10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2013

or

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

For the transition period from                      to                     

Commission file number 1-2661

CSS INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

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

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.    x  Yes    ¨  No

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

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

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

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

As of October 25, 2013, there were 9,278,943 shares of common stock outstanding which excludes shares which may still be issued upon exercise of stock options or upon vesting of restricted stock unit grants.

CSS INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

	PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations – Three and six months ended September 30, 2013 and 2012		3
Condensed Consolidated Balance Sheets – September 30, 2013, March  31, 2013 and September 30, 2012		4
Consolidated Statements of Cash Flows – Six months ended September 30, 2013 and 2012		5
Notes to Consolidated Financial Statements		6-17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18-23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		23
Item 4. Controls and Procedures		23
Part II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25
Item 6. Exhibits		25
Signatures		27

2

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Six Months Ended September 30,
	2013			2012			2013			2012
Sales	$	112,487		$	133,485		$	159,604		$	194,552
Costs and expenses
Cost of sales		75,760			92,654			108,418			136,523
Selling, general and administrative expenses		20,675			22,854			37,679			41,424
Disposition of product line, net		0			5,798			0			5,798
Interest expense (income), net		50			(14	)		70			(67	)
Other income, net		(38	)		(66	)		(32	)		(52	)
		96,447			121,226			146,135			183,626
Income from continuing operations before income taxes		16,040			12,259			13,469			10,926
Income tax expense		5,194			5,419			4,290			4,953
Income from continuing operations		10,846			6,840			9,179			5,973
Income from discontinued operations, net of tax		112			81			112			44
Net income	$	10,958		$	6,921		$	9,291		$	6,017
Net income per common share:
Basic:
Continuing operations	$	1.15		$	0.71		$	0.97		$	0.62
Discontinued operations	$	0.01		$	0.01		$	0.01		$	0.00
Total (1)	$	1.16		$	0.72		$	0.98		$	0.63
Net income per common share:
Diluted:
Continuing operations	$	1.14		$	0.71		$	0.96		$	0.62
Discontinued operations	$	0.01		$	0.01		$	0.01		$	0.00
Total (1)	$	1.16		$	0.72		$	0.98		$	0.63
Weighted average basic and diluted shares outstanding
Basic		9,458			9,592			9,482			9,617
Diluted		9,486			9,621			9,527			9,620
Cash dividends per share of common stock	$	0.15		$	0.15		$	0.30		$	0.30

(1) Total net income per common share may not foot due to rounding.

See notes to consolidated financial statements.

3

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	September 30, 2013		March 31, 2013		September 30, 2012
Assets
Current assets
Cash and cash equivalents	$	37,094	$	87,108	$	9,843
Accounts receivable, net of allowances of $2,205, $2,009 and $2,258		100,925		43,133		123,336
Inventories		74,508		62,598		85,177
Deferred income taxes		3,863		4,520		3,810
Other current assets		14,076		13,073		14,297
Current assets of discontinued operations		0		2		126
Total current assets		230,466		210,434		236,589
Property, plant and equipment, net		27,957		27,956		28,281
Deferred income taxes		3,915		3,974		219
Other assets
Goodwill		14,522		14,522		14,522
Intangible assets, net		27,177		28,004		28,860
Other		4,143		4,290		6,636
Total other assets		45,842		46,816		50,018
Total assets	$	308,180	$	289,180	$	315,107
Liabilities and Stockholders’ Equity
Current liabilities
Accrued customer programs	$	6,862	$	4,015	$	7,620
Other current liabilities		45,245		30,718		57,378
Current liabilities of discontinued operations		389		644		724
Total current liabilities		52,496		35,377		65,722
Long-term obligations		4,767		4,825		5,138
Stockholders’ equity		250,917		248,978		244,247
Total liabilities and stockholders’ equity	$	308,180	$	289,180	$	315,107

See notes to consolidated financial statements.

4

CSS INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended September 30,
	2013			2012
Cash flows from operating activities:
Net income	$	9,291		$	6,017
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization		3,873			3,879
Provision for accounts receivable allowances		1,898			2,045
Deferred tax provision		691			457
Stock-based compensation expense		1,008			914
(Gain) loss on sale or disposal of assets		(8	)		156
Reduction of goodwill		0			2,711
Changes in assets and liabilities:
Increase in accounts receivable		(59,690	)		(80,454	)
Increase in inventory		(11,910	)		(14,472	)
(Increase) decrease in other assets		(856	)		225
Increase in other accrued liabilities		17,149			29,581
Total adjustments		(47,845	)		(54,958	)
Net cash used for operating activities - continuing operations		(38,554	)		(48,941	)
Net cash used for operating activities - discontinued operations		(253	)		(1,609	)
Net cash used for operating activities		(38,807	)		(50,550	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(3,047	)		(1,921	)
Proceeds from disposition of product line, net		0			1,758
Proceeds from sale of fixed assets		8			16
Net cash used for investing activities - continuing operations		(3,039	)		(147	)
Cash flows from financing activities:
Dividends paid		(2,849	)		(2,878	)
Purchase of treasury stock		(5,065	)		(2,650	)
Exercise of stock options		(83	)		192
Payments for tax withholding on net restricted stock settlements		(537	)		(253	)
Tax effect on stock awards		366			(6	)
Net cash used for financing activities - continuing operations		(8,168	)		(5,595	)
Net decrease in cash and cash equivalents		(50,014	)		(56,292	)
Cash and cash equivalents at beginning of period		87,108			66,135
Cash and cash equivalents at end of period	$	37,094		$	9,843

See notes to consolidated financial statements.

5

CSS INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

On September 9, 2011, the Company and its Cleo Inc (“Cleo”) subsidiary sold the Christmas gift wrap portion of Cleo’s business and certain assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets to Impact Innovations, Inc. (“Impact”). Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. The assets, liabilities and cash flows related to the Christmas gift wrap business are presented as current assets and liabilities of discontinued operations. The results of operations for the three- and six months ended September 30, 2013 and 2012, as well as the accompanying notes, reflect the historical operations of Cleo’s Christmas gift wrap business as discontinued operations. The discussions in this quarterly report are presented on the basis of continuing operations, unless otherwise noted.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2014” refers to the fiscal year ending March 31, 2014.

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

6

On September 5, 2012, the Company and its Paper Magic Group, Inc. (“Paper Magic”) subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with Paper Magic’s Halloween business, to Gemmy Industries (HK) Limited (“Gemmy”). Paper Magic’s remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The sale price of $2,281,000 was paid to Paper Magic at closing. The Company incurred $523,000 of transaction costs (included within disposition of product line further discussed in Note 4 to the consolidated financial statements), yielding net proceeds of $1,758,000. The Company is liquidating the remaining assets and satisfying the liabilities throughout fiscal 2014.

Foreign Currency Translation and Transactions

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

Use of Estimates

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

Impairment of Long-Lived Assets including Goodwill and Other Intangible Assets

The Financial Accounting Standards Board (“FASB”) issued updated authoritative guidance in September 2011 to amend previous guidance on the annual and interim testing of goodwill for impairment. The guidance became effective for the Company at the beginning of its 2013 fiscal year. The guidance provides entities with the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two step impairment test would still be required. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. The Company uses a dual approach to determine the fair value of its reporting units including both a market approach and an income approach. We believe the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported. Annual impairment tests are performed by the Company in the fourth quarter of each year. The adoption of this updated authoritative guidance had no impact on the Company’s Consolidated Financial Statements. See Note 7 for further information on goodwill and other intangible assets.

Other indefinite lived intangible assets consist primarily of tradenames which are also required to be tested annually. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

7

Inventories

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

	September 30, 2013		March 31, 2013		September 30, 2012
Raw material	$	9,035	$	8,116	$	10,162
Work-in-process		11,423		14,687		11,047
Finished goods		54,050		39,795		63,968
	$	74,508	$	62,598	$	85,177

Property, Plant and Equipment

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

	September 30, 2013			March 31, 2013			September 30, 2012
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements		36,857			37,007			36,902
Machinery, equipment and other		101,047			101,916			100,206
		140,412			141,431			139,616
Less - Accumulated depreciation and amortization		(112,455	)		(113,475	)		(111,335	)
Net property, plant and equipment	$	27,957		$	27,956		$	28,281

Depreciation expense was $1,555,000 and $1,492,000 for the quarters ended September 30, 2013 and 2012, respectively, and was $3,046,000 and $3,050,000 for the six months ended September 30, 2013 and 2012, respectively.

Revenue Recognition

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

8

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Income from continuing operations	$	10,846	$	6,840	$	9,179	$	5,973
Gain from discontinued operations, net of tax		112		81		112		44
Net income	$	10,958	$	6,921	$	9,291	$	6,017
Denominator:
Weighted average shares outstanding for basic income per common share		9,458		9,592		9,482		9,617
Effect of dilutive stock options		28		29		45		3
Adjusted weighted average share outstanding for diluted income per common share		9,486		9,621		9,527		9,620
Basic:
Continuing operations	$	1.15	$	0.71	$	0.97	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63
Diluted:
Continuing operations	$	1.14	$	0.71	$	0.96	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63

(1) Total net income per share for certain periods does not foot due to rounding.

Stock options on 150,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2013, respectively, because their effects were antidilutive. Options on 264,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2012, respectively, because their effects were antidilutive.

(2) DISCONTINUED OPERATIONS

On September 9, 2011, the Company sold the Cleo Christmas gift wrap business and certain of its assets to Impact. Impact acquired the Christmas gift wrap portion of Cleo’s business and certain of its assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets. Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. Cleo retained the right and obligation to fulfill all customer orders for Cleo Christmas gift wrap products for Christmas 2011. The purchase price was $7,500,000, of which $2,000,000 was paid in cash at closing. The remainder of the purchase price was paid through the issuance by Impact of an unsecured subordinated promissory note, which provides for quarterly payments of interest at 7% and principal payments as follows: $500,000 on March 1, 2012; $2,500,000 on March 1, 2013; and all remaining principal and interest on March 1, 2014. All interest and principal payments due through September 30, 2013 were paid timely. Additionally, in the fourth quarter of fiscal 2013, the Company received a $2,000,000 principal payment in advance of the March 1, 2014 due date. As of September 30, 2013, the note balance of $500,000 was recorded in other current assets in the accompanying condensed consolidated balance sheet.

9

As a result of the sale of its Christmas gift wrap business, the Company has reported these operations as discontinued operations, as shown in the following table (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Operating income (loss)	$	172	$	56	$	172	$	(30	)
Reversal of reserves		0		63		0		92
Discontinued operations, before income taxes		172		119		172		62
Income tax expense		60		38		60		18
Discontinued operations, net of tax	$	112	$	81	$	112	$	44

The following table presents the carrying values of the major accounts of discontinued operations that are included in the condensed consolidated balance sheet (in thousands):

	September 30, 2013		March 31, 2013		September 30, 2012
Accounts receivable, net	$	0	$	2	$	0
Inventories		0		0		126
Total current assets	$	0	$	2	$	126
Total assets attributable to discontinued operations	$	0	$	2	$	126
Customer programs	$	73	$	162	$	254
Restructuring reserve		0		0		126
Other current liabilities		316		482		344
Total current liabilities	$	389	$	644	$	724
Total liabilities associated with discontinued operations	$	389	$	644	$	724

(3) BUSINESS RESTRUCTURING

On March 27, 2012, the Company combined the operations of its Berwick Offray and Paper Magic subsidiaries in order to drive sales growth by providing stronger management oversight and by reallocating sales and marketing resources in a more strategic manner. Involuntary termination benefits were offered to terminated employees under the Company’s pre-existing severance program. The Company recorded approximately $706,000 in employee severance charges during fiscal 2012 and made payments of $523,000 and $116,000 in the fiscal years ended March 31, 2013 and 2012, respectively. The final restructuring payment of $13,000 was paid in April 2013. During the fiscal year ended March 31, 2013, there was a reduction in the restructuring accrual of $54,000 related to severance costs that were less than originally estimated as certain employees under the plan did not receive the expected amount of severance. The charges associated with this restructuring plan are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

(4) DISPOSITION OF PRODUCT LINE

On September 5, 2012, the Company and its Paper Magic subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with the Halloween portion of Paper Magic’s business, to Gemmy. Paper Magic’s

10

remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The inventory remaining after the Halloween 2012 season has been reduced to its estimated net realizable value. The sale price of $2,281,000 was paid to Paper Magic at closing. In connection with the sale, the Company recorded charges of $5,368,000 during the second quarter of fiscal 2013, consisting of severance of 49 employees of $1,282,000, facility closure costs of $1,375,000, professional fees and other costs of $1,341,000 ($523,000 were costs of the transaction) and a non-cash write-down of assets of $1,370,000. Additionally, a portion of the goodwill associated with the Paper Magic reporting unit was allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. This resulted in the Company recording a reduction of goodwill in the amount of $2,711,000 for the Paper Magic reporting unit. There was also a non-cash charge of $1,266,000 related to the write-down of inventory to net realizable value which was recorded in cost of sales.

During the year ended March 31, 2013, the Company made payments related to the restructuring of $1,901,000. Additionally, the Company reduced the restructuring reserve by $210,000 during fiscal 2013, primarily due to sub-lease income that was greater than originally estimated. During the three- and six months ended September 30, 2013, the Company made payments of $358,000 and $937,000, respectively, primarily related to facility costs and severance. During the six months ended September 30, 2013, there was a reduction in the restructuring accrual of $396,000 related to costs that were less than originally estimated. As of September 30, 2013, $456,000 of the remaining liability was classified in other current liabilities and $98,000 was classified in long-term obligations in the accompanying condensed consolidated balance sheet and will be paid through December 2015. The Company is liquidating the remaining assets and satisfying the liabilities through December 2015.

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

	Employee Termination Costs			Facility Costs			Professional Fees and Other Costs			Total
Restructuring reserve as of March 31, 2013	$	589		$	815		$	483		$	1,887
Cash paid, net of sublease income		(418	)		(480	)		(39	)		(937	)
Non-cash adjustments		(63	)		(91	)		(242	)		(396	)
Restructuring reserve as of September 30, 2013	$	108		$	244		$	202		$	554

(5) STOCK-BASED COMPENSATION

2013 Equity Compensation Plan

On July 30, 2013, the Company’s stockholders approved the CSS Industries, Inc. 2013 Equity Compensation Plan (“2013 Plan”). Under the terms of the Company’s 2013 Plan, the Human Resources Committee (the “Human Resources Committee”) of the Company’s Board of Directors (“Board”), or other committee appointed by the Board (collectively with the Human Resources Committee, the “2013 Equity Plan Committee”), may grant incentive stock options, non-qualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at the discretion of the 2013 Equity Plan Committee, but in no event greater than ten years from the date of grant. The 2013 Equity Plan Committee has discretion to determine the date or dates on which granted options become exercisable. At September 30, 2013, there were 1,100,000 shares available for grant. There are no awards outstanding under the 2013 Plan.

11

2004 Equity Compensation Plan

Under the terms of the Company’s 2004 Equity Compensation Plan (“2004 Plan”), which expired on July 30, 2013 upon approval of the 2013 Plan, the Human Resources Committee could grant incentive stock options, non-qualified stock options, restricted stock grants, stock appreciation rights, stock bonuses and other awards to officers and other employees. Service-based options outstanding as of September 30, 2013 become exercisable at the rate of 25% per year commencing one year after the date of grant. Market-based stock options outstanding as of such date will become exercisable only if certain market conditions and service requirements are satisfied, and the date(s) on which they become exercisable will depend on the period in which such market conditions and service requirements are met, if at all. Market-based restricted stock units (“RSUs”) outstanding at September 30, 2013 will vest only if certain market conditions and service requirements have been met, and the date(s) on which they vest will depend on the period in which such market conditions and service requirements are met, if at all. Subject to limited exceptions, service-based RSUs outstanding as of September 30, 2013 vest at the rate of 50% of the shares underlying the grant on each of the third and fourth anniversaries of the grant date. Given that the 2004 Plan is now expired, no further grants may be made under such plan.

The fair value of each market-based stock option and each market-based RSU granted under the above plan was estimated on the date of grant using a Monte Carlo simulation model with the following average assumptions:

	Stock Options						RSUs
	Six Months Ended September 30,						Six Months Ended September 30,
	2013			2012			2013			2012
Risk-free interest rate		0.84	%		0.72	%		0.66	%		0.58	%
Volatility		52.27	%		54.75	%		40.47	%		57.90	%
Dividend yield		2.04	%		3.15	%		2.04	%		3.15	%

The weighted average fair value of stock options granted during the six months ended September 30, 2013 and 2012 was $11.06 and $7.27, respectively. The weighted average fair value of restricted stock units granted during the six months ended September 30, 2013 and 2012 was $20.51 and $14.78, respectively.

2011 Stock Option Plan for Non-Employee Directors

Under the terms of the Company’s 2011 Stock Option Plan for Non-Employee Directors (“2011 Plan”), non-qualified stock options to purchase up to 150,000 shares of common stock are available for grant to non-employee directors at exercise prices of not less than fair market value of the underlying common stock on the date of grant. Under the 2011 Plan, options to purchase 4,000 shares of the Company’s common stock are granted automatically to each non-employee director on the last day that the Company’s common stock is traded in November of each year from 2011 to 2015. Each option will expire five years after the date the option is granted and options may be exercised at the rate of 25% per year commencing one year after the date of grant. At September 30, 2013, 121,000 shares were available for grant under the 2011 Plan.

As of September 30, 2013, there was $1,630,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.0 years. As of September 30, 2013, there was $1,766,000 of total unrecognized compensation cost related to non-vested RSUs granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.3 years.

Compensation cost related to stock options and RSUs recognized in operating results (included in selling, general and administrative expenses) was $516,000 and $504,000 in the quarters ended September 30, 2013 and 2012, respectively, and $1,008,000 and $914,000 in the six months ended September 30, 2013 and 2012, respectively.

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(6) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations on sales denominated in a foreign currency. Derivatives are not used for trading or speculative activities. Firmly committed transactions and the related receivables may be hedged with forward exchange contracts. Gains and losses arising from foreign currency forward contracts are recorded in other income, net as offsets of gains and losses resulting from the underlying hedged transactions. A realized loss of $16,000 and $9,000 was recorded in the three- and six months ended September 30, 2013, respectively. A realized loss of $6,000 was recorded in the three- and six months ended September 30, 2012. As of September 30, 2013 and 2012, the notional amount of open foreign currency forward contracts was $3,192,000 and $5,131,000, respectively. The related unrealized loss was $13,000 and $91,000 at September 30, 2013 and 2012, respectively. We believe we do not have significant counterparty credit risks as of September 30, 2013.

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

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2013		March 31, 2013		September 30, 2012
Foreign currency forward contracts	Other current liabilities	$	13	$	17	$	91

(7) GOODWILL AND INTANGIBLES

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscal year. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangibles might be impaired. In connection with the sale of the Halloween portion of Paper Magic’s business on September 5, 2012, a portion of the goodwill associated with the Paper Magic reporting unit was allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. This resulted in the Company recording a reduction of goodwill in the amount of $2,711,000 for the Paper Magic reporting unit in the second quarter of fiscal 2013. As the sale of the Halloween portion of Paper Magic’s business was a triggering event, the Company performed an interim impairment test on the goodwill remaining in the Paper Magic reporting unit after the reduction in goodwill associated with the sale of the Halloween portion of Paper Magic’s business was recorded. The Company determined that no impairment existed for the remainder of the goodwill of the Paper Magic reporting unit.

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

	September 30, 2013				March 31, 2013				September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	12,793	$	0	$	12,793	$	0	$	12,793	$	0
Customer relationships		22,057		8,609		22,057		7,859		22,057		7,109
Non-compete		0		0		0		0		200		200
Trademarks		403		258		403		243		403		228
Patents		1,262		471		1,262		409		1,301		357
	$	36,515	$	9,338	$	36,515	$	8,511	$	36,754	$	7,894

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Amortization expense related to intangible assets was $413,000 and $415,000 for the quarters ended September 30, 2013 and 2012, respectively, and was $827,000 and $829,000 for the six months ended September 30, 2013 and 2012, respectively. Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2014 and each of the succeeding four years is projected to be as follows (in thousands):

Remainder of fiscal 2014	$	827
Fiscal 2015		1,635
Fiscal 2016		1,634
Fiscal 2017		1,634
Fiscal 2018		1,634

(8) TREASURY STOCK TRANSACTIONS

Under a stock repurchase program authorized by the Company’s Board, the Company repurchased 214,569 shares of the Company’s common stock for $5,231,000 during the six months ended September 30, 2013. As payment for stock repurchases occurs upon settlement three business days after the trade transaction, $166,000 of this amount was paid by the Company subsequent to September 30, 2013. The Company repurchased 140,183 shares of the Company’s common stock for $2,650,000 during the six months ended September 30, 2012. On July 31, 2012, the Company announced that its Board had authorized the repurchase of up to an additional 500,000 shares of the Company’s common stock. As of September 30, 2013, the Company had 259,041 shares remaining available for repurchase under the Board’s authorization.

(9) COMMITMENTS AND CONTINGENCIES

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

(10) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The Company uses certain derivative financial instruments as part of its risk management strategy to reduce foreign currency risk. The Company recorded all derivatives on the condensed consolidated balance sheet at fair value based on quotes obtained from financial institutions as of September 30, 2013.

The Company maintains a Nonqualified Supplemental Executive Retirement Plan for highly compensated employees and invests assets to mirror the obligations under this Plan. The invested funds are maintained at a third party financial institution in the name of CSS and are invested in publicly traded mutual funds. The Company maintains separate accounts for each participant to reflect deferred contribution amounts and the related gains or losses on such deferred amounts. The investments are included in other current assets and the related liability is recorded as deferred compensation and included in other long-term obligations in the condensed consolidated balance sheets. The fair value of the investments is based on the market price of the mutual funds as of September 30, 2013.

The Company maintains two life insurance policies in connection with deferred compensation arrangements with two former executives. The cash surrender value of the policies is recorded in other long-term assets in the condensed consolidated balance sheets and is based on quotes obtained from the insurance company as of September 30, 2013.

To increase consistency and comparability in fair value measurements, the FASB established a fair value hierarchy that prioritizes the inputs to valuation techniques, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1)

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and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial assets and liabilities fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

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

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

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

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

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2013 and March 31, 2013 (in thousands):

			Fair Value Measurements at September 30, 2013 Using
	September 30, 2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	718	$	718	$	0	$	0
Cash surrender value of life insurance policies		1,054		0		1,054		0
Total assets	$	1,772	$	718	$	1,054	$	0
Liabilities
Deferred compensation plans	$	718	$	718	$	0	$	0
Foreign exchange contracts		13		0		13		0
Total liabilities	$	731	$	718	$	13	$	0

			Fair Value Measurements at March 31, 2013 Using
	March 31,    2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	678	$	678	$	0	$	0
Cash surrender value of life insurance policies		1,040		0		1,040		0
Total assets	$	1,718	$	678	$	1,040	$	0
Liabilities
Deferred compensation plans	$	678	$	678	$	0	$	0
Foreign exchange contract		17		0	$	17	$	0
Total liabilities	$	695	$	678	$	17	$	0

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Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value in the condensed consolidated balance sheets as such amounts are a reasonable estimate of their fair values due to the short-term nature of these instruments.

Nonrecurring Fair Value Measurements

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

Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if circumstances indicate a condition of impairment may exist. The valuations use assumptions such as interest and discount rates, growth projections and other assumptions of future business conditions. These valuation methods require a significant degree of management judgment concerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fair value as determined by the valuation models. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy described above. As of September 30, 2013, there were no indications or circumstances indicating that an impairment might exist.

(11) RECENT ACCOUNTING PRONOUNCEMENTS

In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”), which amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If this is the case, a more detailed fair value calculation will need to be performed which is used to identify potential impairments and to measure the amount of impairment losses to be recognized, if any. To perform a qualitative assessment, an entity must identify and evaluate changes in economic, industry and entity-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. ASU 2012-02 is effective for annual and interim impairment tests performed by the Company for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 did not have a material impact on the Company’s future indefinite-lived intangibles impairment tests.

In January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). This update is intended to improve the comparability of statements of financial position prepared in accordance with U.S. GAAP and International Financial Reporting Standards, requiring both gross and net presentation of offsetting assets and liabilities. The new requirements are effective for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As this guidance only affects disclosures, the adoption of this standard did not have an impact on the Company’s financial condition, results of operations and cash flows.

In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). This update requires disclosure, either on the face of the statement where income is presented or in the notes to the financial statements, of significant amounts reclassified out of accumulated other comprehensive income in their entirety. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about these amounts. ASU 2013-02 is effective for annual and interim periods beginning after December 15, 2012. As this update only requires enhanced disclosure, the adoption of ASU 2013-02 did not impact the Company’s financial condition, results of operations and cash flows.

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In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which requires an entity to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (NOL) carryforward, or similar tax loss or tax credit carryforward, rather than as a liability when (1) the uncertain tax position would reduce the NOL or other carryforward under the tax law of the applicable jurisdiction and (2) the entity intends to use the deferred tax asset for that purpose. ASU 2013-11 does not require new recurring disclosures. It is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The Company does not expect the adoption of ASU 2013-11 to have a material impact on the Company’s financial condition, results of operations and cash flows.

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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

During fiscal 2013, net sales of the Halloween portion of Paper Magic’s business, which was sold on September 5, 2012, were $30,914,000. Excluding Halloween sales, which will not be recurring in the future, approximately 61% of the Company’s sales are all occasion. Excluding Halloween sales, approximately 32% of our sales relate to the Christmas season and approximately 7% of our sales relate to other retail seasons.

Seasonal products are sold primarily to mass market retailers, and the Company has relatively high market share in many of these categories. Most of these markets have shown little growth and in some cases have declined in recent years. The Company believes that its all occasion craft, gift card holder, stickers, stationery and memory product lines have higher inherent growth potential due to higher market growth rates. The Company continues to pursue sales growth in these and other areas. The Company continues to confront significant price pressure as its competitors source certain products from overseas and its customers increase direct sourcing from overseas factories. Increasing customer concentration has augmented their bargaining power, which has also contributed to price pressure.

The Company has taken several measures to respond to sales volume, cost and price pressures. The Company believes it continues to have strong core Christmas product offerings which has allowed it to compete effectively in this competitive market. In addition, the Company is aggressively pursuing new product initiatives related to seasonal and all occasion products, including new licensed and non-licensed product offerings. CSS continually invests in product and packaging design and product knowledge to assure that it can continue to provide unique added value to its customers. In addition, CSS maintains a purchasing office in Hong Kong to be able to provide alternatively sourced products at competitive prices. CSS continually evaluates the efficiency and productivity of its North American production and distribution facilities and of its back office operations to maintain its competitiveness. In the last ten fiscal years, the Company has closed six manufacturing plants and seven warehouses totaling 2,680,000 square feet. Additionally, in the last five fiscal years, the Company has combined the operations of its Berwick Offray and Paper Magic subsidiaries in order to drive sales growth by providing stronger management oversight and by reallocating sales and marketing resources in a more strategic manner; consolidated its human resources, accounts receivable, accounts payable and payroll functions into a combined back office operation; and completed the implementation of a phase of the Company’s enterprise resource planning systems standardization project.

Historically, significant revenue growth at CSS has come through acquisitions. Management anticipates that it will continue to consider acquisitions as a strategy to stimulate further growth.

On September 5, 2012, the Company and its Paper Magic Group, Inc. (“Paper Magic”) subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with Paper Magic’s Halloween business, to Gemmy Industries (HK) Limited (“Gemmy”). Paper Magic’s remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The sale price of $2,281,000 was paid to Paper Magic at closing. The Company incurred $523,000 of transaction costs (included within disposition of product line further discussed in Note 4 to the consolidated financial statements), yielding net proceeds of $1,758,000. The Company is liquidating the remaining assets and satisfying the liabilities throughout fiscal 2014.

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On September 9, 2011, the Company and its Cleo Inc (“Cleo”) subsidiary sold the Christmas gift wrap portion of Cleo’s business and certain of its assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets to Impact Innovations, Inc. (“Impact”). Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. Cleo retained the right and obligation to fulfill all customer orders for Cleo Christmas gift wrap products for Christmas 2011. The purchase price was $7,500,000, of which $2,000,000 was paid in cash at closing. The remainder of the purchase price was paid through the issuance by Impact of an unsecured subordinated promissory note, which provides for quarterly payments of interest at 7% and principal payments as follows: $500,000 on March 1, 2012; $2,500,000 on March 1, 2013; and all remaining principal and interest on March 1, 2014. All interest and principal payments due through September 30, 2013 were paid timely. Additionally, in the fourth quarter of fiscal 2013, the Company received a $2,000,000 principal payment in advance of the March 1, 2014 due date. As of September 30, 2013, the note receivable balance of $500,000 was recorded in other current assets in the accompanying condensed consolidated balance sheet. The results of operations for the three- and six month periods ended September 30, 2013 and 2012 reflect the historical operations of the Cleo Christmas gift wrap business as discontinued operations and the discussion herein is presented on the basis of continuing operations, unless otherwise stated.

CRITICAL ACCOUNTING POLICIES

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

The significant accounting policies of the Company are described in the notes to the consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2013. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in many areas. Following are some of the areas requiring significant judgments and estimates: revenue; the assessment of the recoverability of goodwill and other intangible and long-lived assets; the valuation of inventory and accounts receivable; income tax accounting; the valuation of stock-based awards and resolution of litigation and other proceedings. There have been no material changes to the critical accounting policies affecting the application of those accounting policies as noted in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2013.

RESULTS OF OPERATIONS

Seasonality

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

Six Months Ended September 30, 2013 Compared to Six Months Ended September 30, 2012

Sales for the six months ended September 30, 2013 decreased 18% to $159,604,000 from $194,552,000 in the six months ended September 30, 2012 primarily due to lower sales of Halloween products of $26,764,000 as a result of our sale of the Halloween portion of Paper Magic’s business on September 5, 2012, and lower sales of all occasion stationery products compared to the same period in the prior year.

Cost of sales, as a percentage of sales, decreased to 68% in the six months ended September 30, 2013 compared to 70% in the six months ended September 30, 2012 primarily due to sourcing efficiencies and the absence of a write-down of inventory to net realizable value of $966,000 related to the sale of the Halloween portion of Paper Magic’s business which was recorded in the prior year.

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Selling, general and administrative (“SG&A”) expenses of $37,679,000 in the six months ended September 30, 2013 decreased from $41,424,000 in the six months ended September 30, 2012 primarily due to reduced payroll and related costs.

Disposition of product line, net of $5,798,000 recorded in the six months ended September 30, 2012, primarily relates to costs associated with the sale of the Halloween portion of Paper Magic’s business, including severance of $1,282,000, facility closure costs of $1,375,000, professional fees of $1,341,000, a write-down of assets of $1,370,000 and a reduction of goodwill of $2,711,000. These costs were offset by proceeds received from the sale of $2,281,000. The Company incurred $523,000 of transaction costs, which is included in the aforementioned professional fees, yielding net proceeds of $1,758,000. A portion of the goodwill associated with the Paper Magic reporting unit was required to be allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. See Note 4 to the condensed consolidated financial statements for further discussion.

Interest expense, net was $70,000 in the six months ended September 30, 2013 compared to interest income, net of $67,000 in the six months ended September 30, 2012. This change was primarily due to interest income received during the six months ended September 30, 2012 on the note receivable from Impact (issued by Impact as part of its purchase of the Christmas gift wrap business on September 9, 2011). The outstanding principal balance of such note receivable was reduced to $500,000 during fiscal 2013.

Income from continuing operations before income taxes for the six months ended September 30, 2013 was $13,469,000 compared to $10,926,000 in the six months ended September 30, 2012. The increase in income from continuing operations before income taxes for the six months ended September 30, 2013 was primarily due to the reduction in costs associated with the disposition of product line discussed above, favorable margins and lower payroll related expenses, partially offset by the impact of lower sales volume.

Income taxes, as a percentage of income before taxes, were 32% and 45% in the six months ended September 30, 2013 and 2012, respectively. The decrease in income taxes, as a percentage of income before taxes, in the six months ended September 30, 2013 was primarily attributable to a reduction to the property, plant and equipment deferred tax liability recorded in the current period. The increase in income taxes, as a percentage of income before taxes, in the six months ended September 30, 2012 was primarily attributable to a portion of the goodwill reduction recorded related to the sale of the Halloween portion of Paper Magic’s business being non-deductible for tax purposes.

Income from discontinued operations, net of tax of $112,000 for the six months ended September 30, 2013 increased from $44,000 in 2012 primarily due to the favorable outcome of a property tax assessment. The primary operating activity of the discontinued operation ceased in December 2011.

Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012

Sales for the three months ended September 30, 2013 decreased 16% to $112,487,000 from $133,485,000 in the three months ended September 30, 2012 primarily due to lower sales of Halloween products of $18,440,000 due to our sale of the Halloween portion of Paper Magic’s business on September 5, 2012, and lower sales of all occasion stationery products.

Cost of sales, as a percentage of sales, decreased to 67% in the three months ended September 30, 2013 compared to 69% in the three months ended September 30, 2012 primarily due to sourcing efficiencies and the absence of a write-down of inventory to net realizable value of $966,000 related to the sale of the Halloween portion of Paper Magic’s business which was recorded in the same quarter in the prior year.

SG&A expenses of $20,675,000 in the three months ended September 30, 2013 decreased from $22,854,000 in the three months ended September 30, 2012 primarily due to reduced payroll and related costs.

Disposition of product line, net of $5,798,000 recorded in the three months ended September 30, 2012, primarily relates to costs associated with the sale of the Halloween portion of Paper Magic’s business, including severance of

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$1,282,000, facility closure costs of $1,375,000, professional fees of $1,341,000, a write-down of assets of $1,370,000 and a reduction of goodwill of $2,711,000. These costs were offset by proceeds received from the sale of $2,281,000. The Company incurred $523,000 of transaction costs, which is included in the aforementioned professional fees, yielding net proceeds of $1,758,000. A portion of the goodwill associated with the Paper Magic reporting unit was required to be allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. See Note 4 to the condensed consolidated financial statements for further discussion.

Interest expense, net was $50,000 in the three months ended September 30, 2013 compared to interest income, net of $14,000 in the three months ended September 30, 2012. This change was primarily due to interest income received during the three months ended September 30, 2012 on the note receivable from Impact (issued by Impact as part of its purchase of the Christmas gift wrap business on September 9, 2011). The outstanding principal balance of such note receivable was reduced to $500,000 during fiscal 2013.

Income from continuing operations before income taxes for the three months ended September 30, 2013 was $16,040,000 compared to $12,259,000 in 2012. The increase in income from continuing operations before income taxes for the three months ended September 30, 2013 was primarily due to the reduction in costs associated with the disposition of product line discussed above, favorable margins and lower payroll related expenses, partially offset by the impact of lower sales volume.

Income taxes, as a percentage of income before taxes, were 32% and 44% in the three months ended September 30, 2013 and 2012, respectively. The decrease in income taxes, as a percentage of income before taxes, in the three months ended September 30, 2013 was primarily attributable to a reduction to the property, plant and equipment deferred tax liability recorded in the current period. The increase in income taxes, as a percentage of income before taxes, in the three months ended September 30, 2012 was primarily attributable to a portion of the goodwill reduction recorded related to the sale of the Halloween portion of Paper Magic’s business being non-deductible for tax purposes.

Income from discontinued operations, net of tax of $112,000 for the three months ended September 30, 2013 increased from $81,000 in 2012 primarily due to the favorable outcome of a property tax assessment. The primary operating activity of the discontinued operation ceased in December 2011.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2013, the Company had working capital of $177,970,000 and stockholders’ equity of $250,917,000. The increase in accounts receivable from March 31, 2013 reflected seasonal billings of current year Christmas accounts receivable, net of current year collections. The increase in inventories and other current liabilities from March 31, 2013 was primarily a result of the normal seasonal inventory build necessary for the fiscal 2014 shipping season. The increase in stockholders’ equity from March 31, 2013 was primarily attributable to year-to-date net income, partially offset by treasury stock purchases and payments of cash dividends.

The Company relies primarily on cash generated from its operations and, if needed, seasonal borrowings to meet its liquidity requirements. Historically, a significant portion of the Company’s revenues have been seasonal, primarily Christmas related, with approximately 70% of sales recognized in the second and third quarters. As payment for sales of Christmas related products is usually not received until just before or just after the holiday selling season in accordance with general industry practice, working capital needs increase in the second and third quarters, peaking prior to Christmas and dropping thereafter. The sale of the Halloween portion of Paper Magic’s business has decreased the Company’s seasonal working capital requirements. Financing for seasonal working capital requirements, and to provide the Company with sources of capital for general corporate purposes, including acquisitions, is available under a revolving credit facility with two banks. Reflecting the seasonality of the Company’s business, the maximum credit available at any one time under the credit facility (“Commitment Level”) adjusts to $50,000,000 from February to June (“Low Commitment Period”), $100,000,000 from July to October (“Medium Commitment Period”) and $150,000,000 from November to January (“High Commitment Period”) in each respective year over the term of the facility. The Company has the option to increase the Commitment Level

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during part of any Low Commitment Period from $50,000,000 to an amount not less than $62,500,000 and not in excess of $125,000,000; provided, however, that the Commitment Level must remain at $50,000,000 for at least three consecutive months during each Low Commitment Period. The Company has the option to increase the Commitment Level during all or part of any Medium Commitment Period from $100,000,000 to an amount not in excess $125,000,000. Fifteen days prior written notice is required for the Company to exercise an option to increase the Commitment Level with respect to a particular Low Commitment Period or Medium Commitment Period. The Company may exercise an option to increase the Commitment Level no more than three times each calendar year. This facility is due to expire on March 17, 2016. At September 30, 2013, there were no borrowings outstanding under the Company’s revolving credit facility, and the Company did not borrow any amount under the facility during the six months ended September 30, 2013. The Company is in compliance with all financial debt covenants as of September 30, 2013. Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its future cash needs for at least the next 12 months.

As of September 30, 2013, the Company’s letter of credit commitments are as follows (in thousands):

	Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
Letters of credit	$	1,983		0		0		0	$	1,983

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

As of September 30, 2013, the Company is committed to purchase approximately $30,000 of electric power from a vendor through December 31, 2013. The Company believes the minimum commodity purchases under this agreement are well within the Company’s annual commodity requirements. The Company is also committed to pay guaranteed minimum royalties attributable to sales of certain licensed products. Reference is made to contractual obligations included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2013. There have been no significant changes to such contractual obligations.

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

LABOR RELATIONS

With the exception of the bargaining unit at the ribbon manufacturing facility in Hagerstown, Maryland, which totaled approximately 97 employees as of September 30, 2013, CSS employees are not represented by labor unions. Because of the seasonal nature of certain of its businesses, the number of production employees fluctuates during the year. The collective bargaining agreement with the labor union representing the Hagerstown-based production and maintenance employees remains in effect until December 31, 2014.

ACCOUNTING PRONOUNCEMENTS

See Note 11 to the consolidated financial statements for information concerning recent accounting pronouncements and the impact of those standards.

FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding continued use of acquisitions and other initiatives to stimulate growth; aggressively pursuing new product initiatives, pursuing sales growth within certain identified product categories, driving sales growth by providing stronger management oversight and by reallocating sales and marketing resources

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in a more strategic manner; the expected future impact of legal proceedings; the anticipated effects of measures taken by the Company to respond to sales volume, cost and price pressures; the expected future timing for liquidation of assets and satisfaction of liabilities associated with the Company’s former Halloween business; the expected amount and timing of future amortization expense and future compensation expense relating to non-vested outstanding stock options and RSUs; the expected future effect of certain accounting pronouncements; and the Company’s belief that its sources of available capital are adequate to meet its future cash needs for at least the next 12 months. Forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management as to future events and financial performance with respect to the Company’s operations. Forward-looking statements speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they were made. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including without limitation: general market and economic conditions; increased competition (including competition from foreign products which may be imported at less than fair value and from foreign products which may benefit from foreign governmental subsidies); difficulties entering new markets and/or developing new products that drive incremental sales; increased operating costs, including labor-related and energy costs and costs relating to the imposition or retrospective application of duties on imported products; currency risks and other risks associated with international markets; difficulties identifying and evaluating suitable acquisition opportunities; risks associated with acquisitions, including realization of intangible assets and recoverability of long-lived assets, and acquisition integration costs and the risk that the Company may not be able to integrate and derive the expected benefits from such acquisitions; risks associated with the combination of the operations of Berwick Offray and Paper Magic; risks associated with the Company’s sale of the Halloween portion of its Paper Magic business; risks associated with the Company’s restructuring activities, including the risk that the cost of such activities will exceed expectations, the risk that the expected benefits of such activities will not be realized, and the risk that implementation of such activities will interfere with and adversely affect the Company’s operations, sales and financial performance; the risk that customers may become insolvent, may delay payments or may impose deductions or penalties on amounts owed to the Company; costs of compliance with governmental regulations and government investigations; liability associated with non-compliance with governmental regulations, including regulations pertaining to the environment, federal and state employment laws, and import and export controls, customs laws and consumer product safety regulations; and other factors described more fully in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013 and elsewhere in the Company’s filings with the Securities and Exchange Commission. As a result of these factors, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s activities expose it to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. The Company actively monitors these exposures and, where considered appropriate, manages these risks. The Company manages its exposure to foreign currency fluctuations by entering into foreign currency forward contracts to hedge the majority of firmly committed transactions and related receivables that are denominated in a foreign currency. The Company does not enter into contracts for trading purposes and does not use leveraged instruments. The market risks associated with debt obligations and other significant instruments as of September 30, 2013 have not materially changed from March 31, 2013 (see Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013).

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the Company’s management, with the participation of the Company’s President and Chief Executive Officer and Vice President – Finance and 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

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under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the President and Chief Executive Officer and Vice President – Finance and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

(b) Changes in Internal Controls. There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) as promulgated by the Securities and Exchange Commission under the Exchange Act) during the second quarter of fiscal year 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

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

Share Repurchase Program

A total of 185,233 shares were repurchased at an average price of $24.29 in the second quarter of fiscal 2014. As of September 30, 2013, there remained an outstanding authorization to repurchase 259,041 shares of outstanding CSS common stock as represented in the table below.

	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (2)		Maximum Number of Shares that May Yet Be Purchased Under the Program (2)
July 1 through July 31, 2013		0	$	0.00		0		444,274
August 1 through August 31, 2013		85,643		24.26		85,643		358,631
September 1 through September 30, 2013		99,590		24.32		99,590		259,041
Total Second Quarter		185,233	$	24.29		185,233		259,041

(1) All share repurchases were effected in open-market transactions and in accordance with the safe harbor provisions of Rule 10b-18 of the Exchange Act.

(2) On October 23, 2008 and July 31, 2012, the Company announced that its Board of Directors had authorized the repurchase of up to 500,000 shares and 500,000 shares, respectively, of the Company’s common stock (the “Repurchase Program”). As of September 30, 2013, the Company repurchased an aggregate of 740,959 shares pursuant to the Repurchase Program. An expiration date has not been established for the Repurchase Program.

Item 6. Exhibits

*Exhibit 10.1	CSS Industries, Inc. 2013 Equity Compensation Plan.
*Exhibit 31.1	Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
*Exhibit 31.2	Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
*Exhibit 32.1	Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
*Exhibit 32.2	Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U. S. C. Section 1350.
*101.INS	XBRL Instance Document.
*101.SCH	XBRL Schema Document.
*101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.

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*101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
*101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

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

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SIGNATURES

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

	CSS INDUSTRIES, INC.
	(Registrant)
Date: October 30, 2013	By:	/s/ Christopher J. Munyan
		Christopher J. Munyan
		President and Chief Executive Officer
		(principal executive officer)
Date: October 30, 2013	By:	/s/ Vincent A. Paccapaniccia
		Vincent A. Paccapaniccia
		Vice President – Finance and Chief Financial Officer
		(principal financial and accounting officer)

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EX-10.1

Exhibit 10.1

CSS INDUSTRIES, INC.

2013 EQUITY COMPENSATION PLAN

(Effective as of July 30, 2013)

The purpose of the CSS Industries, Inc. 2013 Equity Compensation Plan (the “Plan”) is to provide designated employees and officers of CSS Industries, Inc. (the “Company”) and its subsidiaries with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents. The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefitting the Company’s stockholders, and will align the economic interests of the participants with those of the stockholders.

1. Committee

(a) Administration. The Plan shall be administered and interpreted by the Human Resources Committee (or such other committee appointed by the Board to administer the Plan) (“Committee”). The Committee shall consist of not less than three members of the Board of Directors of the Company (the “Board”), all of whom shall be “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and related Treasury regulations, “non-employee directors” as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and “independent directors” in accordance with the governance rules of the New York Stock Exchange (“NYSE”).

(b) Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise, vesting or restriction period, including the criteria for exercisability, vesting and lapse of any restriction period and the acceleration of exercisability, vesting and lapse of a restriction period, (iv) amend the terms of any previously issued grant, subject to the provisions of Section 18 below, and (v) deal with any other matters arising under the Plan.

(c) Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

2. Grants

Awards under the Plan may consist of grants of Incentive Stock Options and Nonqualified Stock Options (as described in Section 5 and collectively referred to as “Options”), stock units (as described in Section 6 and referred to as “Stock Units”), restricted stock grants (as described in Section 7 and referred to as “Restricted Stock Grants”), stock appreciation rights (as described in Section 8 and referred to as “SARs”), stock bonus awards (as described in Section 9 and referred to as “Stock Bonus Awards”) and dividend equivalents (as described in Section 10 and referred to as “Dividend Equivalents”) (Options, Stock Units, Restricted Stock Grants, SARs, Stock Bonus Awards and Dividend Equivalents are hereinafter collectively referred to as “Grants”). All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument or an amendment to the grant instrument (the “Grant Instrument”). All Grants shall be made conditional upon the Grantee’s acknowledgement, in writing or by acceptance of the Grant, that all decisions and determinations of the Committee shall be final and binding on the Grantee, his or her beneficiaries, and any other person having or claiming an interest under such Grant. The Committee shall approve the form and provisions of each Grant Instrument or may delegate such authority to the executive officers of the Company or to any of them acting singly. Grants under a particular Section of the Plan need not be uniform as among the Grantees.

3. Shares Subject to the Plan

(a) Shares Authorized. Subject to adjustment as described in Section 3(d) below, the aggregate number of shares of common stock, par value $0.10 per share, of the Company (“Company Stock”) that may be granted or transferred under the Plan is the sum of (i) 1,100,000 shares, (ii) the number of shares subject to outstanding options granted under the Company’s 2004 Equity Compensation Plan (the “2004 Plan”) and outstanding on May 31, 2013, to the extent that such options terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, and (iii) the number of shares subject to stock bonus awards granted under the 2004 Plan and outstanding on May 31, 2013, to the extent that such stock bonus awards are forfeited, terminated or otherwise not paid in full, (the “Plan Limit”); provided, that, the Plan Limit shall not include (x) for purposes of clause (ii), shares subject to such outstanding options to the extent that (A) such shares are withheld or surrendered for payment of taxes or the exercise price of any such outstanding option and (B) shares of Company Stock are surrendered in payment of the exercise price of any such outstanding option; and (y) for purposes of clause (iii), shares subject to such outstanding stock bonus awards to the extent that such shares are withheld or surrendered for payment of taxes. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan.

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(b) Share Counting. If, and to the extent, Options or SARs granted under the Plan terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised or if any Stock Unit, Restricted Stock Grants, Stock Bonus Awards or Dividend Equivalents (to the extent that such Dividend Equivalents are payable in shares of Company Stock) granted under the Plan are forfeited, terminated or otherwise not paid in full, the shares subject to such Grants shall again be available for purposes of the Plan, provided, however, that (i) shares of Company Stock surrendered in payment of the Exercise Price of an Option and shares withheld or surrendered for payment of taxes, shall not be available for re-issuance under the Plan, (ii) if SARs are exercised, the full number of shares subject to the SARs shall be considered issued under the Plan, without regard to the number of shares issued upon settlement of the SARs and without regard to any cash settlement of the SARs, and (iii) to the extent that other Grants are to be paid in cash, and not in shares of Company Stock, such Grants shall not count against the share limits in subsection (a).

(c) Individual Limits. The maximum aggregate number of shares of Company Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 300,000 shares, subject to adjustment as described below. The maximum aggregate number of shares of Company Stock to which Options or SARs may be granted under the Plan to any individual during any calendar year is 300,000 shares, subject to adjustment as described below. The maximum aggregate number of shares of Company Stock with respect to which Stock Units, Restricted Stock Grants or Stock Bonus Awards may be granted under the Plan to any individual during any calendar year as Performance Awards under Section 11 is 300,000 shares, subject to adjustment as described below. The foregoing individual share limits shall apply without regard to whether such Grants are to be paid in shares of Company Stock or cash.

(d) Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares; (ii) a merger, reorganization or consolidation; (iii) a reclassification or change in par value; or (iv) any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock for which any individual may receive Grants in any year as set forth in subsection (c) above, the kind and number of shares covered by outstanding Grants, the kind and number of shares issued and to be issued under the Plan, and the price per share or the applicable market value of such Grants shall be equitably adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Plan and such outstanding Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In addition, in the event of a Change of Control of the Company, the provisions of Section 16 of the Plan shall apply. Any adjustments to outstanding Grants shall be consistent with section 409A or 424 of the Code, to the extent applicable. Any adjustments determined by the Committee shall be final, binding and conclusive.

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4. Eligibility for Participation

(a) Eligible Persons. Employees of the Company and its subsidiaries (“Employees”), including Employees who are officers or members of the Board shall be eligible to participate in the Plan.

(b) Selection of Grantees. The Committee shall select the Employees to receive Grants and shall determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines. Employees who receive Grants under this Plan shall be referred to herein as “Grantees.”

5. Granting of Options

The Committee may grant Options to an Employee, upon such terms as the Committee deems appropriate. The following provisions are applicable to Options:

(a) Number of Shares. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Options to Employees.

(b) Type of Option and Price.

(i) The Committee may grant Incentive Stock Options that are intended to qualify as “incentive stock options” within the meaning of section 422 of the Code (“Incentive Stock Options”) or nonqualified stock options that are not intended so to qualify (“Nonqualified Stock Options”) or any combination of Incentive Stock Options and Nonqualified Stock Options, all in accordance with the terms and conditions set forth herein.

(ii) The purchase price (the “Exercise Price”) of Company Stock subject to an Option shall be determined by the Committee and shall be equal to or greater than the Fair Market Value (as defined below) of a share of Company Stock on the date the Option is granted; provided, however, that an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, as defined in section 424 of the Code, unless the Exercise Price per share is not less than 110% of the Fair Market Value of a share of Company Stock on the date of grant.

(iii) The “Fair Market Value” per share of Company Stock shall mean (A) if the principal trading market for the shares of Company Stock is a national securities exchange, the last reported sale price of the shares of Company Stock on the trading day immediately prior to the relevant date (or if there were no trades on that date the immediately preceding date upon which a sale was reported), (B) if the shares of Company Stock are not principally traded on a national securities exchange, the mean between the last reported “bid” and “asked” prices of shares of Company Stock on the

4

relevant date, as reported on the OTC Bulletin Board, or (C) if the shares of Company Stock are not publicly traded or, if publicly traded, are not so reported, the Fair Market Value shall be as determined by the Committee.

(c) Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, as defined in section 424 of the Code, may not have a term that exceeds five years from the date of grant.

(d) Exercisability of Options. Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and reflected in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason.

(e) Termination of Employment, Death or Retirement. Except as provided below or in a Grant Instrument, an Option may only be exercised while the Grantee is employed by the Employer (as defined below) as an Employee.

(i) In the event that a Grantee ceases to be employed by the Employer as a result of a termination by the Employer for any reason other than a termination for Cause or the Grantee’s death, any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be employed by the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by the Employer shall terminate as of such date.

(ii) In the event the Grantee ceases to be employed by the Employer on account of a termination for Cause by the Employer or the Grantee’s voluntary termination (other than by reason of retirement approved by the Committee), any Option held by the Grantee shall terminate as of the date the Grantee ceases to be employed by the Employer, except as otherwise determined by the Committee. In addition, notwithstanding any other provisions of this Section 5, if the Committee determines that the Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employed by the Employer or after the Grantee’s termination of employment, any Option held by the Grantee shall immediately terminate, and the Grantee shall automatically forfeit all shares underlying any exercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund by the Company of the Exercise Price paid by the Grantee for such shares. Upon any exercise of an Option, the Company may withhold delivery of share certificates pending resolution of an inquiry that could lead to a finding resulting in a forfeiture.

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(iii) If the Grantee dies while employed by the Employer or retires from such employment with the consent of the Committee, any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within 180 days after the date on which the Grantee ceases to be employed by the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by the Employer shall terminate as of such date.

(iv) For purposes of the Plan:

(A) The term “Employer” shall mean the Company and its subsidiary corporations or other entities, as determined by the Committee.

(B) “Employed by the Employer” shall mean employment as an Employee (so that, for purposes of exercising Options and SARs and satisfying conditions with respect to Stock Units, Restricted Stock Grants, Stock Bonus Awards and Dividend Equivalents, a Grantee shall not be considered to have terminated employment until the Grantee ceases to be an Employee), unless the Committee determines otherwise.

(C) “Cause” shall mean, except to the extent specified otherwise by the Committee, a finding by the Committee that the Grantee (I) has breached his or her employment agreement with the Employer; (II) has engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty; (III) has disclosed trade secrets or confidential information of the Employer to persons not entitled to receive such information; (IV) has breached any written noncompetition or nonsolicitation agreement between the Grantee and the Employer; or (V) has engaged in such other behavior detrimental to the interests of the Employer as the Committee determines.

(f) Exercise of Options. A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company. The Grantee shall pay the Exercise Price for an Option as specified by the Committee (i) in cash; (ii) by delivering shares of Company Stock owned by the Grantee (including Company Stock acquired in connection with the exercise of an Option), subject to such restrictions as the Committee deems appropriate and having a Fair Market Value on the date of exercise at least equal to the Exercise Price, or by attestation (on a form prescribed by the Committee) to ownership of Shares having a Fair Market Value on the date of exercise at least equal to the Exercise Price; (iii) payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board; (iv) by “net exercise,” which is the surrender of shares for which the Option is exercisable to the Company in exchange for a distribution of shares of Company Stock equal to the amount by which the then Fair Market Value of the shares subject to the exercised Option exceeds the applicable Exercise Price; (v) any combination of clauses

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(i), (ii), (iii) or (iv); or (v) by such other method as the Committee may approve, to the extent permitted by applicable law. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisite period of time necessary to avoid adverse accounting consequences to the Company with respect to the Option. The Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 13) as specified by the Committee. Payment for the shares to be issued or transferred pursuant to the Option, and any required withholding taxes, must be received by the Company by the time specified by the Committee depending on the type of payment being made, but in all cases prior to, or simultaneously with, the issuance or transfer of such shares.

(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, as defined in section 424 of the Code, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. The aggregate number of shares of Company Stock that may be issued under the Plan as Incentive Stock Options is 1,100,000 shares, and all shares issued under the Plan as Incentive Stock Options shall count against the Plan Limit.

6. Stock Unit

(a) General Requirements. The Committee may grant Stock Units to an Employee upon such terms and conditions as the Committee deems appropriate under this Section 6. Each Stock Unit shall represent the right of the Grantee to receive a share of Company Stock or an amount based on the value of a share of Company Stock. All Stock Units shall be credited to accounts on the Company’s records for purposes of the Plan.

(b) Vesting of Stock Units. The Committee shall establish the vesting conditions for Stock Units in the Grant Instrument. The Committee may accelerate the vesting of any or all outstanding Stock Units at any time for any reason.

(c) Terms of Stock Units. The Committee shall determine the number of Stock Units to be granted and the requirements applicable to such Stock Units. The Committee may grant Stock Units that are payable on terms and conditions determined by the Committee. Stock Units may be paid at the end of a specified period, or payment may be deferred to a date authorized by the Committee consistent with section 409A of the Code.

(d) Payment With Respect to Stock Units. Payment with respect to Stock Units shall be made in cash, in Company Stock or in a combination of the two, as determined by the Committee in the Grant Instrument. The Grant Instrument shall specify the maximum number of shares of Company Stock that can be issued under the Stock Units.

(e) Requirement of Employment or Service. The Committee shall determine in the Grant Instrument under what circumstances a Grantee may retain Stock Units after termination of the Grantee’s employment or service, and the circumstances under which Stock Units may be forfeited.

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7. Restricted Stock Grants

The Committee may issue or transfer shares of Company Stock to an Employee under a Restricted Stock Grant, upon such terms as the Committee deems appropriate. The following provisions are applicable to Restricted Stock Grants:

(a) General Requirements. Shares of Company Stock issued or transferred pursuant to a Restricted Stock Grant may be issued or transferred for consideration or for no consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may establish conditions under which restrictions on Restricted Stock Grants shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including, without limitation, restrictions based upon the achievement of specific performance goals. The period of time during which the Restricted Stock Grant shall remain subject to restrictions will be designated in the Grant Instrument as the “Restriction Period.”

(b) Number of Shares. The Committee, in its sole discretion, shall determine the number of shares of Company Stock to be issued or transferred pursuant to a Restricted Stock Grant and the restrictions applicable to such shares.

(c) Requirement of Employment. If the Grantee ceases to be employed by the Employer or if other specified conditions are not met, the Restricted Stock Grant shall terminate as to all shares covered by the Grant as to which the restrictions have not lapsed, and those shares of Company Stock must immediately be returned to the Company. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

(d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Grantee may not sell, assign, transfer, pledge, or otherwise dispose of the shares of the Restricted Stock Grant except to a successor under Section 14. Each certificate for Restricted Stock Grants shall contain a legend giving appropriate notice of the restrictions in the Grant. The Grantee shall be entitled to have the legend removed from the stock certificate covering the shares subject to restrictions and to delivery of such stock certificate when all restrictions on such shares have lapsed. The Committee may determine that the Company will not issue certificates for Restricted Stock Grants until all restrictions on such shares have lapsed. If certificates are issued, the Company will retain possession of such certificates for Restricted Stock Grants until all restrictions on such shares have lapsed.

(e) Right to Vote and to Receive Dividends. The Committee shall determine to what extent, and under what conditions, the Grantee shall have the right to vote shares subject to Restricted Stock Grants and to receive any dividends or other distributions paid on such shares during the Restriction Period, provided that dividends

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with respect to Restricted Stock Grants that are subject to performance conditions shall vest and be paid only if and to the extent the underlying Restricted Stock Grant vests and is paid, as determined by the Committee.

(f) Lapse of Restrictions. All restrictions imposed upon Restricted Stock Grants shall lapse upon the expiration of the applicable Restriction Period and the satisfaction of all conditions imposed by the Committee. The Committee may determine, as to any or all Restricted Stock Grants, that the restrictions shall lapse without regard to any Restriction Period.

8. Stock Appreciation Rights

The Committee may grant SARs to an Employee separately or in tandem with any Option. The following provisions are applicable to SARs:

(a) General Requirements. The Committee may grant SARs to an Employee separately or in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal to, or greater than, the Fair Market Value of a share of Company Stock as of the date of Grant of the SAR.

(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Grantee that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Grantee may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Company Stock.

(c) Exercisability. An SAR shall be exercisable during the period specified by the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. SARs may only be exercised while the Grantee is employed by the Employer or during the applicable period after termination of employment as described in Section 5(e). A tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable.

(d) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised, payable in cash, Company Stock, or a combination thereof. The stock appreciation for an SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described in subsection (a).

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(e) Form of Payment. The Committee shall determine whether the appreciation in an SAR shall be paid in the form of cash, shares of Company Stock, or a combination of the two, in such proportion as the Committee deems appropriate. For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Company Stock are to be received upon exercise of an SAR, cash shall be delivered in lieu of any fractional share.

9. Stock Bonus Awards. The Committee may grant shares of Company Stock as a bonus, or may grant other awards in lieu of obligations of the Company or any of its subsidiaries to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Committee.

10. Dividend Equivalents. The Committee may grant Dividend Equivalents with respect to Stock Units and Stock Bonus Awards under such terms and conditions as the Committee deems appropriate, provided that Dividend Equivalents with respect to Stock Units and Stock Bonus Awards that are subject to performance conditions shall vest and be paid only if and to the extent the underlying Stock Units and Stock Bonus Awards vest and are paid, as determined by the Committee. Dividend Equivalents may be paid to Grantees currently or may be deferred, consistent with section 409A of the Code, as determined by the Committee. All Dividend Equivalents that are not paid currently shall be credited to accounts on the Company’s records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to Stock Units for the Grantee, as determined by the Committee. Unless otherwise specified in the Grant Instrument, deferred Dividend Equivalents will not accrue interest. The Committee may provide that Dividend Equivalents shall be payable based on the achievement of specific performance goals. Dividend Equivalents may be payable in cash or shares of Company Stock or in a combination of the two, as determined by the Committee in the Grant Instrument. For the avoidance of doubt, Dividend Equivalents may not be granted with respect to Options, SARs or Restricted Stock Grants.

11. Qualified Performance-Based Compensation.

The Committee may determine that Stock Units, Restricted Stock Grants or Stock Bonus Awards granted to an Employee shall be considered “qualified performance-based compensation” under section 162(m) of the Code (“Performance Awards”). The following provisions shall apply to any such Performance Awards:

(a) Performance Goals.

(i) When Performance Awards are granted, the Committee shall establish in writing (A) the objective performance goals that must be met, (B) the performance period during which the performance will be measured, (C) the threshold,

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target and maximum amounts that may be paid if the performance goals are met, and (D) any other conditions that the Committee deems appropriate and consistent with the Plan and section 162(m) of the Code.

(ii) The business criteria may relate to the Grantee’s business unit or the performance of the Company and its parents and subsidiaries as a whole, or any combination of the foregoing, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies. The Committee shall use objectively determinable performance goals based on one or more of the following criteria: the price of the Company’s stock, earnings per share, income before taxes and extraordinary items, net income, operating income, revenues, earnings before income tax, EBITDA (earnings before interest, taxes, depreciation and amortization), after-tax or pre-tax profits, operational cash flow, return on capital employed or return on invested capital, after-tax or pre-tax return on stockholders’ equity, decreasing or increasing the level of all, or a portion of, the Company’s assets and/or liabilities, stockholder return, return on equity, growth in assets, unit volume, sales or market share, or strategic business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures. The Committee may provide, at the time the performance goals are established, that adjustments will be made to the applicable performance goals to take into account, in any objective manner specified by the Committee, the impact of one or more of the following: (i) gain or loss from all or certain claims and/or litigation and insurance recoveries, (ii) the impairment of tangible or intangible assets, (iii) stock-based compensation expense, (iv) extraordinary, unusual or infrequently occurring events reported in the Company’s public filings, (v) restructuring activities reported in the Company’s public filings, (vi) investments, dispositions or acquisitions, (vii) gain or loss from the disposal of certain assets, (viii) gain or loss from the early extinguishment, redemption, or repurchase of debt, or (ix) changes in accounting principles that become effective during the performance period.

(b) Establishment of Goals. The Committee shall establish the performance goals in writing either before the beginning of the performance period or during a period ending no later than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on which 25% of the performance period has been completed, or such other date as may be required or permitted under applicable regulations under section 162(m) of the Code. The performance goals shall satisfy the requirements for “qualified performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is payable upon achievement of the designated performance goals, but may reduce the amount of compensation that is payable, pursuant to Performance Awards.

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(c) Certification of Results. The Committee shall certify in writing that the performance goals were satisfied prior to the payment of any Performance Award, as required by section 162(m) of the Code and the regulations promulgated thereunder. The Committee shall determine the amount, if any, to be paid pursuant to each Performance Award based on the achievement of the performance goals and the satisfaction of all other terms of the Grant Instrument. If and to the extent that the Committee does not certify that the performance goals have been met, the grants of Performance Awards for the performance period shall be forfeited or shall not be made, as applicable.

(d) Death or Other Circumstances. The Committee may provide that Performance Awards shall be payable or restrictions on such Performance Awards shall lapse, in whole or in part, in the event of the Grantee’s death during the performance period, or under other circumstances consistent with the Department of Treasury regulations and rulings under section 162(m) of the Code.

12. Deferrals. The Committee may permit or require a Grantee to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to such Grantee in connection with any Grant. If any such deferral election is permitted or required, the Committee shall establish rules and procedures for such deferrals and may provide for interest or other earnings to be paid on such deferrals. The rules and procedures for any such deferrals shall be consistent with applicable requirements of section 409A of the Code.

13. Withholding of Taxes

(a) Required Withholding. All Grants under the Plan shall be subject to applicable federal (including FICA), state, and local tax withholding requirements. The Employer may require that the Grantee or other person receiving or exercising Grants pay to the Employer the amount of any federal, state, or local taxes that the Employer is required to withhold with respect to such Grants, or the Employer may deduct from other wages paid by the Employer the amount of any withholding taxes due with respect to such Grants. The Company may require the payment of any taxes before issuing any shares of Company Stock pursuant to the Grant.

(b) Withholding of Shares. The Committee may determine that the Employer’s tax withholding obligation with respect to a Grant paid in Company Stock shall be satisfied by having shares of Company Stock withheld up to an amount that does not exceed the Grantee’s minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities, or the Committee may allow Grantees to elect to have such share withholding applied to particular Grants.

(c) Stock Delivery. The Committee may provide any Grantee with the right to use previously acquired shares of Company Stock in satisfaction of all or part of the Employer’s tax withholding obligation with respect to a Grant paid in Company Stock.

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14. Transferability of Grants

(a) Nontransferability of Grants. Except as provided below, only the Grantee may exercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii) with respect to Grants other than Incentive Stock Options, if permitted in any specific case by the Committee, pursuant to a domestic relations order or otherwise as permitted by the Committee and, with respect to Nonqualified Stock Options or SARS, only to the extent permitted by subsection (b). When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

(b) Transfer of Nonqualified Stock Options or SARs. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options or SARs to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option or SAR and the transferred Option or SAR shall continue to be subject to the same terms and conditions as were applicable to the Option or SAR immediately before the transfer.

15. Change of Control of the Company

As used herein, a “Change of Control” shall be deemed to have occurred if:

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

(b) The consummation of (i) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (ii) a sale or other disposition of all or substantially all of the assets of the Company; or (iii) a liquidation or dissolution of the Company.

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16. Consequences of a Change of Control

(a) Notice and Acceleration. Upon a Change of Control, unless the Committee determines otherwise, (i) the Company shall provide each Grantee with outstanding Grants not less than ten days’ advance written notice of such Change of Control; (ii) all outstanding Options and SARs shall automatically accelerate and become fully exercisable; and (iii) the restrictions and conditions on all outstanding Stock Units, Restricted Stock Grants, Stock Bonus Awards and Dividend Equivalents shall immediately lapse.

(b) Assumption of Grants. Upon a Change of Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Options and SARs that are not exercised shall be assumed by, or replaced with comparable options and rights by, the surviving corporation (or a parent or subsidiary of the surviving corporation), and other outstanding Grants shall be converted to similar grants of the surviving corporation (or a parent or subsidiary of the surviving corporation).

(c) Other Alternatives. Notwithstanding the foregoing, in the event of a Change of Control, the Committee may take one or both of the following actions with respect to any or all outstanding Grants: the Committee may (i) require that the Grantees surrender their outstanding Options and SARs in exchange for a payment by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the amount, if any, by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s unexercised Options and SARs exceeds the Exercise Price of the Options or the base amount of the SARs, as applicable; (ii) after giving the Grantees an opportunity to exercise their outstanding Options and SARs, terminate any or all unexercised Options and SARs at such time as the Committee deems appropriate; or (iii) determine that Grantees shall receive a payment in settlement of outstanding Stock Units, Restricted Stock Grants, Stock Bonus Awards or Dividend Equivalents, if permitted under section 409A of the Code. Such surrender, termination or payment shall take place as of the date of the Change of Control or such other date as the Committee may specify. Without limiting the foregoing, if the per share Fair Market Value of the Company Stock equals or is less than the per share Exercise Price or base amount, as applicable, the Company shall not be required to make any payment to the Grantee upon surrender of the Option or SAR.

17. Requirements for Issuance or Transfer of Shares. No Company Stock shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant made to any Grantee hereunder on the Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of the shares of Company Stock as the Committee shall deem necessary or advisable, and certificates

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representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. No Grantee shall have any right as a stockholder with respect to Company Stock covered by a Grant until shares have been issued to the Grantee.

18. Amendment and Termination of the Plan

(a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without stockholder approval if such approval is required in order to comply with the Code or other applicable laws, or to comply with applicable stock exchange requirements.

(b) Prohibition on Repricing Programs. The Committee shall not (i) implement any cancellation/regrant program pursuant to which outstanding Options or SARs under the Plan are cancelled and new Options or SARs are granted in replacement with a lower exercise price per share, (ii) cancel outstanding Options or SARs under the Plan with exercise or base prices per share in excess of the then current Fair Market Value per share of Company Stock for consideration payable in cash, equity securities of the Company or in the form of any other award under the Plan, except in connection with a Change of Control transaction or (iii) otherwise directly reduce the exercise price in effect for outstanding Options or SARs under the Plan, without in each such instance obtaining stockholder approval.

(c) Stockholder Re-Approval Requirement. If Stock Units, Restricted Stock Grants or Stock Bonus Awards are to be granted as “qualified performance-based compensation” under Section 11 above, Section 11 must be reapproved by the stockholders no later than the first stockholders meeting that occurs in the fifth year following the year in which the stockholders previously approved the provisions of Section 11, if required by section 162(m) of the Code or the regulations thereunder.

(d) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of the Effective Date (as defined below), unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders.

(e) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 24(c). The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 24(c) or may be amended by agreement of the Company and the Grantee consistent with the Plan.

(f) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials, or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

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19. Funding of the Plan. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Grants.

20. Rights of Grantees. Nothing in this Plan shall entitle any Employee or other person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Employer or any other employment rights.

21. No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. The Committee shall determine whether cash, other awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

22. Headings. Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control.

23. Effective Date of the Plan. The Plan is effective as of July 30, 2013 (the “Effective Date”), subject to the approval by the Company’s stockholders.

24. Miscellaneous

(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation, or otherwise, of the business or assets of any corporation, firm, or association, including Grants to employees thereof who become Employees, or for other proper corporate purposes; or (ii) limit the right of the Committee to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a grant made by such corporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute Grants as it deems appropriate, including setting the Exercise Price of Options or the base price of SARs at a price necessary to retain for the Grantee the same economic value as the prior options or rights, as determined by the Committee. Such substitute awards shall not reduce the Plan’s available shares of Company Stock as described above in Section 3(a), consistent with applicable stock exchange requirements, and shall not be limited by the individual limits in Section 3(c).

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(b) Company Policies. All Grants under the Plan shall be subject to any applicable clawback or recoupment policies, share trading policies and any other policies implemented by the Board of the Company, as in effect from time to time.

(c) Compliance with Law. The Plan, the exercise of Options, and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code, that Grants of “qualified performance-based compensation” comply with the applicable provisions of section 162(m) of the Code and that, to the extent applicable, Grants comply with the requirements of section 409A of the Code. To the extent that any provision that is designed to comply with section 16 of the Exchange Act or the legal requirements of section 422, 162(m) or 409A of the Code as set forth in the Plan ceases to be necessary under section 16 of the Exchange Act or required under section 422, 162(m) or 409A of the Code, that Plan provision shall cease to apply. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation.

(d) Section 409A. The Plan is intended to comply with the requirements of section 409A of the Code, to the extent applicable. All Grants shall be construed and administered such that the Grant either (i) qualifies for an exemption from the requirements of section 409A of the Code or (ii) satisfies the requirements of section 409A of the Code. If a Grant is subject to section 409A of the Code, (i) distributions shall only be made in a manner and upon an event permitted under section 409A of the Code, (ii) payments to be made upon a termination of employment shall only be made upon a “separation from service” under section 409A of the Code, (iii) payments to be made upon a Change of Control shall only be made upon a “change of control event” under section 409A of the Code, (iv) unless the Grant specifies otherwise, each payment shall be treated as a separate payment for purposes of section 409A of the Code, and (v) in no event shall a Grantee, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with section 409A of the Code. Any Grant granted under the Plan that is subject to section 409A of the Code and that is to be distributed to a key employee (as defined below) upon separation from service shall be administered so that any distribution with respect to such Grant shall be postponed for six months following the date of the Grantee’s separation from service, if required by section 409A of the Code. If a distribution is delayed pursuant to section 409A of the Code, the distribution shall be paid within thirty (30) days after the end of the six-month period. If the Grantee dies during such six-month period, any postponed amounts shall be paid within sixty (60) days of the Grantee’s death. The determination of key employees, including the number and identity of persons considered key employees and the identification date, shall be made by the Committee or its delegate each year in accordance with section 416(i) of the Code and the “specified employee” requirements of section 409A of the Code.

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(e) Employees Subject to Taxation Outside the United States. With respect to Grantees who are subject to taxation in countries other than the United States, the Committee may make Grants on such terms and conditions as the Committee deems appropriate to comply with the laws of the applicable countries, and the Committee may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.

(f) Governing Law. The validity, construction, interpretation, and effect of the Plan and Grant Instruments issued under the Plan shall be governed and construed by and determined in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflict of laws provisions thereof.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher J. Munyan, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: October 30, 2013

/s/ Christopher J. Munyan

Christopher J. Munyan,

President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vincent A. Paccapaniccia, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: October 30, 2013

/s/ Vincent A. Paccapaniccia

Vincent A. Paccapaniccia

Vice President – Finance and Chief Financial Officer

(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher J. Munyan, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

/s/ Christopher J. Munyan

Christopher J. Munyan

President and Chief Executive Officer

(principal executive officer)

October 30, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vincent A. Paccapaniccia, 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 to my knowledge:

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

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

/s/ Vincent A. Paccapaniccia

Vincent A. Paccapaniccia

Vice President – Finance and Chief Financial Officer

(principal financial officer)

October 30, 2013

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

On September 9, 2011, the Company and its Cleo Inc (“Cleo”) subsidiary sold the Christmas gift wrap portion of Cleo’s business and certain assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets to Impact Innovations, Inc. (“Impact”). Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. The assets, liabilities and cash flows related to the Christmas gift wrap business are presented as current assets and liabilities of discontinued operations. The results of operations for the three- and six months ended September 30, 2013 and 2012, as well as the accompanying notes, reflect the historical operations of Cleo’s Christmas gift wrap business as discontinued operations. The discussions in this quarterly report are presented on the basis of continuing operations, unless otherwise noted.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2014” refers to the fiscal year ending March 31, 2014.

Principles of Consolidation

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

Nature of Business

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

On September 5, 2012, the Company and its Paper Magic Group, Inc. (“Paper Magic”) subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with Paper Magic’s Halloween business, to Gemmy Industries (HK) Limited (“Gemmy”). Paper Magic’s remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The sale price of $2,281,000 was paid to Paper Magic at closing. The Company incurred $523,000 of transaction costs (included within disposition of product line further discussed in Note 4 to the consolidated financial statements), yielding net proceeds of $1,758,000. The Company is liquidating the remaining assets and satisfying the liabilities throughout fiscal 2014.

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

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

Use of Estimates

Use of Estimates

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

Impairment of Long-Lived Assets including Goodwill and Other Intangible Assets

Impairment of Long-Lived Assets including Goodwill and Other Intangible Assets

The Financial Accounting Standards Board (“FASB”) issued updated authoritative guidance in September 2011 to amend previous guidance on the annual and interim testing of goodwill for impairment. The guidance became effective for the Company at the beginning of its 2013 fiscal year. The guidance provides entities with the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two step impairment test would still be required. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. The Company uses a dual approach to determine the fair value of its reporting units including both a market approach and an income approach. We believe the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported. Annual impairment tests are performed by the Company in the fourth quarter of each year. The adoption of this updated authoritative guidance had no impact on the Company’s Consolidated Financial Statements. See Note 7 for further information on goodwill and other intangible assets.

Other indefinite lived intangible assets consist primarily of tradenames which are also required to be tested annually. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

Inventories

Inventories

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

	September 30, 2013		March 31, 2013		September 30, 2012
Raw material	$	9,035	$	8,116	$	10,162
Work-in-process		11,423		14,687		11,047
Finished goods		54,050		39,795		63,968
	$	74,508	$	62,598	$	85,177

Property, Plant and Equipment

Property, Plant and Equipment

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

	September 30, 2013			March 31, 2013			September 30, 2012
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements		36,857			37,007			36,902
Machinery, equipment and other		101,047			101,916			100,206
		140,412			141,431			139,616
Less - Accumulated depreciation and amortization		(112,455	)		(113,475	)		(111,335	)
Net property, plant and equipment	$	27,957		$	27,956		$	28,281

Depreciation expense was $1,555,000 and $1,492,000 for the quarters ended September 30, 2013 and 2012, respectively, and was $3,046,000 and $3,050,000 for the six months ended September 30, 2013 and 2012, respectively.

Revenue Recognition

Revenue Recognition

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

Net Income Per Common Share

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Income from continuing operations	$	10,846	$	6,840	$	9,179	$	5,973
Gain from discontinued operations, net of tax		112		81		112		44
Net income	$	10,958	$	6,921	$	9,291	$	6,017
Denominator:
Weighted average shares outstanding for basic income per common share		9,458		9,592		9,482		9,617
Effect of dilutive stock options		28		29		45		3
Adjusted weighted average share outstanding for diluted income per common share		9,486		9,621		9,527		9,620
Basic:
Continuing operations	$	1.15	$	0.71	$	0.97	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63
Diluted:
Continuing operations	$	1.14	$	0.71	$	0.96	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63

(1) Total net income per share for certain periods does not foot due to rounding.

Options on 150,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2013, respectively, because their effects were antidilutive. Options on 264,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2012, respectively, because their effects were antidilutive.

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”), which amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If this is the case, a more detailed fair value calculation will need to be performed which is used to identify potential impairments and to measure the amount of impairment losses to be recognized, if any. To perform a qualitative assessment, an entity must identify and evaluate changes in economic, industry and entity-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. ASU 2012-02 is effective for annual and interim impairment tests performed by the Company for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 did not have a material impact on the Company’s future indefinite-lived intangibles impairment tests.

In January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). This update is intended to improve the comparability of statements of financial position prepared in accordance with U.S. GAAP and International Financial Reporting Standards, requiring both gross and net presentation of offsetting assets and liabilities. The new requirements are effective for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As this guidance only affects disclosures, the adoption of this standard did not have an impact on the Company’s financial condition, results of operations and cash flows.

In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). This update requires disclosure, either on the face of the statement where income is presented or in the notes to the financial statements, of significant amounts reclassified out of accumulated other comprehensive income in their entirety. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about these amounts. ASU 2013-02 is effective for annual and interim periods beginning after December 15, 2012. As this update only requires enhanced disclosure, the adoption of ASU 2013-02 did not impact the Company’s financial condition, results of operations and cash flows.

In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which requires an entity to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (NOL) carryforward, or similar tax loss or tax credit carryforward, rather than as a liability when (1) the uncertain tax position would reduce the NOL or other carryforward under the tax law of the applicable jurisdiction and (2) the entity intends to use the deferred tax asset for that purpose. ASU 2013-11 does not require new recurring disclosures. It is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The Company does not expect the adoption of ASU 2013-11 to have a material impact on the Company’s financial condition, results of operations and cash flows.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Statement Of Financial Position [Abstract]
Allowances for accounts receivable	$ 2,205	$ 2,009	$ 2,258

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Stock-Based Compensation

6 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

(5) STOCK-BASED COMPENSATION

2013 Equity Compensation Plan

On July 30, 2013, the Company’s stockholders approved the CSS Industries, Inc. 2013 Equity Compensation Plan (“2013 Plan”). Under the terms of the Company’s 2013 Plan, the Human Resources Committee (the “Human Resources Committee”) of the Company’s Board of Directors (“Board”), or other committee appointed by the Board (collectively with the Human Resources Committee, the “2013 Equity Plan Committee”), may grant incentive stock options, non-qualified stock options, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at the discretion of the 2013 Equity Plan Committee, but in no event greater than ten years from the date of grant. The 2013 Equity Plan Committee has discretion to determine the date or dates on which granted options become exercisable. At September 30, 2013, there were 1,100,000 shares available for grant. There are no awards outstanding under the 2013 Plan.

2004 Equity Compensation Plan

Under the terms of the Company’s 2004 Equity Compensation Plan (“2004 Plan”), which expired on July 30, 2013 upon approval of the 2013 Plan, the Human Resources Committee could grant incentive stock options, non-qualified stock options, restricted stock grants, stock appreciation rights, stock bonuses and other awards to officers and other employees. Service-based options outstanding as of September 30, 2013 become exercisable at the rate of 25% per year commencing one year after the date of grant. Market-based stock options outstanding as of such date will become exercisable only if certain market conditions and service requirements are satisfied, and the date(s) on which they become exercisable will depend on the period in which such market conditions and service requirements are met, if at all. Market-based restricted stock units (“RSUs”) outstanding at September 30, 2013 will vest only if certain market conditions and service requirements have been met, and the date(s) on which they vest will depend on the period in which such market conditions and service requirements are met, if at all. Subject to limited exceptions, service-based RSUs outstanding as of September 30, 2013 vest at the rate of 50% of the shares underlying the grant on each of the third and fourth anniversaries of the grant date. Given that the 2004 Plan is now expired, no further grants may be made under such plan.

The fair value of each market-based stock option and each market-based RSU granted under the above plan was estimated on the date of grant using a Monte Carlo simulation model with the following average assumptions:

	Stock Options						RSUs
	Six Months Ended September 30,						Six Months Ended September 30,
	2013			2012			2013			2012
Risk-free interest rate		0.84	%		0.72	%		0.66	%		0.58	%
Volatility		52.27	%		54.75	%		40.47	%		57.90	%
Dividend yield		2.04	%		3.15	%		2.04	%		3.15	%

The weighted average fair value of stock options granted during the six months ended September 30, 2013 and 2012 was $11.06 and $7.27, respectively. The weighted average fair value of restricted stock units granted during the six months ended September 30, 2013 and 2012 was $20.51 and $14.78, respectively.

2011 Stock Option Plan for Non-Employee Directors

Under the terms of the Company’s 2011 Stock Option Plan for Non-Employee Directors (“2011 Plan”), non-qualified stock options to purchase up to 150,000 shares of common stock are available for grant to non-employee directors at exercise prices of not less than fair market value of the underlying common stock on the date of grant. Under the 2011 Plan, options to purchase 4,000 shares of the Company’s common stock are granted automatically to each non-employee director on the last day that the Company’s common stock is traded in November of each year from 2011 to 2015. Each option will expire five years after the date the option is granted and options may be exercised at the rate of 25% per year commencing one year after the date of grant. At September 30, 2013, 121,000 shares were available for grant under the 2011 Plan.

As of September 30, 2013, there was $1,630,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.0 years. As of September 30, 2013, there was $1,766,000 of total unrecognized compensation cost related to non-vested RSUs granted under the Company’s equity incentive plans which is expected to be recognized over a weighted average period of 2.3 years.

Compensation cost related to stock options and RSUs recognized in operating results (included in selling, general and administrative expenses) was $516,000 and $504,000 in the quarters ended September 30, 2013 and 2012, respectively, and $1,008,000 and $914,000 in the six months ended September 30, 2013 and 2012, respectively.

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2013 and March 31, 2013 (in thousands):

			Fair Value Measurements at September 30, 2013 Using
	September 30, 2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	718	$	718	$	0	$	0
Cash surrender value of life insurance policies		1,054		0		1,054		0
Total assets	$	1,772	$	718	$	1,054	$	0
Liabilities
Deferred compensation plans	$	718	$	718	$	0	$	0
Foreign exchange contracts		13		0		13		0
Total liabilities	$	731	$	718	$	13	$	0

			Fair Value Measurements at March 31, 2013 Using
	March 31,    2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	678	$	678	$	0	$	0
Cash surrender value of life insurance policies		1,040		0		1,040		0
Total assets	$	1,718	$	678	$	1,040	$	0
Liabilities
Deferred compensation plans	$	678	$	678	$	0	$	0
Foreign exchange contract		17		0	$	17	$	0
Total liabilities	$	695	$	678	$	17	$	0

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Inventories

Inventories consisted of the following (in thousands):  

	September 30, 2013		March 31, 2013		September 30, 2012
Raw material	$	9,035	$	8,116	$	10,162
Work-in-process		11,423		14,687		11,047
Finished goods		54,050		39,795		63,968
	$	74,508	$	62,598	$	85,177

Property, Plant and Equipment

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

	September 30, 2013			March 31, 2013			September 30, 2012
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements		36,857			37,007			36,902
Machinery, equipment and other		101,047			101,916			100,206
		140,412			141,431			139,616
Less - Accumulated depreciation and amortization		(112,455	)		(113,475	)		(111,335	)
Net property, plant and equipment	$	27,957		$	27,956		$	28,281

Computation of Basic and Diluted Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2013 and 2012 (in thousands, except per share data): 

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Income from continuing operations	$	10,846	$	6,840	$	9,179	$	5,973
Gain from discontinued operations, net of tax		112		81		112		44
Net income	$	10,958	$	6,921	$	9,291	$	6,017
Denominator:
Weighted average shares outstanding for basic income per common share		9,458		9,592		9,482		9,617
Effect of dilutive stock options		28		29		45		3
Adjusted weighted average share outstanding for diluted income per common share		9,486		9,621		9,527		9,620
Basic:
Continuing operations	$	1.15	$	0.71	$	0.97	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63
Diluted:
Continuing operations	$	1.14	$	0.71	$	0.96	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63

(1) Total net income per share for certain periods does not foot due to rounding.

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Derivative Financial Instruments - Fair Value of Derivative Instruments (Detail) (Foreign Exchange Forward [Member], Other Current Liabilities [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Foreign Exchange Forward [Member] | Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Foreign currency forward contracts	$ 13	$ 17	$ 91

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Summary of Significant Accounting Policies - Property, Plant and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	$ 140,412	$ 141,431	$ 139,616
Less - Accumulated depreciation and amortization	(112,455)	(113,475)	(111,335)
Net property, plant and equipment	27,957	27,956	28,281
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	2,508	2,508	2,508
Buildings, Leasehold Interests and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	36,857	37,007	36,902
Machinery, Equipment and Other [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	$ 101,047	$ 101,916	$ 100,206

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Summary of Significant Accounting Policies - Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Inventory Disclosure [Abstract]
Raw material	$ 9,035	$ 8,116	$ 10,162
Work-in-process	11,423	14,687	11,047
Finished goods	54,050	39,795	63,968
Inventory, net	$ 74,508	$ 62,598	$ 85,177

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Disposition of Product Line - Schedule of Aforementioned Restructuring (Detail) (USD $)	1 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended
	Apr. 30, 2013	Sep. 30, 2013 Sale of Halloween Portion of PMG's Business [Member]	Mar. 31, 2013 Sale of Halloween Portion of PMG's Business [Member]	Sep. 30, 2013 Employee Termination Costs [Member] Sale of Halloween Portion of PMG's Business [Member]	Sep. 30, 2013 Facility Costs [Member] Sale of Halloween Portion of PMG's Business [Member]	Sep. 30, 2013 Professional Fees and Other Costs [Member] Sale of Halloween Portion of PMG's Business [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restructuring reserve, beginning balance		$ 1,887,000		$ 589,000	$ 815,000	$ 483,000
Cash paid, net of sublease income	(13,000)	(937,000)	(1,901,000)	(418,000)	(480,000)	(39,000)
Non-cash adjustments		(396,000)		(63,000)	(91,000)	(242,000)
Restructuring reserve, ending balance		$ 554,000	$ 1,887,000	$ 108,000	$ 244,000	$ 202,000

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Goodwill and Intangibles - Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 36,515	$ 36,515	$ 36,754
Accumulated Amortization	9,338	8,511	7,894
Tradenames and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	12,793	12,793	12,793
Accumulated Amortization	0	0	0
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	22,057	22,057	22,057
Accumulated Amortization	8,609	7,859	7,109
Non-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	0	0	200
Accumulated Amortization	0	0	200
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	403	403	403
Accumulated Amortization	258	243	228
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,262	1,262	1,301
Accumulated Amortization	$ 471	$ 409	$ 357

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Discontinued Operations - Carrying Values of Major Accounts of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Disposal Group Including Discontinued Operation Classified Balance Sheet Disclosures [Abstract]
Accounts receivable, net	$ 0	$ 2	$ 0
Inventories	0	0	126
Total current assets	0	2	126
Total assets attributable to discontinued operations	0	2	126
Customer programs	73	162	254
Restructuring reserve	0	0	126
Other current liabilities	316	482	344
Total current liabilities	389	644	724
Total liabilities associated with discontinued operations	$ 389	$ 644	$ 724

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Fair Value Measurements - Additional Information (Detail) (Recurring Fair Value Measurements [Member])	Sep. 30, 2013 Executives InsurancePolicy
Recurring Fair Value Measurements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of life insurance policies	2
Number of former executives	2

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012 Sale of Halloween Portion of PMG's Business [Member]	Sep. 05, 2012 Sale of Halloween Portion of PMG's Business [Member]
Accounting Policies [Line Items]
Sales price paid						$ 2,281,000
Incurred transaction cost		523,000			523,000
Yielding net proceeds		1,758,000
Depreciation expense	$ 1,555,000	$ 1,492,000	$ 3,046,000	$ 3,050,000
Effective antidilutive securities excluded from computation of net income per share	150,000	264,000	150,000	264,000

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Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

On September 9, 2011, the Company and its Cleo Inc (“Cleo”) subsidiary sold the Christmas gift wrap portion of Cleo’s business and certain assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets to Impact Innovations, Inc. (“Impact”). Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. The assets, liabilities and cash flows related to the Christmas gift wrap business are presented as current assets and liabilities of discontinued operations. The results of operations for the three- and six months ended September 30, 2013 and 2012, as well as the accompanying notes, reflect the historical operations of Cleo’s Christmas gift wrap business as discontinued operations. The discussions in this quarterly report are presented on the basis of continuing operations, unless otherwise noted.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal 2014” refers to the fiscal year ending March 31, 2014.

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

On September 5, 2012, the Company and its Paper Magic Group, Inc. (“Paper Magic”) subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with Paper Magic’s Halloween business, to Gemmy Industries (HK) Limited (“Gemmy”). Paper Magic’s remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The sale price of $2,281,000 was paid to Paper Magic at closing. The Company incurred $523,000 of transaction costs (included within disposition of product line further discussed in Note 4 to the consolidated financial statements), yielding net proceeds of $1,758,000. The Company is liquidating the remaining assets and satisfying the liabilities throughout fiscal 2014.

Foreign Currency Translation and Transactions

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

Use of Estimates

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

Impairment of Long-Lived Assets including Goodwill and Other Intangible Assets

The Financial Accounting Standards Board (“FASB”) issued updated authoritative guidance in September 2011 to amend previous guidance on the annual and interim testing of goodwill for impairment. The guidance became effective for the Company at the beginning of its 2013 fiscal year. The guidance provides entities with the option of first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two step impairment test would still be required. The first step of the test compares the fair value of a reporting unit to its carrying amount, including goodwill, as of the date of the test. The Company uses a dual approach to determine the fair value of its reporting units including both a market approach and an income approach. We believe the use of multiple valuation techniques results in a more accurate indicator of the fair value of each reporting unit. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the implied fair value of the goodwill. If the implied fair value of the goodwill is less than the carrying amount of the goodwill, an impairment loss would be reported. Annual impairment tests are performed by the Company in the fourth quarter of each year. The adoption of this updated authoritative guidance had no impact on the Company’s Consolidated Financial Statements. See Note 7 for further information on goodwill and other intangible assets.

Other indefinite lived intangible assets consist primarily of tradenames which are also required to be tested annually. The fair value of the Company’s tradenames is calculated using a “relief from royalty payments” methodology. Long-lived assets (including property, plant and equipment), except for goodwill and indefinite lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset group may not be recoverable. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

Inventories

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

	September 30, 2013		March 31, 2013		September 30, 2012
Raw material	$	9,035	$	8,116	$	10,162
Work-in-process		11,423		14,687		11,047
Finished goods		54,050		39,795		63,968
	$	74,508	$	62,598	$	85,177

Property, Plant and Equipment

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

	September 30, 2013			March 31, 2013			September 30, 2012
Land	$	2,508		$	2,508		$	2,508
Buildings, leasehold interests and improvements		36,857			37,007			36,902
Machinery, equipment and other		101,047			101,916			100,206
		140,412			141,431			139,616
Less - Accumulated depreciation and amortization		(112,455	)		(113,475	)		(111,335	)
Net property, plant and equipment	$	27,957		$	27,956		$	28,281

Depreciation expense was $1,555,000 and $1,492,000 for the quarters ended September 30, 2013 and 2012, respectively, and was $3,046,000 and $3,050,000 for the six months ended September 30, 2013 and 2012, respectively.

Revenue Recognition

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

Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the three- and six months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Income from continuing operations	$	10,846	$	6,840	$	9,179	$	5,973
Gain from discontinued operations, net of tax		112		81		112		44
Net income	$	10,958	$	6,921	$	9,291	$	6,017
Denominator:
Weighted average shares outstanding for basic income per common share		9,458		9,592		9,482		9,617
Effect of dilutive stock options		28		29		45		3
Adjusted weighted average share outstanding for diluted income per common share		9,486		9,621		9,527		9,620
Basic:
Continuing operations	$	1.15	$	0.71	$	0.97	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63
Diluted:
Continuing operations	$	1.14	$	0.71	$	0.96	$	0.62
Discontinued operations	$	0.01	$	0.01	$	0.01	$	0.00
Total (1)	$	1.16	$	0.72	$	0.98	$	0.63

(1) Total net income per share for certain periods does not foot due to rounding.

Stock options on 150,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2013, respectively, because their effects were antidilutive. Options on 264,000 shares of common stock were not included in computing diluted net income per common share for the three- and six months ended September 30, 2012, respectively, because their effects were antidilutive.

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Business Restructuring

6 Months Ended

Sep. 30, 2013

Restructuring And Related Activities [Abstract]

Business Restructuring

(3) BUSINESS RESTRUCTURING

On March 27, 2012, the Company combined the operations of its Berwick Offray and Paper Magic subsidiaries in order to drive sales growth by providing stronger management oversight and by reallocating sales and marketing resources in a more strategic manner. Involuntary termination benefits were offered to terminated employees under the Company’s pre-existing severance program. The Company recorded approximately $706,000 in employee severance charges during fiscal 2012 and made payments of $523,000 and $116,000 in the fiscal years ended March 31, 2013 and 2012, respectively. The final restructuring payment of $13,000 was paid in April 2013. During the fiscal year ended March 31, 2013, there was a reduction in the restructuring accrual of $54,000 related to severance costs that were less than originally estimated as certain employees under the plan did not receive the expected amount of severance. The charges associated with this restructuring plan are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

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Derivative Financial Instruments

6 Months Ended

Sep. 30, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

(6) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into foreign currency forward contracts in order to reduce the impact of certain foreign currency fluctuations on sales denominated in a foreign currency. Derivatives are not used for trading or speculative activities. Firmly committed transactions and the related receivables may be hedged with forward exchange contracts. Gains and losses arising from foreign currency forward contracts are recorded in other income, net as offsets of gains and losses resulting from the underlying hedged transactions. A realized loss of $16,000 and $9,000 was recorded in the three- and six months ended September 30, 2013, respectively. A realized loss of $6,000 was recorded in the three- and six months ended September 30, 2012. As of September 30, 2013 and 2012, the notional amount of open foreign currency forward contracts was $3,192,000 and $5,131,000, respectively. The related unrealized loss was $13,000 and $91,000 at September 30, 2013 and 2012, respectively. We believe we do not have significant counterparty credit risks as of September 30, 2013.

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

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2013		March 31, 2013		September 30, 2012
Foreign currency forward contracts	Other current liabilities	$	13	$	17	$	91

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Disposition of Product Line

6 Months Ended

Sep. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Disposition of Product Line

(4) DISPOSITION OF PRODUCT LINE

On September 5, 2012, the Company and its Paper Magic subsidiary sold the Halloween portion of Paper Magic’s business and certain Paper Magic assets relating to such business, including certain tangible and intangible assets associated with the Halloween portion of Paper Magic’s business, to Gemmy. Paper Magic’s remaining Halloween assets, including accounts receivable and inventory, were excluded from the sale. Paper Magic retained the right and obligation to fulfill all customer orders for Paper Magic Halloween products (such as Halloween masks, costumes, make-up and novelties) for the Halloween 2012 season. The inventory remaining after the Halloween 2012 season has been reduced to its estimated net realizable value. The sale price of $2,281,000 was paid to Paper Magic at closing. In connection with the sale, the Company recorded charges of $5,368,000 during the second quarter of fiscal 2013, consisting of severance of 49 employees of $1,282,000, facility closure costs of $1,375,000, professional fees and other costs of $1,341,000 ($523,000 were costs of the transaction) and a non-cash write-down of assets of $1,370,000. Additionally, a portion of the goodwill associated with the Paper Magic reporting unit was allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. This resulted in the Company recording a reduction of goodwill in the amount of $2,711,000 for the Paper Magic reporting unit. There was also a non-cash charge of $1,266,000 related to the write-down of inventory to net realizable value which was recorded in cost of sales.

During the year ended March 31, 2013, the Company made payments related to the restructuring of $1,901,000. Additionally, the Company reduced the restructuring reserve by $210,000 during fiscal 2013, primarily due to sub-lease income that was greater than originally estimated. During the three- and six months ended September 30, 2013, the Company made payments of $358,000 and $937,000, respectively, primarily related to facility costs and severance. During the six months ended September 30, 2013, there was a reduction in the restructuring accrual of $396,000 related to costs that were less than originally estimated. As of September 30, 2013, $456,000 of the remaining liability was classified in other current liabilities and $98,000 was classified in long-term obligations in the accompanying condensed consolidated balance sheet and will be paid through December 2015. The Company is liquidating the remaining assets and satisfying the liabilities through December 2015.

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

	Employee Termination Costs			Facility Costs			Professional Fees and Other Costs			Total
Restructuring reserve as of March 31, 2013	$	589		$	815		$	483		$	1,887
Cash paid, net of sublease income		(418	)		(480	)		(39	)		(937	)
Non-cash adjustments		(63	)		(91	)		(242	)		(396	)
Restructuring reserve as of September 30, 2013	$	108		$	244		$	202		$	554

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Goodwill and Intangibles - Schedule of Future Amortization Expense (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
Remainder of fiscal 2014	$ 827
Fiscal 2015	1,635
Fiscal 2016	1,634
Fiscal 2017	1,634
Fiscal 2018	$ 1,634

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Summary of Significant Accounting Policies - Computation of Basic and Diluted Net Income Per Common Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Numerator:
Income from continuing operations	$ 10,846		$ 6,840		$ 9,179		$ 5,973
Gain from discontinued operations, net of tax	112		81		112		44
Net income	$ 10,958		$ 6,921		$ 9,291		$ 6,017
Denominator:
Weighted average shares outstanding for basic income per common share	9,458		9,592		9,482		9,617
Effect of dilutive stock options	28		29		45		3
Adjusted weighted average share outstanding for diluted income per common share	9,486		9,621		9,527		9,620
Basic:
Continuing operations	$ 1.15		$ 0.71		$ 0.97		$ 0.62
Discontinued operations	$ 0.01		$ 0.01		$ 0.01		$ 0.00
Total	$ 1.16	[1]	$ 0.72	[1]	$ 0.98	[1]	$ 0.63	[1]
Diluted:
Continuing operations	$ 1.14		$ 0.71		$ 0.96		$ 0.62
Discontinued operations	$ 0.01		$ 0.01		$ 0.01		$ 0.00
Total	$ 1.16	[1]	$ 0.72	[1]	$ 0.98	[1]	$ 0.63	[1]

[1] Total net income per common share may not foot due to rounding.

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Business Restructuring - Additional Information (Detail) (USD $)	1 Months Ended			12 Months Ended
	Apr. 30, 2013	Sep. 30, 2013	Mar. 31, 2012	Mar. 31, 2013 Employee Severance [Member]	Mar. 31, 2012 Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance charges		$ 98,000	$ 706,000
Restructuring payments	13,000			523,000	116,000
Decrease in restructuring accrual related to severance costs				$ 54,000

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Derivative Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Derivative [Line Items]
Foreign currency forward contracts, unrealized loss			$ 13,000	$ 91,000
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Realized loss from foreign currency forward contracts	16,000	6,000	9,000	6,000
Foreign Exchange Forward [Member]
Derivative [Line Items]
Notional amount of derivative contracts	$ 3,192,000	$ 5,131,000	$ 3,192,000	$ 5,131,000

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012
Current assets
Cash and cash equivalents	$ 37,094	$ 87,108	$ 9,843
Accounts receivable, net of allowances of $2,205, $2,009 and $2,258	100,925	43,133	123,336
Inventories	74,508	62,598	85,177
Deferred income taxes	3,863	4,520	3,810
Other current assets	14,076	13,073	14,297
Current assets of discontinued operations	0	2	126
Total current assets	230,466	210,434	236,589
Property, plant and equipment, net	27,957	27,956	28,281
Deferred income taxes	3,915	3,974	219
Other assets
Goodwill	14,522	14,522	14,522
Intangible assets, net	27,177	28,004	28,860
Other	4,143	4,290	6,636
Total other assets	45,842	46,816	50,018
Total assets	308,180	289,180	315,107
Current liabilities
Accrued customer programs	6,862	4,015	7,620
Other current liabilities	45,245	30,718	57,378
Current liabilities of discontinued operations	389	644	724
Total current liabilities	52,496	35,377	65,722
Long-term obligations	4,767	4,825	5,138
Stockholders' equity	250,917	248,978	244,247
Total liabilities and stockholders' equity	$ 308,180	$ 289,180	$ 315,107

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(9) COMMITMENTS AND CONTINGENCIES

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

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income	$ 9,291	$ 6,017
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization	3,873	3,879
Provision for accounts receivable allowances	1,898	2,045
Deferred tax provision	691	457
Stock-based compensation expense	1,008	914
(Gain) loss on sale or disposal of assets	(8)	156
Reduction of goodwill	0	2,711
Changes in assets and liabilities:
Increase in accounts receivable	(59,690)	(80,454)
Increase in inventory	(11,910)	(14,472)
(Increase) decrease in other assets	(856)	225
Increase in other accrued liabilities	17,149	29,581
Total adjustments	(47,845)	(54,958)
Net cash used for operating activities - continuing operations	(38,554)	(48,941)
Net cash used for operating activities - discontinued operations	(253)	(1,609)
Net cash used for operating activities	(38,807)	(50,550)
Cash flows from investing activities:
Purchase of property, plant and equipment	(3,047)	(1,921)
Proceeds from disposition of product line, net	0	1,758
Proceeds from sale of fixed assets	8	16
Net cash used for investing activities - continuing operations	(3,039)	(147)
Cash flows from financing activities:
Dividends paid	(2,849)	(2,878)
Purchase of treasury stock	(5,065)	(2,650)
Exercise of stock options	(83)	192
Payments for tax withholding on net restricted stock settlements	(537)	(253)
Tax effect on stock awards	366	(6)
Net cash used for financing activities - continuing operations	(8,168)	(5,595)
Net decrease in cash and cash equivalents	(50,014)	(56,292)
Cash and cash equivalents at beginning of period	87,108	66,135
Cash and cash equivalents at end of period	$ 37,094	$ 9,843

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Income Statement [Abstract]
Sales	$ 112,487		$ 133,485		$ 159,604		$ 194,552
Costs and expenses
Cost of sales	75,760		92,654		108,418		136,523
Selling, general and administrative expenses	20,675		22,854		37,679		41,424
Disposition of product line, net	0		5,798		0		5,798
Interest expense (income), net	50		(14)		70		(67)
Other income, net	(38)		(66)		(32)		(52)
Total costs and expenses	96,447		121,226		146,135		183,626
Income from continuing operations before income taxes	16,040		12,259		13,469		10,926
Income tax expense	5,194		5,419		4,290		4,953
Income from continuing operations	10,846		6,840		9,179		5,973
Income from discontinued operations, net of tax	112		81		112		44
Net income	$ 10,958		$ 6,921		$ 9,291		$ 6,017
Basic:
Continuing operations	$ 1.15		$ 0.71		$ 0.97		$ 0.62
Discontinued operations	$ 0.01		$ 0.01		$ 0.01		$ 0.00
Total	$ 1.16	[1]	$ 0.72	[1]	$ 0.98	[1]	$ 0.63	[1]
Diluted:
Continuing operations	$ 1.14		$ 0.71		$ 0.96		$ 0.62
Discontinued operations	$ 0.01		$ 0.01		$ 0.01		$ 0.00
Total	$ 1.16	[1]	$ 0.72	[1]	$ 0.98	[1]	$ 0.63	[1]
Weighted average basic and diluted shares outstanding
Basic	9,458		9,592		9,482		9,617
Diluted	9,486		9,621		9,527		9,620
Cash dividends per share of common stock	$ 0.15		$ 0.15		$ 0.30		$ 0.30

[1] Total net income per common share may not foot due to rounding.

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Discontinued Operations - Additional Information (Detail) (USD $)	0 Months Ended	6 Months Ended
	Sep. 09, 2011	Sep. 30, 2013	Mar. 31, 2013	Mar. 01, 2013	Mar. 01, 2012
Discontinued Operations And Disposal Groups [Abstract]
Purchase price of new company	$ 7,500,000
Cash payment for new company	2,000,000
Interest rate of promissory note		7.00%
Principal payments of promissory note				2,500,000	500,000
Advance principal payment			2,000,000
Notes receivable - current		$ 500,000

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Goodwill and Intangibles (Tables)

6 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets

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

	September 30, 2013				March 31, 2013				September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	12,793	$	0	$	12,793	$	0	$	12,793	$	0
Customer relationships		22,057		8,609		22,057		7,859		22,057		7,109
Non-compete		0		0		0		0		200		200
Trademarks		403		258		403		243		403		228
Patents		1,262		471		1,262		409		1,301		357
	$	36,515	$	9,338	$	36,515	$	8,511	$	36,754	$	7,894

Schedule of Future Amortization Expense

Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2014 and each of the succeeding four years is projected to be as follows (in thousands): 

Remainder of fiscal 2014	$	827
Fiscal 2015		1,635
Fiscal 2016		1,634
Fiscal 2017		1,634
Fiscal 2018		1,634

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Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Recurring Fair Value Measurements [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Mar. 31, 2013
Assets
Assets	$ 1,772	$ 1,718
Liabilities
Liabilities	731	695
Marketable Securities [Member]
Assets
Assets	718	678
Cash Surrender Value of Life Insurance Policies [Member]
Assets
Assets	1,054	1,040
Deferred Compensation Plans [Member]
Liabilities
Liabilities	718	678
Foreign Exchange Contract [Member]
Liabilities
Liabilities	13	17
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets
Assets	718	678
Liabilities
Liabilities	718	678
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Marketable Securities [Member]
Assets
Assets	718	678
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Assets	0	0
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Deferred Compensation Plans [Member]
Liabilities
Liabilities	718	678
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Foreign Exchange Contract [Member]
Liabilities
Liabilities	0	0
Significant Other Observable Inputs (Level 2) [Member]
Assets
Assets	1,054	1,040
Liabilities
Liabilities	13	17
Significant Other Observable Inputs (Level 2) [Member] | Marketable Securities [Member]
Assets
Assets	0	0
Significant Other Observable Inputs (Level 2) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Assets	1,054	1,040
Significant Other Observable Inputs (Level 2) [Member] | Deferred Compensation Plans [Member]
Liabilities
Liabilities	0	0
Significant Other Observable Inputs (Level 2) [Member] | Foreign Exchange Contract [Member]
Liabilities
Liabilities	13	17
Significant Unobservable Inputs (Level 3) [Member]
Assets
Assets	0	0
Liabilities
Liabilities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Marketable Securities [Member]
Assets
Assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | Cash Surrender Value of Life Insurance Policies [Member]
Assets
Assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | Deferred Compensation Plans [Member]
Liabilities
Liabilities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Foreign Exchange Contract [Member]
Liabilities
Liabilities	$ 0	$ 0

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Goodwill and Intangibles - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Impairment charge on goodwill	$ 2,711,000		$ 0	$ 2,711,000
Amortization expense related to intangible assets	$ 413,000	$ 415,000	$ 827,000	$ 829,000

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Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost related to stock options & RSUs recognized in operating results	$ 516,000	$ 504,000	$ 1,008,000	$ 914,000
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost related to non-vested RSUs	1,766,000		1,766,000
2004 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of grant			Not more than 10 years
Stock option plan			2004 Plan
Percentage of stock option exercisable per year			25.00%
Option exercisable period after grant date			1 year
Equity compensation plan expired date			Jul. 30, 2013
Outstanding RSUs vesting percentage			50.00%
Weighted average fair value of stock options granted			$ 11.06	$ 7.27
Weighted average fair value of restricted stock granted			$ 20.51	$ 14.78
2011 Stock Option Plan for Non-Employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant	121,000		121,000
Stock option plan			2011 Plan
Percentage of stock option exercisable per year			25.00%
Option exercisable period after grant date			1 year
Issue of common stock under ESOP	150,000		150,000
Company's common stock granted to non-employee director			4,000
Expiry period of option			5 years
Total unrecognized compensation cost related to non-vested stock option awards	$ 1,630,000		$ 1,630,000
Equity incentive plan, weighted average recognition period			2 years
2011 Stock Option Plan for Non-Employee Directors [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity incentive plan, weighted average recognition period			2 years 3 months 18 days
2013 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant	1,100,000		1,100,000
Term of grant	Not more than 10 years
Stock option plan	2013 Plan

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Stock-Based Compensation - Schedule of Fair Value of Each Stock Option Granted Using Monte Carlo Simulation Model (Detail)	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.84%	0.72%
Volatility	52.27%	54.75%
Dividend yield	2.04%	3.15%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.66%	0.58%
Volatility	40.47%	57.90%
Dividend yield	2.04%	3.15%

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Treasury Stock Transactions

6 Months Ended

Sep. 30, 2013

Equity [Abstract]

Treasury Stock Transactions

(8) TREASURY STOCK TRANSACTIONS

Under a stock repurchase program authorized by the Company’s Board, the Company repurchased 214,569 shares of the Company’s common stock for $5,231,000 during the six months ended September 30, 2013. As payment for stock repurchases occurs upon settlement three business days after the trade transaction, $166,000 of this amount was paid by the Company subsequent to September 30, 2013. The Company repurchased 140,183 shares of the Company’s common stock for $2,650,000 during the six months ended September 30, 2012. On July 31, 2012, the Company announced that its Board had authorized the repurchase of up to an additional 500,000 shares of the Company’s common stock. As of September 30, 2013, the Company had 259,041 shares remaining available for repurchase under the Board’s authorization.

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Discontinued Operations - Schedule of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Disposal Group Not Discontinued Operation Income Statement Disclosures [Abstract]
Operating income (loss)	$ 172	$ 56	$ 172	$ (30)
Reversal of reserves	0	63	0	92
Discontinued operations, before income taxes	172	119	172	62
Income tax expense	60	38	60	18
Discontinued operations, net of tax	$ 112	$ 81	$ 112	$ 44

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Treasury Stock Transactions - Additional Information (Detail) (USD $)	6 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jul. 31, 2012
Equity, Class of Treasury Stock [Line Items]
Number of shares repurchased of the Company's common stock	214,569	140,183
Value of shares repurchased of the Company's common stock	$ 5,231,000	$ 2,650,000
Remaining shares available for repurchase under the Board's authorization	259,041
Authorized repurchase of additional common stock			500,000
Payment for stock repurchases	5,065,000	2,650,000
Subsequent Event [Member]
Equity, Class of Treasury Stock [Line Items]
Payment for stock repurchases	$ 166,000

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Recent Accounting Pronouncements

6 Months Ended

Sep. 30, 2013

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

(11) RECENT ACCOUNTING PRONOUNCEMENTS

In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”), which amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If this is the case, a more detailed fair value calculation will need to be performed which is used to identify potential impairments and to measure the amount of impairment losses to be recognized, if any. To perform a qualitative assessment, an entity must identify and evaluate changes in economic, industry and entity-specific events and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset. ASU 2012-02 is effective for annual and interim impairment tests performed by the Company for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 did not have a material impact on the Company’s future indefinite-lived intangibles impairment tests.

In January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). This update is intended to improve the comparability of statements of financial position prepared in accordance with U.S. GAAP and International Financial Reporting Standards, requiring both gross and net presentation of offsetting assets and liabilities. The new requirements are effective for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As this guidance only affects disclosures, the adoption of this standard did not have an impact on the Company’s financial condition, results of operations and cash flows.

In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). This update requires disclosure, either on the face of the statement where income is presented or in the notes to the financial statements, of significant amounts reclassified out of accumulated other comprehensive income in their entirety. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about these amounts. ASU 2013-02 is effective for annual and interim periods beginning after December 15, 2012. As this update only requires enhanced disclosure, the adoption of ASU 2013-02 did not impact the Company’s financial condition, results of operations and cash flows.

In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which requires an entity to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (NOL) carryforward, or similar tax loss or tax credit carryforward, rather than as a liability when (1) the uncertain tax position would reduce the NOL or other carryforward under the tax law of the applicable jurisdiction and (2) the entity intends to use the deferred tax asset for that purpose. ASU 2013-11 does not require new recurring disclosures. It is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The Company does not expect the adoption of ASU 2013-11 to have a material impact on the Company’s financial condition, results of operations and cash flows.

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Goodwill and Intangibles

6 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

(7) GOODWILL AND INTANGIBLES

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscal year. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangibles might be impaired. In connection with the sale of the Halloween portion of Paper Magic’s business on September 5, 2012, a portion of the goodwill associated with the Paper Magic reporting unit was allocated to the business being sold. Such allocation was made on the basis of the fair value of the assets being sold relative to the overall fair value of the Paper Magic reporting unit. This resulted in the Company recording a reduction of goodwill in the amount of $2,711,000 for the Paper Magic reporting unit in the second quarter of fiscal 2013. As the sale of the Halloween portion of Paper Magic’s business was a triggering event, the Company performed an interim impairment test on the goodwill remaining in the Paper Magic reporting unit after the reduction in goodwill associated with the sale of the Halloween portion of Paper Magic’s business was recorded. The Company determined that no impairment existed for the remainder of the goodwill of the Paper Magic reporting unit.

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

	September 30, 2013				March 31, 2013				September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames and trademarks	$	12,793	$	0	$	12,793	$	0	$	12,793	$	0
Customer relationships		22,057		8,609		22,057		7,859		22,057		7,109
Non-compete		0		0		0		0		200		200
Trademarks		403		258		403		243		403		228
Patents		1,262		471		1,262		409		1,301		357
	$	36,515	$	9,338	$	36,515	$	8,511	$	36,754	$	7,894

Amortization expense related to intangible assets was $413,000 and $415,000 for the quarters ended September 30, 2013 and 2012, respectively, and was $827,000 and $829,000 for the six months ended September 30, 2013 and 2012, respectively. Based on the current composition of intangibles, amortization expense for the remainder of fiscal 2014 and each of the succeeding four years is projected to be as follows (in thousands):

Remainder of fiscal 2014	$	827
Fiscal 2015		1,635
Fiscal 2016		1,634
Fiscal 2017		1,634
Fiscal 2018		1,634

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Discontinued Operations

6 Months Ended

Sep. 30, 2013

Text Block [Abstract]

Discontinued Operations

(2) DISCONTINUED OPERATIONS

On September 9, 2011, the Company sold the Cleo Christmas gift wrap business and certain of its assets to Impact. Impact acquired the Christmas gift wrap portion of Cleo’s business and certain of its assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets. Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. Cleo retained the right and obligation to fulfill all customer orders for Cleo Christmas gift wrap products for Christmas 2011. The purchase price was $7,500,000, of which $2,000,000 was paid in cash at closing. The remainder of the purchase price was paid through the issuance by Impact of an unsecured subordinated promissory note, which provides for quarterly payments of interest at 7% and principal payments as follows: $500,000 on March 1, 2012; $2,500,000 on March 1, 2013; and all remaining principal and interest on March 1, 2014. All interest and principal payments due through September 30, 2013 were paid timely. Additionally, in the fourth quarter of fiscal 2013, the Company received a $2,000,000 principal payment in advance of the March 1, 2014 due date. As of September 30, 2013, the note balance of $500,000 was recorded in other current assets in the accompanying condensed consolidated balance sheet.

As a result of the sale of its Christmas gift wrap business, the Company has reported these operations as discontinued operations, as shown in the following table (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Operating income (loss)	$	172	$	56	$	172	$	(30	)
Reversal of reserves		0		63		0		92
Discontinued operations, before income taxes		172		119		172		62
Income tax expense		60		38		60		18
Discontinued operations, net of tax	$	112	$	81	$	112	$	44

The following table presents the carrying values of the major accounts of discontinued operations that are included in the condensed consolidated balance sheet (in thousands):

	September 30, 2013		March 31, 2013		September 30, 2012
Accounts receivable, net	$	0	$	2	$	0
Inventories		0		0		126
Total current assets	$	0	$	2	$	126
Total assets attributable to discontinued operations	$	0	$	2	$	126
Customer programs	$	73	$	162	$	254
Restructuring reserve		0		0		126
Other current liabilities		316		482		344
Total current liabilities	$	389	$	644	$	724
Total liabilities associated with discontinued operations	$	389	$	644	$	724

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Disposition of Product Line - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Apr. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Mar. 31, 2013	Mar. 31, 2012	Sep. 30, 2012 Sale of Halloween Portion of PMG's Business [Member] Employees	Sep. 30, 2013 Sale of Halloween Portion of PMG's Business [Member]	Mar. 31, 2013 Sale of Halloween Portion of PMG's Business [Member]	Sep. 05, 2012 Sale of Halloween Portion of PMG's Business [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale price of business portion sold											$ 2,281,000
Restructuring charges								5,368,000
Severance of employees								49
Severance of employees cost								1,282,000
Facility closure costs								1,375,000
Professional fees related with sale of business								1,341,000
Incurred transaction cost			523,000					523,000
Non-cash write-down of assets related with sale of business								1,370,000
Reduction of goodwill from disposition of product line		2,711,000		0	2,711,000			2,711,000
Non-cash charge related to write-down of inventory								1,266,000
Company made payments related to restructuring	13,000								937,000	1,901,000
Decrease in restructuring reserve						210,000
Payment related to facility costs and severance		358,000		937,000
Remaining liability related with other current liabilities		456,000		456,000
Remaining liability related with long-term obligation		98,000		98,000			706,000
Reduction in Restructuring accrual				$ 396,000

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Discontinued Operations (Tables)

6 Months Ended

Sep. 30, 2013

Text Block [Abstract]

Schedule of Discontinued Operations

As a result of the sale of its Christmas gift wrap business, the Company has reported these operations as discontinued operations, as shown in the following table (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2013		2012		2013		2012
Operating income (loss)	$	172	$	56	$	172	$	(30	)
Reversal of reserves		0		63		0		92
Discontinued operations, before income taxes		172		119		172		62
Income tax expense		60		38		60		18
Discontinued operations, net of tax	$	112	$	81	$	112	$	44

Carrying Values of Major Accounts of Discontinued Operations

The following table presents the carrying values of the major accounts of discontinued operations that are included in the condensed consolidated balance sheet (in thousands): 

	September 30, 2013		March 31, 2013		September 30, 2012
Accounts receivable, net	$	0	$	2	$	0
Inventories		0		0		126
Total current assets	$	0	$	2	$	126
Total assets attributable to discontinued operations	$	0	$	2	$	126
Customer programs	$	73	$	162	$	254
Restructuring reserve		0		0		126
Other current liabilities		316		482		344
Total current liabilities	$	389	$	644	$	724
Total liabilities associated with discontinued operations	$	389	$	644	$	724

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Fair Value Measurements

6 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

(10) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The Company uses certain derivative financial instruments as part of its risk management strategy to reduce foreign currency risk. The Company recorded all derivatives on the condensed consolidated balance sheet at fair value based on quotes obtained from financial institutions as of September 30, 2013.

The Company maintains a Nonqualified Supplemental Executive Retirement Plan for highly compensated employees and invests assets to mirror the obligations under this Plan. The invested funds are maintained at a third party financial institution in the name of CSS and are invested in publicly traded mutual funds. The Company maintains separate accounts for each participant to reflect deferred contribution amounts and the related gains or losses on such deferred amounts. The investments are included in other current assets and the related liability is recorded as deferred compensation and included in other long-term obligations in the condensed consolidated balance sheets. The fair value of the investments is based on the market price of the mutual funds as of September 30, 2013.

The Company maintains two life insurance policies in connection with deferred compensation arrangements with two former executives. The cash surrender value of the policies is recorded in other long-term assets in the condensed consolidated balance sheets and is based on quotes obtained from the insurance company as of September 30, 2013.

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

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

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

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

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

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in its condensed consolidated balance sheet as of September 30, 2013 and March 31, 2013 (in thousands):

			Fair Value Measurements at September 30, 2013 Using
	September 30, 2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	718	$	718	$	0	$	0
Cash surrender value of life insurance policies		1,054		0		1,054		0
Total assets	$	1,772	$	718	$	1,054	$	0
Liabilities
Deferred compensation plans	$	718	$	718	$	0	$	0
Foreign exchange contracts		13		0		13		0
Total liabilities	$	731	$	718	$	13	$	0

			Fair Value Measurements at March 31, 2013 Using
	March 31,    2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable securities	$	678	$	678	$	0	$	0
Cash surrender value of life insurance policies		1,040		0		1,040		0
Total assets	$	1,718	$	678	$	1,040	$	0
Liabilities
Deferred compensation plans	$	678	$	678	$	0	$	0
Foreign exchange contract		17		0	$	17	$	0
Total liabilities	$	695	$	678	$	17	$	0

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value in the condensed consolidated balance sheets as such amounts are a reasonable estimate of their fair values due to the short-term nature of these instruments.

Nonrecurring Fair Value Measurements

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

Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if circumstances indicate a condition of impairment may exist. The valuations use assumptions such as interest and discount rates, growth projections and other assumptions of future business conditions. These valuation methods require a significant degree of management judgment concerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fair value as determined by the valuation models. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy described above. As of September 30, 2013, there were no indications or circumstances indicating that an impairment might exist.

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Derivative Financial Instruments (Tables)

6 Months Ended

Sep. 30, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments

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

		Fair Value of Derivative Instruments
		Fair Value
	Balance Sheet Location	September 30, 2013		March 31, 2013		September 30, 2012
Foreign currency forward contracts	Other current liabilities	$	13	$	17	$	91

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Disposition of Product Line (Tables)

6 Months Ended

Sep. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Schedule of Aforementioned Restructuring

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

	Employee Termination Costs			Facility Costs			Professional Fees and Other Costs			Total
Restructuring reserve as of March 31, 2013	$	589		$	815		$	483		$	1,887
Cash paid, net of sublease income		(418	)		(480	)		(39	)		(937	)
Non-cash adjustments		(63	)		(91	)		(242	)		(396	)
Restructuring reserve as of September 30, 2013	$	108		$	244		$	202		$	554

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Document and Entity Information	6 Months Ended
	Sep. 30, 2013	Oct. 25, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	CSS
Entity Registrant Name	CSS INDUSTRIES INC
Entity Central Index Key	0000020629
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		9,278,943

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Stock-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

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

The fair value of each market-based stock option and each market-based RSU granted under the above plan was estimated on the date of grant using a Monte Carlo simulation model with the following average assumptions:  

	Stock Options						RSUs
	Six Months Ended September 30,						Six Months Ended September 30,
	2013			2012			2013			2012
Risk-free interest rate		0.84	%		0.72	%		0.66	%		0.58	%
Volatility		52.27	%		54.75	%		40.47	%		57.90	%
Dividend yield		2.04	%		3.15	%		2.04	%		3.15	%