thousands):

Inventory	$	865
Property, plant and equipment	350
Intangible assets	500
Total assets acquired	1,715
Deferred tax liability	(214		)
Net assets acquired	$	1,501

In connection with this bargain purchase, the Company recorded a gain of approximately $376,000 which is included in other (income) expense, net in the consolidated statements of operations in the quarter ended September 30, 2016.

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Share-Based Compensation

6 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

2013 Equity Compensation Plan

Under the terms of the Company’s 2013 Equity Compensation Plan (“2013 Plan”), the Company may grant incentive stock options, non-qualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees and non-employee directors. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at the discretion of the Company, but in no event greater than ten years from the date of grant, and at the date of grant the Company has discretion to determine the date or dates on which granted options become exercisable. Under the 2013 Plan, a committee of the Company's Board of Directors (the "Board") approves grants to officers and other employees, and the Board approves grants to non-employee directors. Service-based stock options outstanding as of September 30, 2016 become exercisable at the rate of 25% per year commencing one year after the date of grant. Market-based stock options outstanding as of September 30, 2016 become exercisable only if certain market conditions and service requirements are satisfied, and the date(s) on which they become exercisable will depend on the period in which such market conditions and service requirements are met, if at all, except that vesting and exercisability are accelerated upon a change of control. Outstanding service-based restricted stock units ("RSUs") granted to employees vest at the rate of 50% of the shares underlying the grant at each of the third and fourth anniversaries of the date on which the award was granted. Service-based RSUs granted to directors and outstanding as of September 30, 2016 vest on July 31, 2017. Market-based RSUs outstanding at September 30, 2016 will vest only if certain market conditions and service requirements have been met, and the date(s) on which they vest will depend on the period in which such market conditions and service requirements are met, if at all, except that vesting and redemption are accelerated upon a change of control. At September 30, 2016, there were 640,338 shares available for grant under the 2013 Plan.

The fair value of each stock option and market-based RSU granted under the above plan was estimated on the date of grant using either a Black-Scholes option pricing model (service-based awards) or a Monte Carlo simulation model (market-based awards) with the following average assumptions:

	Stock Options				RSUs
	Six Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	1.66	%	1.96	%	1.20	%	1.29	%
Volatility	35.12	%	36.90	%	33.08	%	36.86	%
Dividend yield	2.91	%	2.59	%	2.99	%	2.60	%
Expected life of option (in years)	4.75		4.75

The fair value of each service-based RSU granted to employees was estimated on the day of grant based on the closing price of the Company's common stock reduced by the present value of the expected dividend stream during the vesting period using the risk-free interest rate. The fair value of each service-based RSU granted to directors, for which dividend equivalents are paid upon vesting of the underlying awards, was estimated on the day of grant based on the closing price of the Company's common stock.

During the six months ended September 30, 2016 and 2015, the Company granted 151,350 and 134,100 stock options, respectively, with a weighted average fair value of $6.25 and $7.35, respectively. During the six months ended September 30, 2016 and 2015, the Company granted 66,602 and 44,100 RSUs, respectively, with a weighted average fair value of $21.47 and $18.46, respectively. As of September 30, 2016, there were 566,825 and 179,687 outstanding stock options and RSUs, respectively.

As of September 30, 2016, there was $1,727,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.9 years. As of September 30, 2016, there was $2,013,000 of total unrecognized compensation cost related to non-vested RSUs granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.2 years.

On August 11, 2015, the Company granted 10,000 RSUs to the new Chair of the Company's Board of Directors. The RSUs will become vested and convertible into a lump sum cash payment equal to the then fair market value of corresponding shares of common stock of the Company if, and only to the extent that, certain service-based vesting conditions and other terms and conditions are satisfied by August 15, 2017, or upon occurrence of a change of control. The RSUs are classified as liability awards because they will be paid in cash upon vesting. The RSU award liability is measured at its fair market value at the end of each reporting period and, therefore, will fluctuate based on the performance of the Company's stock. The total amount accrued related to this grant as of September 30, 2016 was $144,000 and is included in accrued payroll and other compensation in the condensed consolidated balance sheet. The total amount accrued related to this grant as of September 30, 2015 was $17,000 and is included in long-term obligations in the condensed consolidated balance sheet. During the six months ended September 30, 2016 and 2015, dividend equivalents of $4,000 and $2,000 were paid in cash related to this liability classified award and were charged to selling, general and administrative expenses.

Compensation cost related to stock options and RSUs (inclusive of the liability classified awards described above) recognized in operating results (included in selling, general and administrative expenses) was $307,000 and $410,000 in the quarters ended September 30, 2016 and 2015, respectively, and $749,000 and $867,000 in the six months ended September 30, 2016 and 2015, respectively.

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Derivative Financial Instruments

6 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations on sales denominated in a foreign currency. Derivatives are not used for trading or speculative activities. Firmly committed transactions and the related receivables may be hedged with forward exchange contracts. Gains and losses arising from foreign currency forward contracts are recorded in other (income) expense, net as offsets of gains and losses resulting from the underlying hedged transactions. A realized gain of $12,000 and $14,000 was recorded in the three- and six months ended September 30, 2016, respectively. A realized gain of $9,000 was recorded in the three- and six months ended September 30, 2015. As of September 30, 2016 and 2015, the notional amount of open foreign currency forward contracts was $1,564,000 and $1,656,000, respectively. The related unrealized gain was $14,000 and $97,000 at September 30, 2016 and 2015, respectively. The Company believes it does not have significant counterparty credit risks as of September 30, 2016.

The following table shows the fair value of the foreign currency forward contracts designated as hedging instruments and included in the Company’s condensed consolidated balance sheet (in thousands):

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2016		September 30, 2015
Foreign currency forward contracts	Other current assets	$	14	$	97

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Intangible Assets

6 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

INTANGIBLE ASSETS

On September 30, 2016, the Company sold a manufacturing facility that was acquired as part of the acquisition of substantially all of the assets and business of Blumenthal Lansing Company, LLC ("Blumenthal") on February 2, 2016. As the proceeds received from the sale of the building were in excess of the estimated fair value of the building recorded in the transaction, the Company recorded an adjustment to increase property, plant and equipment and reduce goodwill, in the amount of approximately $297,000, in order to properly reflect the fair value of the building as of the acquisition date.

The following table shows the change in goodwill for the six months ended September 30, 2016 (in thousands):

Balance at March 31, 2016	$	19,974
Decrease in goodwill - Blumenthal	(297		)
Balance at September 30, 2016	$	19,677

With the acquisition of substantially all of the assets and business of Schiff on July 8, 2016, the Company recorded intangible assets of $500,000 relating to customer lists which are being amortized over the estimated useful life of five years. Additionally, in an unrelated transaction, the Company recorded customer lists of $100,000 which were acquired during the second quarter of fiscal 2017 and are being amortized over two years.

The gross carrying amount and accumulated amortization of other intangible assets is as follows (in thousands):

	September 30, 2016				March 31, 2016				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	15,553	$	—	$	15,553	$	—	$	12,953	$	—
Customer relationships	39,757		14,940		39,157		13,444		29,957		12,183
Patents	1,164		767		1,164		708		1,164		650
Trademarks	403		348		403		333		403		318
Non-compete	530		192		530		139		530		86
	$	57,407	$	16,247	$	56,807	$	14,624	$	45,007	$	13,237

Amortization expense related to intangible assets was $820,000 and $639,000 for the quarters ended September 30, 2016 and 2015, respectively, and was $1,623,000 and $1,278,000 for the six months ended September 30, 2016 and 2015. Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2017 and each of the succeeding four years is projected to be as follows (in thousands):

Remainder of fiscal 2017	$	1,681
Fiscal 2018	3,362
Fiscal 2019	3,305
Fiscal 2020	3,244
Fiscal 2021	3,056

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Treasury Stock Transactions

6 Months Ended

Sep. 30, 2016

Equity [Abstract]

Treasury Stock Transactions

TREASURY STOCK TRANSACTIONS

Under a stock repurchase program authorized by the Company's Board, the Company repurchased 352,789 shares of the Company’s common stock for approximately $10,000,000 during the six months ended September 30, 2015. There were no repurchases of the Company's common stock by the Company during the six months ended September 30, 2016. As of September 30, 2016, the Company had 303,166 shares remaining available for repurchase under the Board’s authorizations.

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

CSS and its subsidiaries are involved in ordinary, routine legal proceedings that are not considered by management to be material. In the opinion of Company counsel and management, the ultimate liabilities resulting from such legal proceedings will not materially affect the consolidated financial position of the Company or its results of operations or cash flows.

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Fair Value Measurements

6 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The Company uses certain derivative financial instruments as part of its risk management strategy to reduce foreign currency risk. The Company recorded all derivatives on the condensed consolidated balance sheet at fair value based on quotes obtained from financial institutions as of September 30, 2016.

The Company maintains a Nonqualified Supplemental Executive Retirement Plan ("SERP") for qualified employees and invests assets to mirror the obligations under this Plan. The invested funds are maintained at a third party financial institution in the name of CSS and are invested in publicly traded mutual funds. There have been no contributions provided under the SERP since fiscal 2007 and there are four employees who maintain account balances as of September 30, 2016. The Company maintains separate accounts for each participant to reflect deferred contribution amounts and the related gains or losses on such deferred amounts. The investments are included in other current assets and the related liability is recorded as deferred compensation and included in long-term obligations in the condensed consolidated balance sheet. The fair value of the investments is based on the market price of the mutual funds as of September 30, 2016.

The Company maintains two life insurance policies in connection with deferred compensation arrangements with two former executives. The cash surrender value of the policies is recorded in other long-term assets in the condensed consolidated balance sheets and is based on quotes obtained from the insurance company as of September 30, 2016.

To increase consistency and comparability in fair value measurements, the Financial Accounting Standards Board ("FASB") established a fair value hierarchy that prioritizes the inputs to valuation techniques into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The Company’s recurring assets and liabilities recorded on the condensed consolidated balance sheet are categorized based on the inputs to the valuation techniques as follows:

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Examples of Level 2 inputs include quoted prices for identical or similar assets or liabilities in non-active markets and pricing models whose inputs are observable for substantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2016 and March 31, 2016 (in thousands):

			Fair Value Measurements at September 30, 2016 Using
	September 30, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	296	$	296	$	—	$	—
Foreign exchange contracts	14		—		14		—
Cash surrender value of life insurance policies	1,166		—		1,166		—
Total assets	$	1,476	$	296	$	1,180	$	—
Liabilities
Deferred compensation plans	$	296	$	296	$	—	$	—
Total liabilities	$	296	$	296	$	—	$	—

			Fair Value Measurements at March 31, 2016 Using
	March 31, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	278	$	278	$	—	$	—
Cash surrender value of life insurance policies	1,153		—		1,153		—
Total assets	$	1,431	$	278	$	1,153	$	—
Liabilities
Deferred compensation plans	$	278	$	278	$	—	$	—
Total liabilities	$	278	$	278	$	—	$	—

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value in the condensed consolidated balance sheets as such amounts are a reasonable estimate of their fair values due to the short-term nature of these instruments. Short-term investments included held-to-maturity securities that were recorded at amortized cost, which approximates fair value (Level 2), because their short-term maturity results in the interest rates on these securities approximating current market interest rates.

Nonrecurring Fair Value Measurements

The Company’s nonfinancial assets which are measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangible assets and certain other assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. In making the assessment of impairment, recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to future net cash flows estimated by the Company to be generated by such assets. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are recorded at the lower of their carrying value or estimated net realizable value.

As discussed in Note 2, the Company acquired substantially all of the assets and business of Schiff on July 8, 2016 and determined that the aggregate preliminary fair value of acquired intangible assets, consisting of customer relationships, was $500,000. The Company estimated the fair value of the acquired intangible assets using discounted cash flow techniques which included an estimate of future cash flows discounted to present value with an appropriate risk-adjusted discount rate (Level 3). As discussed in Note 5, the Company acquired certain customer lists in the amount of $100,000 during the second quarter of fiscal 2016. The Company estimated the fair value of the acquired customer lists as the amount paid to acquire such customer lists (Level 2).

Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if events or circumstances indicate a condition of impairment may exist. Impairment testing is conducted through valuation methods that are based on assumptions for matters such as interest and discount rates, growth projections and other future business conditions (Level 3). These valuation methods require a significant degree of management judgment concerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fair value as determined by the valuation models. As of September 30, 2016, the Company believes that no impairments exist.

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Recent Accounting Pronouncements

6 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies and provides guidance on eight cash flow classification issues and is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either liability or equity, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 requires lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements, with certain practical expedients available. The standard also requires certain quantitative and qualitative disclosures. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"), which requires entities to present all deferred tax liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The Company adopted ASU 2015-17 on a retrospective basis in the fourth quarter of fiscal 2016. The adoption of ASU 2015-17 resulted in a $4,652,000 reduction in current deferred tax assets, a $4,413,000 increase in noncurrent deferred tax assets, and a $239,000 reduction in noncurrent deferred tax liabilities as of September 30, 2015.

In September 2015, the FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. This guidance was effective for the Company beginning April 1, 2016 and will be applied prospectively to adjustments arising after that date. There was no impact of adopting this standard at the date of adoption.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"). ASU 2015-11 amends the guidelines for the measurement of inventory from lower of cost or market to the lower of cost and net realizable value (NRV). NRV is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Under existing standards, inventory is measured at lower of cost or market, which requires the consideration of replacement cost, NRV and NRV less an amount that approximates a normal profit margin. This ASU eliminates the requirement to determine and consider replacement cost or NRV less a normal profit margin for inventory measurement. The new standard is effective prospectively for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the effect that ASU 2015-11 will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard also requires expanded disclosures regarding the qualitative and quantitative information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for fiscal years beginning after December 15, 2016. The standard permits the use of either a full retrospective or a modified retrospective approach. The Company is evaluating the method by which it will adopt ASU 2014-09 and the impact it will have on its consolidated financial statements and related disclosures.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2017” refers to the fiscal year ending March 31, 2017.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.

Nature of Business

Nature of Business

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of all occasion and seasonal social expression products, principally to mass market retailers. These all occasion and seasonal products include decorative ribbons and bows, classroom exchange Valentines, infant products, journals, buttons, boxed greeting cards, gift tags, gift card holders, gift bags, gift wrap, decorations, floral accessories, craft and educational products, Easter egg dyes and novelties, memory books, scrapbooks, stickers, stationery, and other items that commemorate life’s celebrations. The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively higher sales levels and operating profits in the second and third quarters of the Company’s fiscal year, which ends March 31, thereby causing significant fluctuations in the quarterly results of operations of the Company.

The Company's principal operating subsidiaries include Berwick Offray LLC ("Berwick Offray"), Paper Magic Group, Inc. ("Paper Magic") and C.R. Gibson, LLC ("C.R. Gibson").

Reclassification

Reclassification

Certain prior period amounts have been reclassified to conform with the current year classification.

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

Translation adjustments are charged or credited to a separate component of stockholders’ equity. Gains and losses on foreign currency transactions are not material and are included in other (income) expense, net in the consolidated statements of operations.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Judgments and assessments of uncertainties are required in applying the Company’s accounting policies in many areas. Such estimates pertain to revenue recognition, the valuation of inventory and accounts receivable, the assessment of the recoverability of goodwill and other intangible and long-lived assets, income tax accounting, the valuation of share-based awards and resolution of litigation and other proceedings. Actual results could differ from these estimates.

Short-Term Investments

Short-Term Investments

The Company categorized and accounted for its short-term investment holdings as held-to-maturity securities. This categorization was based upon the Company's positive intent and ability to hold these securities until maturity. There were no short-term investments at September 30, 2016. Short-term investments at March 31, 2016 consisted of commercial paper with an amortized cost of $59,806,000 and matured in the first half of fiscal 2017. Short-term investments at September 30, 2015 consisted of commercial paper with an amortized cost of $24,929,000 and matured in fiscal 2016. Held-to-maturity securities are recorded at amortized cost which approximated fair value at March 31, 2016 and September 30, 2015.

Inventories

Inventories

The Company records inventory when title is transferred, which occurs upon receipt or prior to receipt dependent on supplier shipping terms. The Company adjusts unsaleable and slow-moving inventory to its estimated net realizable value. Substantially all of the Company’s inventories are stated at the lower of first-in, first-out (FIFO) cost or market. The remaining portion of the inventory is valued at the lower of last-in, first-out (LIFO) cost or market.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include the following (in thousands):

	September 30, 2016			March 31, 2016			September 30, 2015
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements	34,612			34,317			33,754
Machinery, equipment and other	89,630			87,675			86,722
	126,750			124,500			122,984
Less - Accumulated depreciation and amortization	(99,546		)	(97,447		)	(97,215		)
Net property, plant and equipment	$	27,204		$	27,053		$	25,769

Depreciation expense was $1,290,000 and $1,419,000 for the quarters ended September 30, 2016 and 2015, respectively, and was $2,647,000 and $2,824,000 for the six months ended September 30, 2016 and 2015, respectively.

Long-Lived Assets including Goodwill and Other Intangible Assets

Long-Lived Assets including Goodwill and Other Intangible Assets

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscal year. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangibles might be impaired. During the six months ended September 30, 2016, there were no such events or circumstances.

The Company uses a dual approach to determine the fair value of its reporting units, including both a market approach and an income approach. The Company believes the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported.

Other indefinite-lived intangible assets consist primarily of tradenames, which are also required to be tested annually for impairment. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite-lived intangible assets, are reviewed for impairment when events or circumstances indicate the carrying value of an asset group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the six months ended September 30, 2016, there were no such events or circumstances. See Note 5 for further information on other intangible assets.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.

The Company recognizes the impact of an uncertain tax position if it is more likely than not that such position will be sustained on audit, based solely on the technical merits of the position.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue from product sales when the goods are shipped, title and risk of loss have been transferred to the customer and collection is reasonably assured. Provisions for returns, allowances, rebates to customers and other adjustments are provided in the same period that the related sales are recorded.

Net Income Per Common Share

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2016 and 2015 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income	$	6,992	$	11,229	$	3,706	$	8,161
Denominator:
Weighted average shares outstanding for basic net income per common share	9,076		9,148		9,065		9,245
Effect of dilutive stock options	31		89		46		100
Adjusted weighted average shares outstanding for diluted net income per common share	9,107		9,237		9,111		9,345
Basic net income per common share	$	0.77	$	1.23	$	0.41	$	0.88
Diluted net income per common share	$	0.77	$	1.22	$	0.41	$	0.87

The Company has excluded 508,000 shares and 258,000 shares, consisting of outstanding stock options and unearned restricted stock units, in computing diluted net income per common share for the three- and six months ended September 30, 2016 and 2015, respectively, because their effects were antidilutive.

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2016, the FASB issued Accounting Standards Update ("ASU") 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"). ASU 2016-15 clarifies and provides guidance on eight cash flow classification issues and is intended to reduce existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either liability or equity, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-09 will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). ASU 2016-02 requires lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements, with certain practical expedients available. The standard also requires certain quantitative and qualitative disclosures. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"), which requires entities to present all deferred tax liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The Company adopted ASU 2015-17 on a retrospective basis in the fourth quarter of fiscal 2016. The adoption of ASU 2015-17 resulted in a $4,652,000 reduction in current deferred tax assets, a $4,413,000 increase in noncurrent deferred tax assets, and a $239,000 reduction in noncurrent deferred tax liabilities as of September 30, 2015.

In September 2015, the FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. This guidance was effective for the Company beginning April 1, 2016 and will be applied prospectively to adjustments arising after that date. There was no impact of adopting this standard at the date of adoption.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory" ("ASU 2015-11"). ASU 2015-11 amends the guidelines for the measurement of inventory from lower of cost or market to the lower of cost and net realizable value (NRV). NRV is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Under existing standards, inventory is measured at lower of cost or market, which requires the consideration of replacement cost, NRV and NRV less an amount that approximates a normal profit margin. This ASU eliminates the requirement to determine and consider replacement cost or NRV less a normal profit margin for inventory measurement. The new standard is effective prospectively for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the effect that ASU 2015-11 will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 provides a single model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard also requires expanded disclosures regarding the qualitative and quantitative information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted for fiscal years beginning after December 15, 2016. The standard permits the use of either a full retrospective or a modified retrospective approach. The Company is evaluating the method by which it will adopt ASU 2014-09 and the impact it will have on its consolidated financial statements and related disclosures.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Inventories

Inventories consisted of the following (in thousands):

	September 30, 2016		March 31, 2016		September 30, 2015
Raw material	$	10,919	$	11,392	$	11,376
Work-in-process	14,474		17,745		13,603
Finished goods	68,308		43,885		54,286
	$	93,701	$	73,022	$	79,265

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include the following (in thousands):

	September 30, 2016			March 31, 2016			September 30, 2015
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements	34,612			34,317			33,754
Machinery, equipment and other	89,630			87,675			86,722
	126,750			124,500			122,984
Less - Accumulated depreciation and amortization	(99,546		)	(97,447		)	(97,215		)
Net property, plant and equipment	$	27,204		$	27,053		$	25,769

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2016 and 2015 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Numerator:
Net income	$	6,992	$	11,229	$	3,706	$	8,161
Denominator:
Weighted average shares outstanding for basic net income per common share	9,076		9,148		9,065		9,245
Effect of dilutive stock options	31		89		46		100
Adjusted weighted average shares outstanding for diluted net income per common share	9,107		9,237		9,111		9,345
Basic net income per common share	$	0.77	$	1.23	$	0.41	$	0.88
Diluted net income per common share	$	0.77	$	1.22	$	0.41	$	0.87

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Business Acquisition (Tables)

6 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Schedule of the estimated fair values of assets acquired

The following table summarizes the preliminary fair values of the net assets acquired at the date of acquisition (in thousands):

Inventory	$	865
Property, plant and equipment	350
Intangible assets	500
Total assets acquired	1,715
Deferred tax liability	(214		)
Net assets acquired	$	1,501

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Share-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Fair Value of Each Stock Option Granted Using Monte Carlo Simulation Model

The fair value of each stock option and market-based RSU granted under the above plan was estimated on the date of grant using either a Black-Scholes option pricing model (service-based awards) or a Monte Carlo simulation model (market-based awards) with the following average assumptions:

	Stock Options				RSUs
	Six Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Risk-free interest rate	1.66	%	1.96	%	1.20	%	1.29	%
Volatility	35.12	%	36.90	%	33.08	%	36.86	%
Dividend yield	2.91	%	2.59	%	2.99	%	2.60	%
Expected life of option (in years)	4.75		4.75

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Derivative Financial Instruments (Tables)

6 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments

The following table shows the fair value of the foreign currency forward contracts designated as hedging instruments and included in the Company’s condensed consolidated balance sheet (in thousands):

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2016		September 30, 2015
Foreign currency forward contracts	Other current assets	$	14	$	97

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Intangible Assets (Tables)

6 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table shows the change in goodwill for the six months ended September 30, 2016 (in thousands):

Balance at March 31, 2016	$	19,974
Decrease in goodwill - Blumenthal	(297		)
Balance at September 30, 2016	$	19,677

Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets

The gross carrying amount and accumulated amortization of other intangible assets is as follows (in thousands):

	September 30, 2016				March 31, 2016				September 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	15,553	$	—	$	15,553	$	—	$	12,953	$	—
Customer relationships	39,757		14,940		39,157		13,444		29,957		12,183
Patents	1,164		767		1,164		708		1,164		650
Trademarks	403		348		403		333		403		318
Non-compete	530		192		530		139		530		86
	$	57,407	$	16,247	$	56,807	$	14,624	$	45,007	$	13,237

Schedule of Future Amortization Expense

Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2017 and each of the succeeding four years is projected to be as follows (in thousands):

Remainder of fiscal 2017	$	1,681
Fiscal 2018	3,362
Fiscal 2019	3,305
Fiscal 2020	3,244
Fiscal 2021	3,056

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2016 and March 31, 2016 (in thousands):

			Fair Value Measurements at September 30, 2016 Using
	September 30, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	296	$	296	$	—	$	—
Foreign exchange contracts	14		—		14		—
Cash surrender value of life insurance policies	1,166		—		1,166		—
Total assets	$	1,476	$	296	$	1,180	$	—
Liabilities
Deferred compensation plans	$	296	$	296	$	—	$	—
Total liabilities	$	296	$	296	$	—	$	—

			Fair Value Measurements at March 31, 2016 Using
	March 31, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	278	$	278	$	—	$	—
Cash surrender value of life insurance policies	1,153		—		1,153		—
Total assets	$	1,431	$	278	$	1,153	$	—
Liabilities
Deferred compensation plans	$	278	$	278	$	—	$	—
Total liabilities	$	278	$	278	$	—	$	—

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Net Investment Income [Line Items]
Held-to-maturity short-term investments	$ 0	$ 24,929	$ 0	$ 24,929	$ 59,806
Depreciation expense	$ 1,290	$ 1,419	$ 2,647	$ 2,824
Effective antidilutive securities excluded from computation of net income per share (in shares)	508	258	570,000	258,000
Commercial Paper [Member]
Net Investment Income [Line Items]
Held-to-maturity short-term investments		$ 24,929		$ 24,929	$ 59,806

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Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Inventory Disclosure [Abstract]
Raw material	$ 10,919	$ 11,392	$ 11,376
Work-in-process	14,474	17,745	13,603
Finished goods	68,308	43,885	54,286
Inventory, net	$ 93,701	$ 73,022	$ 79,265

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Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 126,750	$ 124,500	$ 122,984
Less - Accumulated depreciation and amortization	(99,546)	(97,447)	(97,215)
Net property, plant and equipment	27,204	27,053	25,769
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	2,508	2,508	2,508
Buildings, Leasehold Interests and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	34,612	34,317	33,754
Machinery, Equipment and Other [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 89,630	$ 87,675	$ 86,722

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Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income	$ 6,992	$ 11,229	$ 3,706	$ 8,161
Denominator:
Weighted average shares outstanding for basic net income per common share (in shares)	9,076	9,148	9,065	9,245
Effect of dilutive stock options (in shares)	31	89	46	100
Adjusted weighted average shares outstanding for diluted net income per common share (in shares)	9,107	9,237	9,111	9,345
Basic net income per common share (in dollars per share)	$ 0.77	$ 1.23	$ 0.41	$ 0.88
Diluted net income per common share (in dollars per share)	$ 0.77	$ 1.22	$ 0.41	$ 0.87

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Business Acquisition - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Jul. 08, 2016	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Payments to acquire business			$ 1,125	$ 0
Gain on bargain purchase			$ 376	$ 0
Lawrence Schiff Silk Mills, Inc. [Member]
Business Acquisition [Line Items]
Payments to acquire business	$ 1,125
Fair value of net assets acquired	$ 1,501
Lawrence Schiff Silk Mills, Inc. [Member] | Other Income (Expense), Net [Member]
Business Acquisition [Line Items]
Gain on bargain purchase		$ 376

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Business Acquisition - Fair Value of Assets Acquired (Details) - Lawrence Schiff Silk Mills, Inc. [Member] $ in Thousands	Jul. 08, 2016 USD ($)
Business Acquisition [Line Items]
Inventory	$ 865
Property, plant and equipment	350
Intangible assets	500
Total assets acquired	1,715
Deferred tax liability	(214)
Net assets acquired	$ 1,501

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Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Aug. 11, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long-term obligations		$ 4,590	$ 4,295	$ 4,590	$ 4,295	$ 4,631
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost related to stock options and RSUs recognized		$ 307	$ 410	$ 749	$ 867
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted during the period (in shares)				151,350	134,100
Weighted average fair value of stock options granted (in dollars per share)				$ 6.25	$ 7.35
Stock options outstanding (in shares)		566,825		566,825
Total unrecognized compensation cost related to non-vested stock option awards		$ 1,727		$ 1,727
Equity incentive plan, weighted average recognition period (in years)				2 years 10 months 25 days
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted during the period (in shares)				66,602	44,100
Weighted average fair value of restricted stock granted (in dollars per share)				$ 21.47	$ 18.46
RSUs outstanding (in shares)		179,687		179,687
Equity incentive plan, weighted average recognition period (in years)				2 years 2 months 15 days
Total unrecognized compensation cost related to non-vested RSUs		$ 2,013		$ 2,013
Restricted Stock Units (RSUs) [Member] | Board of Directors Chairman [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted during the period (in shares)	10,000
Accrued payroll and other compensation		144		144
Long-term obligations		$ 17		17
Dividend equivalent units paid				$ 4	$ 2
2013 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of grant (in years)				10 years
Shares available for grant (in shares)		640,338		640,338
2013 Equity Compensation Plan [Member] | Service-Based Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate percentage				25.00%
Award service period (in years)				1 year
Third Anniversary [Member] | 2013 Equity Compensation Plan [Member] | Service-Based RSUs [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate percentage				50.00%
Fourth Anniversary [Member] | 2013 Equity Compensation Plan [Member] | Service-Based RSUs [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate percentage				50.00%

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Share-Based Compensation - Schedule of Fair Value of Each Stock Option Granted Using Monte Carlo Simulation Model (Details)	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.66%	1.96%
Volatility	35.12%	36.90%
Dividend yield	2.91%	2.59%
Expected life of option (in years)	4 years 9 months	4 years 9 months
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.20%	1.29%
Volatility	33.08%	36.86%
Dividend yield	2.99%	2.60%

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Derivative Financial Instruments - Additional Information (Details) - Designated as Hedging Instrument [Member] - Foreign Exchange Forward [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Derivative [Line Items]
Realized gain from foreign currency forward contracts	$ 12	$ 9	$ 14	$ 9
Notional amount of derivative contracts	$ 1,564	$ 1,656	1,564	1,656
Foreign currency forward contracts, unrealized gain			$ 14	$ 97

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Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	$ 14	$ 97

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Intangible Assets - Goodwill (Details) $ in Thousands	6 Months Ended
	Sep. 30, 2016 USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 19,974
Decrease in goodwill - Blumenthal	(297)
Ending Balance	$ 19,677

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Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jul. 08, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Decrease in goodwill				$ 297
Amortization expense related to intangible assets		$ 820	$ 639	1,623	$ 1,278
Customer Lists [Member]
Business Acquisition [Line Items]
Finite lived assets acquired		$ 100		100
Finite lived assets useful life (in years)		2 years
Blumenthal Lansing Company, LLC [Member]
Business Acquisition [Line Items]
Decrease in goodwill				$ 297
Lawrence Schiff Silk Mills, Inc. [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 500
Lawrence Schiff Silk Mills, Inc. [Member] | Customer Lists [Member]
Business Acquisition [Line Items]
Finite lived assets acquired	$ 500
Finite lived assets useful life (in years)	5 years

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Intangible Assets - Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 57,407	$ 56,807	$ 45,007
Accumulated Amortization	16,247	14,624	13,237
Tradenames and Trademarks [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Gross Carrying Amount	15,553	15,553	12,953
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	39,757	39,157	29,957
Accumulated Amortization	14,940	13,444	12,183
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,164	1,164	1,164
Accumulated Amortization	767	708	650
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	403	403	403
Accumulated Amortization	348	333	318
Non-compete [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	530	530	530
Accumulated Amortization	$ 192	$ 139	$ 86

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Intangible Assets - Schedule of Future Amortization Expense (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of fiscal 2017	$ 1,681
Fiscal 2018	3,362
Fiscal 2019	3,305
Fiscal 2020	3,244
Fiscal 2021	$ 3,056

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Treasury Stock Transactions (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Equity [Abstract]
Number of shares repurchased of the Company's common stock (in shares)	0	352,789
Value of shares repurchased of the Company's common stock		$ 10,000
Remaining shares available for repurchase under the Board's authorization (in shares)	303,166

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Fair Value Measurements - Additional Information (Details) $ in Thousands	Sep. 30, 2016 USD ($) executive employee InsurancePolicy	Jul. 08, 2016 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of employees with SERP account balances | employee	4
Recurring Fair Value Measurements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of life insurance policies | InsurancePolicy	2
Number of former executives | executive	2
Lawrence Schiff Silk Mills, Inc. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Intangible assets acquired		$ 500
Customer Lists [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite lived assets acquired	$ 100
Customer Lists [Member] | Lawrence Schiff Silk Mills, Inc. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite lived assets acquired		$ 500

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Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring Fair Value Measurements [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Mar. 31, 2016
Assets
Total assets	$ 1,476	$ 1,431
Liabilities
Total liabilities	296	278
Deferred Compensation Plans [Member]
Liabilities
Total liabilities	296	278
Marketable Securities [Member]
Assets
Total assets	296	278
Foreign Exchange Contracts [Member]
Assets
Total assets	14
Cash Surrender Value of Life Insurance Policies [Member]
Assets
Total assets	1,166	1,153
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets
Total assets	296	278
Liabilities
Total liabilities	296	278
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Deferred Compensation Plans [Member]
Liabilities
Total liabilities	296	278
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Marketable Securities [Member]
Assets
Total assets	296	278
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Foreign Exchange Contracts [Member]
Assets
Total assets	0
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Total assets	0	0
Significant Other Observable Inputs (Level 2) [Member]
Assets
Total assets	1,180	1,153
Liabilities
Total liabilities	0	0
Significant Other Observable Inputs (Level 2) [Member] | Deferred Compensation Plans [Member]
Liabilities
Total liabilities	0	0
Significant Other Observable Inputs (Level 2) [Member] | Marketable Securities [Member]
Assets
Total assets	0	0
Significant Other Observable Inputs (Level 2) [Member] | Foreign Exchange Contracts [Member]
Assets
Total assets	14
Significant Other Observable Inputs (Level 2) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Total assets	1,166	1,153
Significant Unobservable Inputs (Level 3) [Member]
Assets
Total assets	0	0
Liabilities
Total liabilities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Deferred Compensation Plans [Member]
Liabilities
Total liabilities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Marketable Securities [Member]
Assets
Total assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | Foreign Exchange Contracts [Member]
Assets
Total assets	0
Significant Unobservable Inputs (Level 3) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Total assets	$ 0	$ 0

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Recent Accounting Pronouncements (Details) - Accounting Standards Update 2015-07 [Member] $ in Thousands	Sep. 30, 2015 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reduction in current deferred tax assets	$ 4,652
Increase in noncurrent deferred tax assets	4,413
Reduction in noncurrent deferred tax liabilities	$ 239