10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C.
20549

FORM 10-Q

For the Quarter Ended
December 31, 2004 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 number)
1845 Walnut Street, Philadelphia, PA	19103
(Address of principal executive offices)	(Zip Code)

(215) 569-9900

(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.

Yes                                No  

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes                                No  

As of January 25, 2005, there were 11,977,799 shares of common stock outstanding which excludes shares which may still be issued upon exercise of stock options.

CSS INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

	PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations and Comprehensive Income – Three and nine months ended December 31, 2004 and 2003	3
Condensed Consolidated Balance Sheets - December 31, 2004 and March 31, 2004	4
Consolidated Statements of Cash Flows - Nine months ended December 31, 2004 and 2003	5
Notes to Consolidated Financial Statements	6-15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-20
Item 3. Quantitive and Qualitative Disclosures About Market Risk	20
Item 4. Controls and Procedures	20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	21-22
Item 6. Exhibits	22
Signatures	23

Page 2 of 24

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended December 31,					Nine Months Ended December 31,
(In thousands, except per share data)	2004			2003		2004			2003
SALES	$	247,169		$	247,394	$	478,435		$	484,846
COSTS AND EXPENSES
Cost of sales		184,656			176,443		353,270			350,718
Selling, general and administrative expenses		24,221			27,048		68,984			73,036
Interest expense, net		906			1,185		2,032			2,874
Other expense (income), net		49			192		(643	)		(310	)
		209,832			204,868		423,643			426,318
INCOME BEFORE INCOME TAXES		37,337			42,526		54,792			58,528
INCOME TAX EXPENSE		13,366			15,129		19,615			20,954
NET INCOME	$	23,971		$	27,397	$	35,177		$	37,574
NET INCOME PER COMMON SHARE
Basic	$	2.01		$	2.31	$	2.95		$	3.20
Diluted	$	1.91		$	2.18	$	2.79		$	3.05
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		11,952			11,841		11,929			11,730
Diluted		12,523			12,592		12,607			12,335
CASH DIVIDENDS PER SHARE OF COMMON STOCK	$	.10		$	.08	$	.30		$	.227
COMPREHENSIVE INCOME
Net income	$	23,971		$	27,397	$	35,177		$	37,574
Change in fair value of interest rate swap agreements, net		—			149		—			269
Foreign currency translation adjustment		(8	)		—		(3	)		17
Comprehensive income	$	23,963		$	27,546	$	35,174		$	37,860

See notes to consolidated financial statements.

Page 3 of 24

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)	December 31, 2004		March 31, 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	18,845	$	93,191
Accounts receivable, net		214,715		40,460
Inventories		81,652		94,459
Deferred income taxes		7,491		7,937
Other current assets		13,719		12,987
Total current assets		336,422		249,034
PROPERTY, PLANT AND EQUIPMENT, NET		77,681		81,193
OTHER ASSETS
Intangible assets, net		35,506		35,619
Other		4,852		4,551
Total other assets		40,358		40,170
Total assets	$	454,461	$	370,397
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Notes payable	$	19,000	$	—
Current portion of long-term debt		10,000		—
Other current liabilities		95,609		61,221
Total current liabilities		124,609		61,221
LONG-TERM DEBT, NET OF CURRENT PORTION		40,000		50,251
LONG-TERM OBLIGATIONS		3,602		3,631
DEFERRED INCOME TAXES		6,451		6,142
STOCKHOLDERS’ EQUITY		279,799		249,152
Total liabilities and stockholders’ equity	$	454,461	$	370,397

See notes to consolidated financial statements.

Page 4 of 24

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended December 31,
(In thousands)	2004			2003
Cash flows from operating activities:
Net income	$	35,177		$	37,574
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization		10,451			10,252
Provision for doubtful accounts		260			917
Deferred tax provision		755			439
(Gain) loss on sale of assets		(120	)		255
Compensation expense related to stock options		165			—
Changes in assets and liabilities:
Increase in accounts receivable		(174,515	)		(168,711	)
Decrease in inventory		12,807			28,230
Increase in other assets		(1,133	)		(662	)
Increase in other current liabilities		36,109			28,663
Total adjustments		(115,221	)		(100,617	)
Net cash (used for) operating activities		(80,044	)		(63,043	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(6,905	)		(10,551	)
Proceed from sale of assets		223			3,702
Net cash (used for) investing activities		(6,682	)		(6,849	)
Cash flows from financing activities:
Payments on long-term obligations		(49	)		(172	)
Borrowings on notes payable		141,745			188,795
Repayments on notes payable		(122,745	)		(159,815	)
Dividends paid		(4,778	)		(2,668	)
Payment of fractional shares related to 3 for 2 stock split		—			(2	)
Purchase of treasury stock		(6,815	)		—
Proceeds from exercise of stock options		5,025			3,914
Net cash provided by financing activities		12,383			30,052
Effect of exchange rate changes on cash		(3	)		17
Net (decrease) in cash and cash equivalents		(74,346	)		(39,823	)
Cash and cash equivalents at beginning of period		93,191			51,981
Cash and cash equivalents at end of period	$	18,845		$	12,158

See notes to consolidated financial statements.

Page 5 of 24

CSS INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004

(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 financial statements should be read in conjunction with the financial statements and notes thereto included in the latest Annual Report on Form 10-K.  The results of operations for the interim periods are not necessarily indicative of the results for the full year.
	Principles of Consolidation -
	The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.
	Nature of Business -
	CSS is a consumer products company primarily engaged in the design, manufacture and sale to mass market retailers of seasonal, social expression products, including gift wrap, gift bags, boxed greeting cards, gift tags, tissue paper, paper and vinyl decorations, classroom exchange Valentines, decorative ribbons and bows, Halloween masks, costumes, make-ups and novelties, Easter egg dyes and novelties and educational products.  The seasonal nature of CSS’ business results in low sales and operating losses in the first and fourth quarters and high shipment 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.
	Reclassification -
	Certain prior period amounts have been reclassified to conform with the current period presentation.
	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 expense (income), net in the consolidated statements of operations.

Page 6 of 24

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 the valuation of inventory and accounts receivable, the assessment of the recoverability of goodwill and other intangible assets, income tax accounting and resolution of litigation and proceedings regarding the possible imposition of duties on tissue products. Actual results could differ from those estimates.

Inventories -

The Company records inventory at the date of taking title which generally occurs upon receipt or prior to receipt with regard to in-transit inventory of overseas product.  The Company adjusts unsaleable and slow-moving inventory to its 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):

	December 31, 2004		March 31, 2004
Raw material	$	23,687	$	17,878
Work-in-process		19,168		27,363
Finished goods		38,797		49,218
	$	81,652	$	94,459

Revenue Recognition -

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

Stock-Based Compensation -

The Company applies Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plans. Accordingly, compensation expense is generally not recognized for its stock-based compensation plans.  Had compensation expense for the Company’s stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” the Company’s net income and net income per share would have been decreased as follows:

Page 7 of 24

	Three Months Ended December 31,						Nine Months Ended December 31,
(in thousands, except per share data)	2004			2003			2004			2003
Net income, as reported	$	23,971		$	27,397		$	35,177		$	37,574
Add: Total stock-based employee compensation expense included in the determination of net income, as reported		—			—			165			—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(746	)		(567	)		(2,040	)		(1,702	)
Pro forma net income	$	23,225		$	26,830		$	33,302		$	35,872
Net income per share:
Basic - as reported	$	2.01		$	2.31		$	2.95		$	3.20
Basic - pro forma	$	1.94		$	2.27		$	2.79		$	3.06
Diluted - as reported	$	1.91		$	2.18		$	2.79		$	3.05
Diluted - pro forma	$	1.87		$	2.12		$	2.65		$	2.93

Net Income Per Common Share -

The following table sets forth the computation of basic net income per common share and diluted net income per common share for the three and nine months ended December 31, 2004 and 2003 (in thousands, except per share data):

	Three Months Ended December 31,				Nine Months Ended December 31,
	2004		2003		2004		2003
Numerator:
Net income	$	23,971	$	27,397	$	35,177	$	37,574
Denominator:
Weighted average shares outstanding for basic income per common share		11,952		11,841		11,929		11,730
Effect of dilutive stock options		571		751		678		605
Adjusted weighted average shares outstanding for diluted income per common share		12,523		12,592		12,607		12,335
Basic net income per common share	$	2.01	$	2.31	$	2.95	$	3.20
Diluted net income per common share	$	1.91	$	2.18	$	2.79	$	3.05

Statements of Cash Flows -

For purposes of the consolidated statements of cash flows, the Company considers all holdings of highly liquid debt instruments with a purchased maturity of less than three months to be cash equivalents.

Page 8 of 24

(2)	DERIVATIVE FINANCIAL INSTRUMENTS:
	The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations.  Firmly committed transactions and the related receivables and payables may be hedged with foreign currency forward contracts.  Gains and losses arising from foreign currency forward contracts are recognized in income or expense as offsets of gains and losses resulting from the underlying hedged transactions.  As of December 31, 2004, the notional amount of open foreign currency forward contracts was $20,799,000 and the related loss was $1,453,000.
	In 2001, the Company entered into interest rate swap agreements, with maturities through January 2004, to manage its exposure to interest rate movements by effectively converting a portion of its anticipated working capital debt from variable to fixed rates.  These agreements involved the Company receiving variable rate payments in exchange for fixed rate payments without the effect of leverage and without the exchange of the underlying face amount.  Variable rate payments were based on one month U.S. dollar LIBOR.  There were no interest rate swap contracts outstanding during the quarter or nine months ended December 31, 2004.  During the quarter and nine months ended December 31, 2003, interest rate differentials paid under these agreements were recognized as adjustments to interest expense and amounted to $235,000 and $435,000, respectively.
(3)	BUSINESS ACQUISITIONS AND DIVESTITURES:
	Crystal Creative Products, Inc.
	On October 18, 2002, a subsidiary of the Company acquired all of the capital stock of Crystal Creative Products, Inc. (“Crystal”) for $22,891,000, including transaction costs, and assumed and repaid $18,828,000 of outstanding debt (primarily seasonal working capital debt).  During fiscal 2004, the Company received cash of approximately $2,155,000 in satisfaction of a post closing adjustment to the purchase price.  Crystal, headquartered in Middletown, Ohio, was a leading designer, manufacturer and distributor of consumer convenience gift wrap products and competed in the seasonal end of the gift bag and tissue markets with the Company’s existing product lines.  At the time of acquisition, its product lines included gift tissue, gift bags, and related packaging products for the consumer market, as well as specialty tissues for in-store packaging of retailers and for industrial applications.  A portion of the purchase price is being held in escrow for certain indemnification obligations.  The acquisition was accounted for as a purchase and the excess of cost over the fair market value of the net tangible assets acquired of $9,877,000 was recorded as intangible assets in the accompanying consolidated balance sheets.  Of the $9,877,000 of acquired intangible assets, $4,290,000 was assigned to tradenames that are not subject to amortization, $5,287,000 was assigned to goodwill and $300,000 was assigned to a covenant not to compete which has a useful life of five years.
	In July 2003, the Company finalized a restructuring plan related to the Crystal acquisition, under which the Company restructured its business to integrate the acquired entity with its current businesses.  In connection with this plan, the Company sold assets related to a non-core portion of the Crystal business for $3,525,000 in July 2003, and closed Crystal’s primary manufacturing facility in Maysville, Kentucky.  A separate administration building in Middletown, Ohio also closed in March 2004.  The Company recorded a restructuring reserve of $1,672,000 as part of purchase accounting, including severance related to approximately 150 employees.  Uncommitted restructuring accruals related to the closing of the Maysville facility were reversed against goodwill in the fourth quarter of fiscal 2004.  There were no payments made in the quarter ended December 31, 2004.  Payments of $367,000 (including $143,000 for severance costs) were made in the nine months ended December 31, 2004.  During the first quarter of fiscal 2005, the Company reopened the Maysville facility in response to the filing of an anti-dumping petition related to tissue products manufactured in China.

Page 9 of 24

Selected information relating to the Crystal restructuring reserve follows (in thousands):

	Severance			Contractual Obligations and Facility Exit Costs			Total
Restructuring reserve as of March 31, 2004	$	143		$	224		$	367
Cash paid – fiscal 2005		(143	)		(224	)		(367	)
Restructuring reserve as of December 31, 2004	$	—		$	—		$	—

C. M. Offray & Son, Inc.

On March 15, 2002, a subsidiary of the Company completed the acquisition of substantially all of the business and assets of the portion of C. M. Offray & Son, Inc. (“Offray”) which manufactures and sells decorative ribbon products, floral accessories and narrow fabrics for apparel, craft and packaging applications.  Berwick acquired substantially all of the  business and assets of Offray for $44,865,000 in cash, including transaction costs.  A portion of the purchase price is being held in escrow to cover indemnification obligations.  The acquisition was accounted for as a purchase and the cost approximated the fair market value of the net assets acquired.  Therefore, no goodwill was recorded in this transaction.

In conjunction with the acquisition of Offray, the Company’s management approved a restructuring plan. As part of this plan, the Company accrued $2,385,000 for severance and costs related to the closure of certain facilities.  As of December 31, 2004, the Company had closed Offray’s distribution facility in Quebec, Canada and its warehouse in Antietam, Maryland and has communicated termination of employment to approximately 125 employees.  Payments, mainly for severance, of  $17,000 and $233,000 were made in the quarter and in the nine months ended December 31, 2004.  These payments represent the final severance payments.  During the third quarter ended December 31, 2004, there was a reduction in the restructuring accrual of $77,000 related to severance costs that were less than originally estimated as certain employees under the plan did not receive the expected amount of severance.  There was a corresponding reduction in property, plant and equipment for this amount.

Selected information relating to the Offray restructuring reserve follows (in thousands):

	Severance			Contractual Obligations and Facility Exit Costs			Total
Restructuring reserve as of March 31, 2004	$	310		$	92		$	402
Cash paid – fiscal 2005		(233	)		(92	)		(325	)
Non cash reduction – fiscal 2005		(77	)		—			(77	)
Restructuring reserve as of December 31, 2004	$	—		$	—		$	—

(4)

BUSINESS RESTRUCTURING:

On May 5, 2004, a subsidiary of the Company announced a restructuring of its business and established a restructuring reserve related to its administrative office located in Minneapolis, Minnesota.  This restructuring was established in order to gain efficiencies within the business unit.  As part of this restructuring plan, the Company accrued $377,000 for termination costs and costs related to the restructuring of the administrative office expected to be completed in December 2004.  As of December 31, 2004, the Company has communicated termination of employment to 33 employees.  Payments for termination costs of $243,000 and $298,000 were made in the quarter and nine months ended December 31, 2004, respectively.  Payments for contractual obligations of $37,000 and $97,000 were made in the quarter and nine months ended December 31, 2004, respectively.

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During the third quarter and in the nine months ended December 31, 2004, the Company increased the restructuring reserve related to the ratable recognition of retention bonuses for employees providing service until their termination date in the amount of $96,000 and $300,000, respectively.  Additionally, during the third quarter there was an increase in the restructuring reserve related to unutilized office space in the amount of $83,000.  These amounts are shown in selling, general and administrative expenses in the accompanying consolidated statement of operations.  As of December 31, 2004, the remaining liability of $365,000 was classified as a current liability in the accompanying condensed consolidated balance sheet and will be paid during the remainder of fiscal 2005. The Company anticipates incurring a total of $1,373,000, including $479,000 for termination costs and $894,000 for contractual obligations and facility exit costs, with such additional amounts being expensed over the remainder of fiscal 2005.

Selected information relating to the Minneapolis restructuring reserve follows (in thousands):

	Termination Costs			Contractual Obligations and Facility Exit Costs			Total
Initial accrual - May 2004	$	171		$	206		$	377
Cash paid – fiscal 2005		(298	)		(97	)		(395	)
Charges to expense – fiscal 2005		300			83			383
Restructuring reserve as of December 31, 2004	$	173		$	192		$	365

	On November 1, 2004, a subsidiary of the Company announced the anticipated closure of its plant located in Anniston, Alabama.  As of December 31, 2004, the Company has communicated termination of employment to 89 employees.  Manufacturing operations will be moved to other locations of the Company and is expected to be completed by March 2005.  As part of this restructuring plan, the Company accrued $206,000 for severance costs.  There were no payments of severance made during the third quarter and as of December 31, 2004, this liability was classified as a current liability in the accompanying condensed consolidated balance sheet and will be paid during the remainder of fiscal 2005.  The Company anticipates incurring a total of $1,417,000, including $246,000 for termination costs and $1,171,000 for facility exit costs, with such amounts being expensed over the remainder of fiscal 2005.
(5)	GOODWILL AND INTANGIBLES:
	Effective April 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” Upon adoption of SFAS No. 142, amortization of goodwill and indefinite-lived intangible assets ceased.  The Company determined that its tradenames are indefinite-lived assets.
	The Company performs the required annual impairment test of the carrying amount of goodwill and indefinite lived intangible assets in the fourth quarter of its fiscal year.

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Included in intangibles assets, net in the accompanying condensed consolidated balance sheets are the following acquired intangible assets (in thousands):

	December 31, 2004		March 31, 2004
Goodwill	$	30,952	$	30,952
Tradenames		4,290		4,290
Non-compete and other		264		377
	$	35,506	$	35,619

	Amortization expense was $38,000 for the quarters ended December 31, 2004 and 2003 and was $113,000 for the nine months ended December 31, 2004 and 2003.  Based on the current composition of intangibles, amortization expense for each of the succeeding five years is projected to be as follows: three months ending March 31, 2005: $38,000; years ending March 31, 2006: $94,000; 2007: $94,000; 2008: $38,000; and 2009: $0.
(6)	DEBT ARRANGEMENTS:
	On April 23, 2004, the Company’s $100,000,000 revolving credit facility was replaced with a $50,000,000 revolving credit facility with five banks.  This new facility expires on April 23, 2009.  The loan agreement contains provisions to increase or reduce the interest pricing spread based on the achievement of certain benchmarks related to the ratio of earnings to interest expense.  At the Company’s option, interest on the facility currently accrues at (1) the greater of the prime rate minus .5% or the Federal Funds Rate, or (2) LIBOR plus .75%.  The revolving credit facility provides for commitment fees of .225% per annum on the daily average of the unused commitment.  The loan agreement also contains covenants, the most restrictive of which pertain to net worth, the ratio of operating cash flow to fixed charges, the ratio of debt to capitalization and limitations on capital expenditures.
	On April 23, 2004, the Company entered into an extension of its $100,000,000 accounts receivable securitization facility during which time it renewed the facility for a five-year period, expiring on July 25, 2009, although it may terminate prior to such date in the event of the termination of the commitments of the facility’s back-up purchasers.  The facility limit now has a seasonally-adjusted funding limit of $100,000,000 during peak seasonal periods and $25,000,000 during off-peak seasonal periods.  Interest on amounts financed under this facility are based on a variable commercial paper rate plus .375% and provides for commitment fees of .225% per annum on the daily average of the unused commitment.
(7)	COMMITMENTS AND CONTINGENCIES:
	As described in Item 3 of the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2004, a group of six domestic producers of tissue paper products and a labor union filed an anti-dumping duty petition with the U.S. Commerce Department (“Commerce Department”) and the U.S. International Trade Commission (“ITC”) on February 17, 2004.  The petitioners are seeking the imposition of duties of 163.36% on certain tissue paper products imported from China.  If the petitioners are successful, duties will be imposed on certain tissue paper products that the Company imports from China.
	In September 2004, the Commerce Department issued its preliminary determination in the anti-dumping duty investigation on certain tissue paper products imported from China.  As a result of this determination, the Company and other importers are required to post bond or a cash deposit upon importation of these products at rates reflecting the Commerce Department’s estimate of the duties that may be imposed on these products.  In November 2004 and January 2005, the Commerce Department

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	denied requests to reduce these deposit rates pending the issuance of its final determination.  The actual amount of the duties, if imposed, may be higher or lower than the deposit rates, depending on the final determinations of the Commerce Department and the ITC, which are expected to be issued in February 2005 and March 2005, respectively, and any reviews that may be undertaken by the Commerce Department thereafter.  The Company’s exposure is estimated to be in the range of approximately $.03 to $.16 per diluted share.  The Company is vigorously contesting the imposition of these duties, however given the preliminary determinations of the Commerce Department and the ITC, the Company has fully established a pre-tax reserve for its estimated maximum exposure of $3,100,000, or $.16 per share, in the quarter ended December 31, 2004.
	In order to mitigate the effect of any duties that may be imposed as a result of these proceedings, the Company resumed tissue-converting operations at the Company’s previously-closed facility in Maysville, Kentucky, and developed alternative sourcing arrangements.
(8)	PENSION AND OTHER POSTRETIREMENT OBLIGATIONS:
	The Company’s Cleo subsidiary administers a defined benefit pension plan covering substantially all salaried employees of Crystal.  The plan, acquired as part of the Crystal acquisition on October 18, 2002, was frozen on November 2, 2002 and terminated September 30, 2003.  Future benefits to Crystal division employees will be provided by participation in an existing defined contribution profit sharing and 401(k) plan.  The Company’s Cleo subsidiary also administers a post-retirement medical plan covering certain employees of the former Crystal division.  The plan was frozen to new participants prior to Crystal’s acquisition by the Company.
	The components of net pension and other post-retirement benefit cost are as follows (in thousands):

	Nine Months Ended December 31,
	2004			2003			2004		2003
	Pension Benefits						Other Benefits
Interest cost	$	48		$	83		$	44	$	64
Expected return on plan assets		(111	)		(251	)		—		—
Benefit cost (credit)	$	(63	)	$	(168	)	$	44	$	64

	Three Months Ended December 31,
	2004			2003			2004		2003
	Pension Benefits						Other Benefits
Interest cost	$	16		$	28		$	15	$	21
Expected return on plan assets		(37	)		(84	)		—		—
Benefit cost (credit)	$	(21	)	$	(56	)	$	15	$	21

In May 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position 106-2 (FSP 106-2), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (the “Act”).  FSP 106-2 provides guidance on the accounting for the effects of the Act for employers that sponsor postretirement health care plans that provide prescription drug benefits.  FSP 106-2 became effective on July 1, 2004 for the Company and, based on management’s review of the benefits provided under its post-retirement plans, the enactment of the Act did not constitute a significant event and the impact of the Act on its post-retirement plan will be recognized on the next measurement date of the plan, which is March 31, 2005.  Management does not anticipate that there will be a material impact on its financial condition or results of operations as a result of adopting the provisions of FSP 106-2.

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(9)	ACCOUNTING PRONOUNCEMENTS:
	In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities (VIE), an Interpretation of ARB No. 51,” which requires all VIEs to be consolidated by the primary beneficiary.  The primary beneficiary is the entity that holds the majority of the beneficial interests in the VIE.  In December 2003, the FASB revised FIN 46 (“FIN 46R”), delaying the effective dates for certain entities created before February 1, 2003, and making other amendments to clarify application of the guidance.  FIN 46R requires certain disclosures of an entity’s relationship with variable interest entities.  FIN 46R was effective for companies with interests in variable interest entities or potential variable interest entities (commonly referred to as special-purpose entities, or SPEs) for periods ending after December 15, 2003.  FIN 46R was effective for companies with all other types of entities (i.e. non-SPEs) for periods ending after March 15, 2004.  The adoption of FIN 46R had no impact on the Company’s financial position or results of operations.
	In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative and when a derivative contains a financing component.  This statement is effective for contracts entered into or modified after June 30, 2003.  The adoption of this statement had no impact on the Company’s financial position or results of operations.
	In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which requires that certain financial instruments that were previously presented as equity or as temporary equity to be presented as liabilities.  Such instruments include mandatory redeemable preferred and common stock, and certain options and warrants.  SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003 and was applied to the Company’s existing financial instruments effective July 1, 2003, the beginning of the first fiscal period after June 15, 2003.  The Company adopted SFAS No. 150 for new or modified financial instruments on June 1, 2003.  The adoption of this statement had no impact on the Company’s financial position or results of operations.
	In December 2003, the FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and other Postretirement Benefits,” establishing additional annual disclosures about plan assets, investment strategy, measurement date, plan obligations and cash flows.  In addition, the revised standard established interim disclosure requirements related to the net periodic benefit cost recognized and contributions paid or expected to be paid during the current fiscal year.  The new annual disclosures are effective for financial statements with fiscal years ending after December 15, 2003 and the interim-period disclosures are effective for interim periods beginning after December 15, 2003.  The Company adopted the disclosures for its fiscal year ending March 31, 2004 and in its interim fiscal 2005 periods.  The adoption of this statement had no impact on the Company’s financial position or results of operations.
	In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4,” which amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage.  This statement now requires that these costs be expensed as current period charges. In addition, this statement requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities.  The provisions of this statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  The Company has not yet assessed the impact of this statement on the Company’s financial position or results of operations.

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In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,” which eliminates the APB Opinion No. 29 exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  Commercial substance exists if the future cash flows of the entity are expected to change significantly as a result of the exchange.  The provisions of this statement are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.

In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” a revision to SFAS 123, “Accounting for Stock-Based Compensation.”  This statement supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.”  SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This statement requires that the cost of share based payment transactions be recorded as an expense at their fair value determined by applying a fair value measurement method.  The provisions of this statement are effective as of the first interim reporting period beginning after June 15, 2005 (period ending September 30, 2005).  Reference is made to footnote No. 1, Summary of Significant Accounting Policies, for the SFAS No. 123 impact on net income and net income per share.

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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 Company’s business is roughly 75% seasonal (Christmas, Valentines, Easter and Halloween products), with the remainder being everyday product sales.  Seasonal products are sold primarily to mass market retailers and the Company typically has relatively high market shares in many of these categories.  Most of these markets have shown little or no growth in recent years and there continues to be significant cost pressure in this area as our competitors source certain products overseas and our customers increase direct sourcing from overseas factories.  Increasing customer concentration and bargaining power also contribute to price pressure.

The Company is responding to these pressures in a number of ways.  First, we are increasing our investment in product and packaging design and product knowledge to assure we can continue to provide unique added value to our customers.  Secondly, we have opened a new office and showroom in the Far East to better meet our customers’ buying needs and to be able to provide alternatively sourced products at competitive prices.  Lastly, we increased our focus on efficiency and productivity in our North American production and distribution facilities to assure our competitiveness domestically.

Our everyday product lines, principally craft, floral and packaging products, have high inherent growth potential due to higher market growth rates, particularly in craft, and to our relatively low current market shares.  We have established project teams to pursue top line sales growth in these and other areas.

The Company has experienced cost increases in certain key materials.  These increases will impact fiscal 2006 and will require that management either obtain price increases from its customers or find other means of reducing material costs in the products its sells.

Historically, significant growth at CSS has come through carefully chosen and executed acquisitions.  Management anticipates that it will continue this pursuit in the future, as well.

LITIGATION

As described in Item 3 of the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2004, a group of six domestic producers of tissue paper products and a labor union filed an anti-dumping duty petition with the U.S. Commerce Department (“Commerce Department”) and the U.S. International Trade Commission (“ITC”) on February 17, 2004.  The petitioners are seeking the imposition of duties of 163.36% on certain tissue paper products imported from China.  If the petitioners are successful, duties will be imposed on certain tissue paper products that the Company imports from China.

In September 2004, the Commerce Department issued its preliminary determination in the anti-dumping duty investigation on certain tissue paper products imported from China.  As a result of this determination, the Company and other importers are required to post bond or a cash deposit upon importation of these products at rates reflecting the Commerce Department’s estimate of the duties that may be imposed on these products.  In November 2004 and January 2005, the Commerce Department denied requests to reduce these deposit rates pending the issuance of its final determination.  The actual amount of the duties, if imposed, may be higher or lower than the deposit rates, depending on the final determinations of the Commerce Department and the ITC, which are expected to be issued in February 2005 and March 2005, respectively, and any reviews that may be undertaken by the Commerce Department thereafter.  The Company’s exposure is estimated to be in the range of approximately $.03 to $.16 per diluted share.  The Company is vigorously contesting the imposition of these duties, however given the preliminary

Page 16 of 24

determinations of the Commerce Department and the ITC, the Company has fully established a pre-tax reserve for its estimated maximum exposure of $3,100,000, or $.16 per share, in the quarter ended December 31, 2004.

In order to mitigate the effect of any duties that may be imposed as a result of these proceedings, the Company resumed tissue-converting operations at the Company’s previously-closed facility in Maysville, Kentucky, and developed alternative sourcing arrangements.

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.  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: useful lives of plant and equipment; cash flow and valuation assumptions in performing asset impairment tests of long-lived assets and goodwill; valuation reserves for inventory and accounts receivable; income tax accounting and resolution of litigation and proceedings regarding the possible imposition of duties on tissue products.

RESULTS OF OPERATIONS

Seasonality

The seasonal nature of CSS’ business results in low sales and operating losses in the first and fourth quarters and high shipment 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.

Nine Months Ended December 31, 2004 Compared to Nine Months Ended December 31, 2003

Sales for the nine months ended December 31, 2004 decreased 1% to $478,435,000 from $484,846,000 in 2003 primarily due to lower sales of ribbons and bows, the absence of sales related to a product line which was sold in July of 2003 and the later timing of Valentine shipments to a major customer which pushed sales into the fourth quarter.  This sales decline was partially offset by higher sales of Christmas and everyday boxed greeting cards.

Cost of sales, as a percentage of sales, was 74% in 2004 and 72% in 2003.  The increase in cost of sales is substantially due to lower gross margins caused by our establishment of a reserve of $3,100,000 for duties that may be imposed on imported tissue products, higher freight costs and higher material costs, particularly paper based and polypropylene based raw materials.

Selling, general and administrative (“SG&A”) expenses, as a percentage of sales, were 14% in 2004 and 15% in 2003.  The decrease in SG&A expenses of $4,052,000, or 6%, over the prior year nine months is primarily due to lower compensation costs and integration savings related to recent acquisitions, partially offset by costs incurred related to the Minneapolis restructuring plan and incremental costs related to compliance with Section 404 of the Sarbanes-Oxley Act (“SOX 404”) requirements.

Interest expense, net was $2,032,000 in 2004 and $2,874,000 in 2003.  The decrease in interest expense was primarily due to lower borrowing levels as a result of the cash generated from operations and

Page 17 of 24

improved management of working capital, partially offset by higher interest rates.

Income taxes, as a percentage of income before taxes, were 36% in 2004 and 2003.

Net income for the nine months ended December 31, 2004 was $35,177,000, or $2.79 per diluted share compared to $37,574,000, or $3.05 per diluted share in 2003.  The decrease in net income is primarily attributable to lower sales and margins, partially offset by reduced compensation costs, integration savings and lower interest expense.

Three Months Ended December 31, 2004 Compared to Three Months Ended December 31, 2003

Sales for the quarter ended December 31, 2004 of $247,169,000 were flat compared to prior year sales of $247,394,000 primarily as a result of the later timing of Valentine shipments to a major customer which pushed sales into the fourth quarter and lower sales of gift wrap, tissue products and ribbons and bows.  This sales decline was largely offset by higher sales of Christmas and everyday boxed greeting cards.

Cost of sales, as a percentage of sales, was 75% in 2004 and 71% in 2003.  The increase in cost of sales is primarily a result of lower gross margins caused by our establishment of a reserve of $3,100,000 for duties that may be imposed on imported tissue products, higher freight costs and higher material costs, particularly paper based and polypropylene based raw materials.

SG&A expenses, as a percentage of sales, were 10% in 2004 and 11% in 2003.  The decrease in SG&A expenses of $2,827,000, or 10%, over the prior year quarter is attributable to the result of lower compensation costs and integration savings related to recent acquisitions, partially offset by costs incurred related to the Minneapolis restructuring plan and incremental costs related to compliance with SOX 404 requirements.

Interest expense, net was $906,000 in 2004 and $1,185,000 in 2003.  The decrease in interest expense was primarily due to lower borrowing levels, partially offset by higher interest rates.

Income taxes, as a percentage of loss before taxes, were 36% in 2004 and 2003.

Net income for the three months ended December 31, 2004 was $23,971,000, or $2.01 per diluted share compared to $27,397,000, or $2.18 per diluted share in 2003.  The decrease in net income is primarily attributable to the impact of lower sales and margins, partially offset by lower compensation costs and acquisition integration savings.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2004, the Company had working capital of $211,813,000 and stockholders’ equity of $279,799,000.  The increase in accounts receivable from March 31, 2004 reflected seasonal billings of current year Christmas accounts receivables, net of current year collections.   The decrease in inventories reflected normal seasonal shipments during the fiscal 2005 shipping season.  The increase in other current liabilities was due to increased accruals for income taxes, sales commissions, royalties and employee benefits.  The increase in stockholders’ equity was primarily attributable to the year-to-date net income and capital contributed upon exercise of employee stock options, partially offset by treasury share repurchases and payments of cash dividends.

The Company relies primarily on cash generated from operations and seasonal borrowings to meet its liquidity requirements.  Historically, most revenues are seasonal with approximately 80% of sales generated in the second and third quarters.  Payment for Christmas related products is usually not received

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until after the holiday selling season in accordance with general industry practice.  As a result, short-term borrowing needs increase through December and peak prior to Christmas. Seasonal borrowings are made under a $50,000,000 revolving credit facility with five banks and a receivable purchase agreement in an amount up to $100,000,000 with an issuer of receivables-backed commercial paper.  In addition, the Company has outstanding $50,000,000 of 4.48% senior notes due ratably in annual installments over five years beginning in December 2005.  These financing facilities are 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.  At December 31, 2004, there was $50,000,000 of long-term borrowings outstanding related to the senior notes and $19,000,000 outstanding under the Company’s short-term credit facilities.  Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its ongoing cash needs for at least the next 12 months.

As of December 31, 2004, the Company’s contractual obligations and commitments are as follows (in thousands):

	Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
Short-term debt	$	19,000	$	—	$	—	$	—	$	19,000
Capital lease obligations		307		—		—		—		307
Operating leases		7,093		9,715		7,098		2,974		26,880
Long-term debt		10,000		20,000		20,000		0		50,000
Other long-term obligations		230		1,149		86		2,367		3,832
	$	36,630	$	30,864	$	27,184	$	5,341	$	100,019

Other long-term obligations consist primarily of medical postretirement liabilities and deferred compensation arrangements.  Future timing of payments for other long-term obligations represent management’s best estimate.

As of December 31, 2004, the Company’s other commitments are as follows (in thousands):

	Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
Letters of credit	$	11,312	$	—	$	—	$	—	$	11,312

The Company has letters of credit that guarantee funding of workers compensation claims as well as obligations to certain vendors.  The Company has no financial guarantees or other arrangements with any third parties or related parties other than its subsidiaries.

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.

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ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standard Board (“FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities.”  In April 2003, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”  In December 2003, the FASB revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.”  In May 2004, the FASB issued FASB Staff Position (“FSP”) No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.”  In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29” and SFAS No. 123(R), “Share-Based Payment.”  See the notes to the consolidated financial statements for information concerning the Company’s implementation and impact of these standards.

ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to the impact of interest rate changes and manages this exposure through the use of variable-rate and fixed-rate debt.  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 December 31, 2004 has not materially changed from March 31, 2004 (See Item 7A of the Annual Report on Form 10-K).

ITEM 4.  CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures.  As of the end of the period covered by this report, with the participation of the Company’s management, the Company’s President and Chief Executive Officer and Vice President – Finance and 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 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 recorded, processed, summarized and reported within the time period specified in the Commission’s rules and procedures.

(b)

Changes in Internal Controls.  The evaluation referred to above did not identify any changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2004 that have materially affected, or are 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 1.  Legal Proceedings

As described in Item 3 of the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2004, a group of six domestic producers of tissue paper products and a labor union filed an anti-dumping duty petition with the U.S. Commerce Department (“Commerce Department”) and the U.S. International Trade Commission (“ITC”) on February 17, 2004.  The petitioners are seeking the imposition of duties of 163.36% on certain tissue paper products imported from China.  If the petitioners are successful, duties will be imposed on certain tissue paper products that the Company imports from China.

In September 2004, the Commerce Department issued its preliminary determination in the anti-dumping duty investigation on certain tissue paper products imported from China.  As a result of this determination, the Company and other importers are required to post bond or a cash deposit upon importation of these products at rates reflecting the Commerce Department’s estimate of the duties that may be imposed on these products.  In November 2004 and January 2005, the Commerce Department denied requests to reduce these deposit rates pending the issuance of its final determination.  The actual amount of the duties, if imposed, may be higher or lower than the deposit rates, depending on the final determinations of the Commerce Department and the ITC, which are expected to be issued in February 2005 and March 2005, respectively, and any reviews that may be undertaken by the Commerce Department thereafter.  The Company’s exposure is estimated to be in the range of approximately $.03 to $.16 per diluted share.  The Company is vigorously contesting the imposition of these duties, however given the preliminary determinations of the Commerce Department and the ITC, the Company has fully established a pre-tax reserve for its estimated maximum exposure of $3,100,000, or $.16 per share, in the quarter ended December 31, 2004.

In order to mitigate the effect of any duties that may be imposed as a result of these proceedings, the Company resumed tissue-converting operations at the Company’s previously-closed facility in Maysville, Kentucky, and developed alternative sourcing arrangements. 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

As of December 31, 2004, the Company repurchased 6,240,276 shares of CSS common stock, consisting of the shares repurchased pursuant to the repurchase program described below and an additional 1,650,000 shares (on a split-adjusted basis) purchased on June 24, 2002 from the Company’s Chairman, members of his family and a trust for members of his family.  A total of 7,700 shares were repurchased at an average price of $31.64, in the third quarter of fiscal 2005.  As of December 31, 2004, there remained an outstanding authorization to repurchase 509,724 shares of outstanding CSS common stock as represented in the table below.

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	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1)(2)		Maximum Number of Shares that May Yet Be Purchased Under the Program
October 1 through October 31, 2004		7,700	$	31.64		7,700		509,724
November 1 through November 30, 2004		—		—		—		509,724
December 1 through December 31, 2004		—		—		—		509,724
Total Second Quarter		7,700	$	31.64		7,700		509,724

(1)	The Company announced that its Board of Directors had authorized on February 18, 1998 the repurchase of up to 1,000,000 shares of the Company’s common stock (the “Repurchase Program”).  Thereafter, the Company announced that its Board of Directors had increased the number of shares authorized to be repurchased by the Company pursuant to the Repurchase Program as follows: November 9, 1998 (500,000 additional shares); May 4, 1999 (500,000 additional shares); September 28, 1999 (500,000 additional shares); September 26, 2000 (500,000 additional shares); and February 27, 2003 (400,000 additional shares).  As a result of the Company’s three-for-two stock split distributed on July 10, 2003, the number of shares authorized for repurchase pursuant to the Repurchase Program was automatically increased to 5,100,000 shares.  The aggregate number of shares repurchased by the Company pursuant to the Repurchase Program as of December 31, 2004 was 4,590,276 on a split-adjusted basis.  An expiration date has not been established for the Repurchase Program.
(2)	All open market share repurchases were effected in accordance with the safe harbor provisions of Rule 10b-18 of the Securities Exchange Act.
Item 6.	Exhibits
	Exhibit 10.1 Employment Agreement dated as of December 1, 2004 between CSS Industries, Inc. and Richard L. Morris.
	Exhibit 31.1 Certification of the Chief Executive Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
	Exhibit 31.2 Certification of the Chief Financial Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
	Exhibit 32.1 Certification of the Chief Executive Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.
	Exhibit 32.2 Certification of the Chief Financial Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.

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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: January 26, 2005	By:	/s/ DAVID J. M. ERSKINE
		David J. M. Erskine President and Chief Executive Officer
Date: January 26, 2005	By:	/s/ CLIFFORD E. PIETRAFITTA
		Clifford E. Pietrafitta Vice President – Finance, Chief Financial Officer and Principal Accounting Officer

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EXHIBIT INDEX

Exhibit No.
10.1	Employment Agreement dated as of December 1, 2004 between CSS Industries, Inc. and Richard L. Morris.
31.1	Certification of the Chief Executive Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer of CSS Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.

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EX-10

                              EMPLOYMENT AGREEMENT


         EMPLOYMENT AGREEMENT (the "Agreement") dated as of December 1, 2004
between CSS Industries, Inc., a Delaware corporation ("CSS") and Richard L.
Morris ("Executive").

         WHEREAS, CSS and the Executive are desirous of memorializing the terms
and conditions of the Executive's continued employment by CSS during the term of
this Agreement;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereto, intending to be
legally bound, agree as follows:

         1. Employment. CSS agrees to employ the Executive and the Executive
accepts such employment and agrees to perform such Executive's duties and
responsibilities hereunder, in accordance with the terms and conditions
hereinafter set forth.

                  1.1 Employment Term. The term of this Agreement (the
"Employment Term") shall commence as of the date hereof and shall continue for a
term of three years, unless terminated prior thereto in accordance with a
provision of Section 7 of this Agreement. If the Executive remains an employee
of CSS beyond the expiration of the Employment Term, the Executive specifically
acknowledges that his status will thereupon be that of an employee-at-will.

                  1.2. Duties and Responsibilities.

                           (a) During the Employment Term, the Executive shall
serve as Vice President - Chief Information Officer and shall perform all duties
and accept all responsibilities consistent with such office as may from time to
time be assigned to him by the Chief Executive Officer or Board of Directors
("Board") of CSS. In connection with the performance of such duties and
responsibilities, the Executive will report to the Chief Executive Officer of
CSS.

                           (b) The Executive represents to CSS that the
Executive is not subject or a party to any employment agreement, non-competition
covenant, non-disclosure agreement or any other agreement, covenant,
understanding or restriction of any nature whatsoever which would prohibit the
Executive from entering into this Agreement and performing fully the Executive's
duties and responsibilities hereunder, or which would in any manner, directly or
indirectly, limit or affect the performance of the duties and responsibilities
of the Executive described in Subsection 1.2(a) above.

                           (c) The Executive agrees to at all times comply in
all material respects with policies and procedures adopted by CSS for its
employees, including, without limitation, procedures and policies relating to
conflicts of interest.

                  1.3 Extent of Service. During the Employment Term, the
Executive agrees to use the Executive's best efforts to carry out the duties and
responsibilities described in Section 1.2 hereof and to devote his full time,
attention and energy to such duties and responsibilities. The Executive agrees
not to become engaged in any other business activity other than passive
investments without the prior approval of the Human Resources Committee (the
"Committee") of the CSS Board.

                                                                               1


                  1.4 Base Compensation.

                           (a) For the services rendered by the Executive
pursuant to this Agreement, CSS shall pay the Executive a salary of $230,000 for
each twelve months of the Employment Term ("Base Salary"), plus such additional
amounts, if any, from and after April 2005, as may be approved by the Committee,
less withholding taxes and other withholdings required by law and other
deductions agreed to by the Executive. Such Base Salary less applicable
deductions shall be payable in installments at such times as CSS customarily
pays its other officers.

                           (b) During the Employment Term: the Executive shall
be entitled to four weeks of paid vacation and shall be entitled to participate
in other fringe benefit programs as CSS makes available to executives holding
similar positions, including by way of illustration and not of limitation,
participation in CSS' 401K Profit Sharing Plan; however, the Executive has
confirmed that he does not intend to participate in either the medical or dental
insurance related programs available to CSS employees as long as these benefits
are available to him from his spouse's group insurance plan (other than COBRA
based).

                           (c) The Executive shall be responsible for the
payment of all federal, state and local taxes in respect of the payments to be
made and benefits to be provided under this Agreement or otherwise to the extent
imposed upon the Executive by applicable law.

                  1.5 Incentive Compensation. In addition to the Base Salary and
other compensation described in Section 1.4, the Executive shall also be
eligible to participate in CSS' annual bonus program relating to the fiscal year
ending March 31, 2005 and thereafter at a level of up to 60% of Base Salary in
accordance with criteria annually approved by the Committee, which criteria is
based, in material part, upon the achievement of certain financial and
qualitative objectives. Anything of the foregoing to the contrary
notwithstanding, the Executive's annual bonus relating to the fiscal year ending
March 31, 2005 shall be paid on a pro rata basis. Furthermore, upon commencement
of the Employment Term, the undersigned will recommend to the Committee that a
grant of a Stock Option to acquire 25,000 shares of the Company's Common Stock
be made to the Executive, which grant shall in all respects be subject to and in
accordance with the provisions of the CSS 2004 Equity Compensation Plan
("Plan"). Thereafter during the Employment Term, the Executive will be
considered for further Plan option grants by the Committee on not less than an
annual basis and a recommendation will be made to the Committee that such grant
be at a so-called "Grant Level" of 150%.

                  1.6 Employment Situs and Reimbursements. During the Employment
Term, the Executive will not be required to relocate from the Philadelphia, PA
SMSA without the Executive's consent.

                                                                               2


         2. Developments. All developments, including inventions, whether
patentable or otherwise, trade secrets, discoveries, improvements, ideas and
writings which either directly or indirectly relate to or may be useful in the
Business (the "Developments") which the Executive, either individually or in
conjunction with any other person or persons, shall conceive, make, develop,
acquire or acquire knowledge of during the Employment Term or at any time
thereafter during which the Executive is employed by CSS, shall become the sole
and exclusive property of CSS. The Executive assigns, transfers and conveys, and
agrees to assign, transfer and convey to CSS, all of his right, title and
interest in and to any and all such Developments and to disclose to the extent
practicable all such Developments to the CSS Board. At any time and from time to
time, upon the request and at the expense of CSS, the Employee will execute and
deliver any and all instruments, documents and papers, give evidence and do any
and all other acts which, in the opinion of counsel for CSS, are or may be
necessary or desirable to document such transfer or to enable CSS to file and
prosecute applications for and to acquire, maintain and enforce any and all
intellectual property rights with respect to any such Developments or to obtain
any extension, validation, re-issue, continuance or renewal of any such
intellectual property rights. CSS will be responsible for the preparation of any
such instruments, documents and papers and for the prosecution of any such
proceedings and will reimburse the Executive for all reasonable expenses
incurred by the Executive in compliance with the provisions of this Section.

         3. Confidential Information. The Executive recognizes and acknowledges
that by reason of employment by and service to CSS, the Executive has had and
will continue to have (both during the Employment Term and at any time
thereafter during which he is employed by CSS), access to confidential
information of CSS, and its affiliates, including, without limitation,
information and knowledge pertaining to products and services offered,
inventions, innovations, designs, ideas, plans, trade secrets, proprietary
information, computer systems and software, packaging, advertising, distribution
and sales methods and systems, sales and profit figures, customer and client
lists, and relationships between CSS and its affiliates and dealers,
distributors, wholesalers, customers, clients, suppliers and others who have
business dealings with CSS and such affiliates ("Confidential Information"). The
Executive acknowledges that such Confidential Information is a valuable and
unique asset of CSS and covenants that the Executive will not, either during or
at any time after the Employment Term, disclose any such Confidential
Information to any person for any reason whatsoever (except as his duties
described herein may require) without the prior written consent of the
Committee, unless such information is in the public domain through no fault of
Executive or except as may be required by law.

         4. Non-Competition.

                  (a) During the period of the later to occur of the expiration
of the Employment Term or the period of the Executive's employment with CSS, and
for a period of one year thereafter, the Executive will not, without the prior
written consent of the Committee, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise with or use
or permit the Executive's name to be used in connection with, any business or
enterprise engaged within any portion of the United States or Canada
(collectively, the "Territory") (whether or not such business is physically
located within the Territory) that is engaged in the creation, design,
manufacture, distribution or sale of any products that are the same or of a
similar type then manufactured by CSS or by any of its affiliates during the
Employment Term (the "Business"). It is recognized by the Executive that the
Business and the Executive's connection therewith is or will be involved in
activity throughout the Territory, and that more limited geographical
limitations on this non-competition covenant (and the non-solicitation covenant
set forth in Section 5 hereof) are therefore not appropriate.

                                                                               3


                  (b) The foregoing restriction shall not be construed to
prohibit the ownership by the Executive of not more than five percent (5%) of
any class of securities of any corporation which is engaged in any of the
foregoing businesses having a class of securities registered pursuant to the
Securities Act of 1933, provided that such ownership represents a passive
investment and that neither the Executive nor any group of persons including the
Executive in any way, either directly or indirectly, manages or exercises
control of any such corporation, guarantees any of its financial obligations,
otherwise takes any part in business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.

         5. No Solicitation. For a period of one year following the date that
Executive's employment with CSS is terminated by either party, the Executive
agrees not to, either directly or indirectly, (i) call on or solicit with
respect to the Business any person, firm, corporation or other entity who or
which at the time of termination was, or within two years prior thereto had
been, a customer of CSS or any of its affiliates or (ii) solicit the employment
of any person who was employed by CSS or by any of its affiliates on a full or
part-time basis at any time during the course of the Executive's employment with
CSS, unless prior to such solicitation of employment, such person's employment
with CSS or any of its affiliates was terminated.

         6. Equitable Relief.

                  (a) The Executive acknowledges that the restrictions contained
in Sections 2, 3, 4 and 5 hereof are reasonable and necessary to protect the
legitimate interests of CSS and its affiliates, that CSS would not have entered
into this Agreement, in the absence of such restrictions, and that any violation
of any provision of those Sections will result in irreparable injury to CSS. The
Executive represents that the Executive's experience and capabilities are such
that the restrictions contained in Sections 3 and 4 hereof will not prevent the
Executive from obtaining employment or otherwise earning a living at the same
general level of economic benefit as is anticipated by this Agreement. THE
EXECUTIVE FURTHER REPRESENTS AND ACKNOWLEDGES THAT (I) THE EXECUTIVE HAS BEEN
ADVISED BY CSS TO CONSULT THE EXECUTIVE'S OWN LEGAL COUNSEL IN RESPECT OF THIS
AGREEMENT, (II) THAT THE EXECUTIVE HAS HAD FULL OPPORTUNITY, PRIOR TO EXECUTION
OF THIS AGREEMENT, TO REVIEW THOROUGHLY THIS AGREEMENT WITH THE EXECUTIVE'S
COUNSEL, AND (III) THE EXECUTIVE HAS READ AND FULLY UNDERSTANDS THE TERMS AND
PROVISIONS OF THIS AGREEMENT.

                  (b) The Executive agrees that CSS shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as any other remedies provided by law arising from any
violation of Sections 2, 3, 4 and 5 hereof, which rights shall be cumulative and
in addition to any other rights or remedies to which CSS may be entitled. In the
event that any of the provisions of Sections 2, 3, 4 and 5 hereof should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.

                                                                               4


                  (c) The Executive and CSS irrevocably and unconditionally (i)
agree that any suit, action or other legal proceeding arising out of Sections 2,
3, 4 and 5 of this Agreement, including without limitation, any action commenced
by CSS for preliminary or permanent injunctive relief or other equitable relief,
may be brought in the United States District Court for the Eastern District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Philadelphia County,
Pennsylvania, (ii) consents to the non-exclusive jurisdiction of any such court
in any such suit, action or proceeding, and (iii) waives any objection to the
laying of venue of any such suit, action or proceeding in any such court. The
Executive and CSS also irrevocably and unconditionally consent to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 12 hereof.

                  (d) The Executive agrees that CSS may provide a copy of
Sections 2, 3, 4 and 5 of this Agreement to any business or enterprise (i) which
the Executive may directly or indirectly own, manage, operate, finance, join,
participate in the ownership, management, operation, financing, control or
control of, or (ii) with which the Executive may be connected with as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which the Executive may use or
permit the Executive's name to be used.

         7. Termination. This Agreement shall terminate prior to the expiration
of the Employment Term upon the occurrence of any one of the following events:

                  7.1. Disability. In the event that Executive is unable fully
to perform the duties and responsibilities set forth in Section 1.2 of this
Agreement by reason of illness, injury or incapacity for one hundred eighty
consecutive days, during which time the Executive shall continue to be
compensated as provided in Section 1.4 hereof (less any payments due the
Executive under disability benefit programs, including Social Security
disability, worker's compensation, and disability retirement benefits), this
Agreement may be terminated by CSS and CSS shall have no further liability or
obligation to the Executive for compensation hereunder; provided, however, that
Executive will be entitled to receive the payments prescribed under any
disability benefit plan which may be in effect for employees of CSS and in which
the Executive participated. The Executive agrees, in the event of any dispute
under this Section 7.1, to submit to a physical examination by a physician
selected by CSS, who is licensed in the Commonwealth of Pennsylvania.

                  7.2. Death. In the event that the Executive dies during the
Employment Term, CSS shall pay to the Executive's executors, legal
representatives or administrators an amount equal to the installment of Base
Salary set forth in Subsection 1.4 (a) hereof for the month in which the
Executive dies and applicable incentive compensation, if any, referred to in
Section 1.5 hereof in respect of the last fiscal year ended prior to the date of
the Executive's death to the extent earned, but not yet paid. Thereafter CSS
shall have no further liability or obligation hereunder to the Executive's
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through the Executive; provided, however that the
Executive's estate or designated beneficiaries shall be entitled to receive the
payments prescribed for such recipients under any death benefit plan which may
be in effect for employees of CSS in which the Executive participated.

                                                                               5


                  7.3. Cause. Nothing in this Agreement shall be construed to
prevent its termination by CSS at any time for "cause". For purposes of this
Agreement, "cause" shall mean the failure of the Executive to perform or observe
any of the terms or provisions of this Agreement, a failure to comply with a
lawful directive of the Chief Executive Officer of CSS or the CSS Board,
conviction of a crime involving moral turpitude or substance abuse or the
willful engaging by the Executive in misconduct injurious to CSS or any of its
affiliates. In the event of termination for cause, CSS shall pay the Executive
an amount equal to the installment of Base Salary due until the date of
termination and any reimbursable expenses then due the Executive and shall have
no further liability or obligation to the Executive for compensation hereunder.
Such termination shall be effected by notice thereof transmitted to the
Executive in a manner permitted by the notice provisions of Section 12 hereof
and shall be effective as of the date of transmittal of such notice.

                  7.4. Without Cause by CSS. CSS may also terminate this
Agreement at and for CSS' sole convenience and in its sole discretion and
without specifying any cause. In such event, and contingent upon (i) receipt by
CSS of a valid and fully effective release (in form and substance reasonably
satisfactory to CSS) of all claims of any nature which the Executive might have
at such time against CSS and its affiliates and their respective officers,
directors and agents excepting therefrom only any payments due the Executive
from CSS pursuant to this Section 7.4, and (ii) the resignation of the Executive
from all positions of any nature which Executive may then have held with CSS and
its affiliates, CSS shall continue to pay Executive until the end of the
Employment Term the Base Salary set forth in Subsection 1.4(a) hereof in the
installments provided therein, together with payment of any incentive
compensation described in Section 1.5 to the extent such incentive compensation
related to CSS' then last fiscal year which had been earned by the Executive,
but not yet paid. Notwithstanding anything of the foregoing to the contrary, the
gross amount of any compensation that the Executive becomes entitled to receive
from employment by another or self-employment during the period that the
Executive continues to receive compensation from CSS pursuant hereto shall
constitute an offset and credit against any obligation of payment by CSS
pursuant to this Section 7.4. The Executive agrees to promptly advise CSS from
time to time of his entitlement to any such compensation.

         8. Survival. Notwithstanding the termination of this Agreement by CSS
by reason of either the Executive's disability under Section 7.1, for cause
under Section 7.3, without cause under Section 7.4, the Executive's obligations
under Sections 2, 3, 4 and 5 hereof shall survive and remain in full force and
effect for the periods therein provided, and the provisions for equitable relief
against the Executive in Section 6 hereof shall continue in force along with the
provisions of Sections 8 through 17 hereof. Any payment obligation of CSS set
forth in Sections 1 and 7 hereof shall survive the termination of this Agreement
and remain in full force and effect.

         9. Arbitration. Except as otherwise provided in Section 6(c) with
respect to injunctive relief, all disputes between the parties hereto pertaining
to this Agreement shall be settled by arbitration before one arbitrator pursuant
to the Employment Arbitration Rules of the American Arbitration Association in
Philadelphia, Pennsylvania; provided, however, that any award pursuant to such
arbitration shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. The award rendered by the arbitrator shall be
conclusive and binding upon the parties hereto. Nothing herein shall prevent the
parties from settling any dispute by mutual agreement at any time. Each party
shall pay his or its own expenses of arbitration and shall equally share the
expenses of the arbitrator.

                                                                               6


         10. Premises At 1616 Walnut Street, Philadelphia, PA. The Executive has
advised CSS that Xernon Technology Solutions, LLC, a limited liability company
of which the Executive owns all of the equity ("Tenant") is tenant under lease
dated November 11, 2003 ("Lease") of Premises designated Suite 1510 ("Premises")
in the building known as 1616 Walnut Street, Philadelphia, PA. The current Lease
term expires December 31, 2008; however, this term may be prematurely terminated
by the Tenant on December 31, 2006 by giving not less than 120 days written
notice to the landlord and paying the landlord $3,600. It is agreed that the
Executive will cause the Tenant to seek the consent of the landlord under the
Lease to an assignment of the Lease to CSS in accordance with the provisions of
Section 17 thereof. CSS will either pay directly or reimburse the Executive for
the $200.00 fee payable to the landlord simultaneous with the request for
consent. Commencing the Employment Term and ending on the date that the
assignment of the Lease has occurred, CSS will either pay directly or reimburse
the Tenant for the rent payable to the landlord of the Premises pursuant to
Section 4 of the Lease and for the utilities utilized in the Premises during
such period. During the Employment Term, the Executive shall continue to utilize
the Premises until such time as an office at 1845 Walnut Street, Philadelphia,
PA is ready for occupancy by the Executive.

         11. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

         12. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given either when hand delivered, or if not
hand delivered, either mailed by registered or certified mail postage prepaid,
or sent by electronic facsimile transmission (with a hard copy sent by a
nationally recognized overnight courier or registered mail), or sent by a
nationally recognized overnight courier, as follows (provided that notice of
change of address shall be deemed given only when received):

                  If to CSS, to:

                                    1845 Walnut Street, Suite 800
                                    Philadelphia, PA 19103
                                    Attention:  David J. M. Erskine, President

                                    Telecopy:  215-569-9979

                  If to the Executive, to:

                                    914 Latimer Street
                                    Philadelphia, PA 19107
                                    Telecopy:   215-629-0125

or to such other names or addresses as CSS or the Executive, as the case may be,
shall designate by notice to each other person entitled to receive notices in
the manner specified in this Section.

                                                                               7


         13. Entire Agreement; Contents of Agreement.

                  (a) Except as otherwise set forth herein, this Agreement
supersedes all prior agreements and sets forth the entire understanding among
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment executed
by the Executive and approved by the Committee and executed on behalf of CSS by
a duly authorized officer. The Executive and CSS acknowledge that the effect of
this provision is that no oral modifications of any nature whatsoever to this
Agreement shall be permitted.

                  (b) The Executive and CSS acknowledge that from time to time,
CSS may establish, maintain and distribute employee manuals or handbooks or
personnel policy manuals, and representatives of CSS may make written or oral
statements relating to personnel policies and procedures. Such manuals,
handbooks and statements are intended only for general guidance. No policies,
procedures or statements of any nature by or on behalf of CSS (whether written
or oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement or to create express or implied obligations
of any nature by either CSS to the Executive.

         14. Assignment. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, including without limitation any buyer of all or
substantially all of the assets of CSS, except that the duties and
responsibilities of the Executive hereunder are of a personal nature and shall
not be assignable or delegated in whole or in part by the Executive.

         15. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application in any
other jurisdiction.

         16. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by a party from time to time and as
often as may be deemed expedient or necessary by such party in its sole
discretion.

         17. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.

                                                                               8


         IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.

                                       CSS Industries, Inc.



                                       By:____________________________________
                                            David J. M. Erskine, President and
                                            Chief Executive Officer


                                       ________________________________________
                                       Richard L. Morris






















                                                                               9

EX-31

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, David J. M. Erskine, 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 officer 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)) 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)  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

c)  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 officer 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:  January 26, 2005

/s/ DAVID J. M. ERSKINE

David J. M. Erskine,
President and Chief Executive Officer

EX-31

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, Clifford E. Pietrafitta, 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 officer 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)) 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)  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

c)  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 officer 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:  January 26, 2005

/s/ CLIFFORD E. PIETRAFITTA

Clifford E. Pietrafitta
Vice President – Finance, Chief Financial Officer and Principal Accounting Officer

EX-32

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 ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. M. Erskine, 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:

          (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 result of operations of the Company.

/s/ DAVID J. M. ERSKINE

David J. M. Erskine
President and Chief Executive Officer

January 26, 2005

EX-32

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 ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifford E. Pietrafitta, Vice President – Finance and Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

          (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 result of operations of the Company.

/s/ CLIFFORD E. PIETRAFITTA

Clifford E. Pietrafitta
Vice President – Finance and Chief Financial Officer

January 26, 2005