EX-99 2 a4648797-ex991.txt CSS INDUSTRIES, INC. PRESS RELEASE EXHIBIT 99.1 CSS Industries, Inc. Reports Sales and Earnings for the Year and Quarter Ended March 31, 2004 PHILADELPHIA--(BUSINESS WIRE)--May 25, 2004--CSS Industries, Inc. (NYSE:CSS) announced today the results of operations for the year and quarter ended March 31, 2004. Sales for fiscal year 2004 increased 1% to $539,349,000 from $532,815,000, while net income before cumulative effect of change in accounting principle increased 15% to $29,850,000, or $2.42 per diluted share, from $25,846,000, or $2.09 per diluted share, in fiscal 2003. Sales for the fourth quarter of 2004 decreased 3% to $54,503,000 from $56,124,000 in fiscal 2003. The net loss increased in the fourth quarter to $7,724,000, or $.65 per diluted share, from $6,492,000, or $.56 per diluted share, in fiscal 2003. The prior year results have been restated to reflect a three for two stock split. In addition, the prior year results reflect the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets." Upon adoption and effective with the beginning of fiscal 2003, the Company recorded a non-cash write-off of goodwill and negative goodwill in the amount of $8,813,000, net of taxes, or $.71 per diluted share. The Company's highly seasonal orientation results in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters. The increase in sales for the year ended March 31, 2004 was primarily a result of the inclusion for the full year of Crystal Creative Products, Inc. ("Crystal"), acquired on October 18, 2002. Excluding Crystal, sales decreased $13,769,000, or 3% as a result of lower sales of seasonal products caused by the overall sluggish retail environment, partially offset by increased everyday product sales. The increase in net income per diluted share before the cumulative effect of the change in accounting principle from $2.09 to $2.42 is due primarily to improved profitability of our recently acquired businesses and Halloween product lines as well as a decline in bad debt expense. For the quarter, sales declined 3% due to lower Easter sales and the absence of a significant new merchandising program for a major customer included in the fourth quarter of fiscal 2003. This sales decline was partially offset by increased everyday greeting card sales. The pre-tax loss for the fourth quarter increased 16% due to lower sales volume, the write-off of equipment which will no longer be utilized and increased provisions for inactive inventory. "We are pleased to have continued the trend of the last few years and delivered EPS growth in excess of 15%," commented David J. M. Erskine, CSS President and CEO. "Fiscal 2005 will be a strategically important year in the continuing development of CSS. The Company will invest in new product initiatives, a new Hong Kong office and showrooms, and in continuing to rationalize our asset base. Despite the up-front costs of these initiatives and the cautious purchasing patterns of our mass merchant customers, we expect to generate EPS growth for next year of approximately 10%. Some increase in inflation is incorporated in our planning, however, a significant resurgence could negatively impact our results." All statements other than statements of historical fact included in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including without limitation, general market conditions, increased competition, and other factors described in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2003. CSS' consolidated results of operations for the three months and year ended March 31, 2004 and 2003 and condensed consolidated balance sheets as of March 31, 2004 and 2003 follow: CSS INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Year Ended March 31, March 31, ------------------- ------------------- 2004 2003 2004 2003 -------- -------- -------- -------- (Unaudited)(Unaudited)(Unaudited) SALES $54,503 $56,124 $539,349 $532,815 -------- -------- -------- -------- COSTS AND EXPENSES Cost of sales 44,750 43,575 393,806 392,588 Selling, general and administrative expenses 21,572 22,855 96,270 97,241 Interest expense, net 528 758 3,402 3,661 Rental and other income, net (116) (546) (426) (685) -------- -------- -------- -------- 66,734 66,642 493,052 492,805 -------- -------- -------- -------- (LOSS) INCOME BEFORE INCOME TAXES (12,231) (10,518) 46,297 40,010 INCOME TAX (BENEFIT) EXPENSE (4,507) (4,026) 16,447 14,164 -------- -------- -------- -------- (LOSS) INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (7,724) (6,492) 29,850 25,846 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX - - - (8,813) -------- -------- -------- -------- NET (LOSS) INCOME $(7,724) $(6,492) $29,850 $17,033 ======== ======== ======== ======== BASIC NET (LOSS) INCOME PER COMMON SHARE Before cumulative effect of accounting change $(.65) $(.56) $2.54 $2.19 Cumulative effect of accounting change - - - (.74) -------- -------- -------- -------- Basic net (loss) income per common share $(.65) $(.56) $2.54 $1.45 ======== ======== ======== ======== DILUTED NET (LOSS) INCOME PER COMMON SHARE Before cumulative effect of accounting change $(.65) $(.56) $2.42 $2.09 Cumulative effect of accounting change - - - (.71) -------- -------- -------- -------- Diluted net (loss) income per common share $(.65) $(.56) $2.42 $1.38 ======== ======== ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 11,839 11,529 11,755 11,784 ======== ======== ======== ======== DILUTED 11,839 11,529 12,346 12,338 ======== ======== ======== ======== CSS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) March 31, March 31, 2004 2003 -------- -------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 93,191 $ 51,981 Accounts receivable, net 40,460 47,583 Inventories 94,459 106,648 Income tax receivable - 2,398 Deferred income taxes 7,937 6,226 Other current assets 12,987 13,771 -------- -------- Total current assets 249,034 228,607 -------- -------- PROPERTY, PLANT AND EQUIPMENT, NET 81,193 82,731 -------- -------- OTHER ASSETS Intangible assets, net 35,619 36,045 Other 4,551 4,578 -------- -------- Total other assets 40,170 40,623 -------- -------- Total assets $370,397 $351,961 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ - $ - Other current liabilities 61,221 73,497 -------- -------- Total current liabilities 61,221 73,497 -------- -------- LONG-TERM DEBT 50,251 50,063 -------- -------- LONG-TERM OBLIGATIONS 3,631 3,684 -------- -------- DEFERRED INCOME TAXES 6,142 3,856 -------- -------- STOCKHOLDERS' EQUITY 249,152 220,861 -------- -------- Total liabilities and stockholders' equity $370,397 $351,961 ======== ======== CONTACT: CSS Industries, Inc. Clifford E. Pietrafitta, 215-569-9900