8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 3, 2007

CSS Industries, Inc.
(Exact name of registrant as specified in its charter)

Delaware	1-2661	13-1920657
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1845 Walnut Street, Philadelphia, PA	19103
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 569-9900

Not Applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

As previously reported in our Current Report on Form 8-K filed on December 7, 2007 (the “Prior Filing”), CSS Industries, Inc. (“we”, “our”), through its wholly-owned subsidiary C.R. Gibson, LLC (f/k/a Delta Acquisition, LLC), completed the acquisition of substantially all of the business and assets of C.R. Gibson, Inc., a designer, marketer and distributor of memory books, stationery, journals and notecards, paper tableware, infant and wedding photo albums and scrapbooks and other gift items that commemorate life’s celebrations, on December 3, 2007. We indicated in section (a) of Item 9.01 of the Prior Filing that the financial statements required by that Item would be filed by amendment to the Prior Filing. Accordingly, we hereby file the following financial statements with this Amendment:

• Audited financial statements of the C.R. Gibson Business (as defined below) as of December 31, 2006 and for the year then ended (filed as Exhibit 99.1 and incorporated herein by reference).

• Unaudited interim financial statements of the C.R. Gibson Business as of September 22, 2007 and for the period from January 1, 2007 to September 22, 2007 (filed as Exhibit 99.2 and incorporated herein by reference).

As used in this report and the accompanying Exhibits, the term “C.R. Gibson Business” (which term is more fully described in Note 1(a) to the audited financial statements of the C.R. Gibson Business as of December 31, 2006 and for the year then ended filed herewith as Exhibit 99.1) refers to that portion of the assets and business of C.R. Gibson, Inc. that we acquired on December 3, 2007.

(b) Pro Forma Financial Information.

We indicated in section (b) of Item 9.01 of the Prior Filing that the pro forma financial information required by that Item would be filed by amendment to the Prior Filing. Accordingly, we hereby file the following pro forma financial information with this Amendment:

• Unaudited pro forma combined statement of operations of CSS Industries, Inc. for the fiscal year ended March 31, 2007 and for the nine-months ended December 31, 2007 (filed as Exhibit 99.3 and incorporated herein by reference).

(d) Exhibits.

23.1 Consent of KPMG LLP, Independent Auditors, with respect to its report on the audited financial statements of the C.R. Gibson Business as of December 31, 2006 and for the year then ended.

99.1 Audited financial statements of the C.R. Gibson Business as of December 31, 2006 and for the year then ended.

99.2 Unaudited interim financial statements of the C.R. Gibson Business as of September 22, 2007 and for the period from January 1, 2007 to September 22, 2007.

99.3 Unaudited pro forma combined statement of operations of CSS Industries, Inc. for the fiscal year ended March 31, 2007 and for the nine months ended December 31, 2007.

2

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 hereunto duly authorized.

CSS Industries, Inc.
(Registrant)
By:	/s/ Clifford E. Pietrafitta
	Clifford E. Pietrafitta
	Vice President – Finance and Chief Financial Officer

Date: February 19, 2008

3

EXHIBIT INDEX

Exhibit	Description
23.1	Consent of KPMG LLP, Independent Auditors, with respect to its report on the audited financial statements of the C.R. Gibson Business as of December 31, 2006 and for the year then ended.
99.1	Audited financial statements of the C.R. Gibson Business as of December 31, 2006 and for the year then ended.
99.2	Unaudited interim financial statements of the C.R. Gibson Business as of September 22, 2007 and for the period from January 1, 2007 to September 22, 2007.
99.3	Unaudited pro forma combined statement of operations of CSS Industries, Inc. for the fiscal year ended March 31, 2007 and for the nine months ended December 31, 2007.

4

EX-23.1

Exhibit 23.1  

Consent of Independent Auditors

The Board of Directors
CSS Industries, Inc.

We consent to the incorporation by reference in the registration statements (Nos. 333-31941, 333-100795 and 333-118008) on Form S-8 of CSS Industries, Inc. of our report dated September 24, 2007 with respect to the balance sheet of the C.R. Gibson Business as of December 31, 2006 and the related statements of operations, owner’s net investment and cash flows for the year then ended, which report appears in the Form 8-K/A of CSS Industries, Inc. dated February 19, 2008.

 
/s/  KPMG LLP
 
Atlanta, Georgia
February 19, 2008

EX-99.1

EXHIBIT 99.1

The C. R. Gibson Business
Financial Statements
December 31, 2006

(With Independent Auditors’
Report Thereon)

Independent Auditors’ Report

The Board of Directors
C.R. Gibson, Inc.:

We have audited the accompanying balance sheet of the C.R. Gibson Business (as defined in note 1) as of December 31, 2006 and the related statements of operations, owner’s net investment, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the C.R. Gibson Business as of December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Atlanta, Georgia
September 24, 2007

THE C.R. GIBSON BUSINESS

Balance Sheet

December 31, 2006

Assets
Current assets:
Cash	$	1,515
Accounts receivable, net of allowances for doubtful accounts of $262,983		8,456,439
Inventories, net		11,157,671
Prepaid expenses and other current assets		595,810
Total current assets		20,211,435
Property, plant, and equipment, net		1,911,404
Other assets		211,705
	$	22,334,544
Liabilities and Owner’s Net Investment
Current liabilities:
Accounts payable	$	8,000,506
Accrued expenses		1,530,125
Reserve for future returns and customer allowances		1,167,515
Total current liabilities		10,698,146
Long-term debt		699,295
Total liabilities		11,397,441
Owner’s net investment		10,937,103
Total liabilities and owner’s net investment	$	22,334,544

See accompanying notes to financial statements.

2

THE C.R. GIBSON BUSINESS

Statement of Operations

December 31, 2006

Sales, net of returns and allowances	$	50,228,607
Cost of sales		27,772,882
Gross profit		22,455,725
Operating expenses:
Selling costs		2,469,673
Depreciation		445,935
General and administrative costs		15,110,115
Total operating expenses		18,025,723
Income from operations		4,430,002
Other income		4,493
Interest expense, net		(408,007	)
Net income	$	4,026,488

See accompanying notes to financial statements.

3

THE C.R. GIBSON BUSINESS

Statement of Owner’s Net Investment

Year ended December 31, 2006

Balances at December 31, 2005	$	7,610,143
Net income		4,026,488
Net amounts remitted to C.R. Gibson, Inc.		(699,528	)
Balances at December 31, 2006	$	10,937,103

See accompanying notes to financial statements.

4

THE C.R. GIBSON BUSINESS

Statement of Cash Flows

Year ended December 31, 2006

Cash flows from operating activities:
Net income	$	4,026,488
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		445,935
Provision for doubtful accounts receivable		249,262
Provision for markdowns, returns, and allowances		3,367,210
Loss on disposal of assets		45,771
Change in operating assets and liabilities
Accounts receivable		208,158
Inventories		(5,915,272	)
Prepaid expenses and other current assets		(34,311	)
Accounts payable		(1,484,470	)
Accrued expenses		11,118
Other assets		(209,218	)
Net cash provided by operating activities		710,671
Cash flows from investing activities:
Purchases of property and equipment		(1,064,354	)
Proceeds from disposal of equipment		184,412
Net cash used in investing activities		(879,942	)
Cash flows from financing activities:
Net amounts remitted to C.R. Gibson, Inc.		(1,072,484	)
Net borrowings on C.R. Gibson, Inc.’s line of credit		699,295
Net cash used in financing activities		(373,189	)
Net decrease in cash		(542,460	)
Cash, beginning of year		543,975
Cash, end of year	$	1,515
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	401,370

See accompanying notes to financial statements.

5

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(1) Significant Accounting Policies

(a)	Description of Business and Basis of Presentation
	C.R. Gibson, Inc. publishes, designs, markets, and distributes premium albums, memory products, and paper goods and sells its products to a variety of specialty and mass-market retailers. In May 2006, C.R. Gibson, Inc. acquired certain assets and liabilities of a photo frame company, formed as a wholly owned subsidiary of C.R. Gibson, Inc. and herein defined as Burnes Home Accents, LLC.
	The accompanying financial statements are referred to as The C.R. Gibson Business (the Company) and include the assets, liabilities and related operations of C.R. Gibson, Inc. excluding its Burnes Home Accents, LLC subsidiary. These financial statements give effect to certain assets, liabilities and expenses historically recorded or incurred at the C.R. Gibson, Inc. level, which related to or were incurred on behalf of the Company and have been identified and allocated to the stand-alone financial statements of the Company for the period presented. Allocations were made primarily based on specific identification. Management believes the methodology applied in the allocation of these costs is reasonable.
(b)	Revenue Recognition
	The Company recognizes sales revenue when products are shipped, the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed and determinable. At that time, the Company also provides reserves for future product returns and future customer allowances. Such reserves are included in current liabilities or as a reduction to accounts receivable in the accompanying consolidated balance sheets. Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows.
(c)	Use of Estimates
	The preparation of financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of 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.
(d)	Inventories
	Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method (FIFO) for all inventories and are shown net of valuation reserves for obsolete and slow moving inventory.
(e)	Property, Plant, and Equipment
	Property, plant, and equipment are stated at cost. Depreciation on property, plant, and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or their estimated useful lives.

(Continued)

6

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(f)	Long-Lived Assets
	The Company evaluates whether events and circumstances have occurred that indicate that the remaining balance of long-lived assets to be held and used in operations of the Company may be impaired and not be recoverable. In performing this evaluation, the Company uses an estimate of the related cash flows expected to result from the use of the asset and its eventual disposition. When this evaluation indicates the asset has been impaired, the Company will measure such impairment based on the asset’s fair value and the amount of such impairment is charged to earnings. No impairment charges were recognized during fiscal 2006. Long-lived assets to be disposed of by sale are valued at the lower of the carrying amount or estimated fair value less cost to sell.
(g)	Stock-Based Compensation
	Effective January 1, 2006, C.R. Gibson, Inc. adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment (SFAS No. 123(R)). SFAS No. 123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123) and supersedes APB No. 25. SFAS No. 123(R) requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award. SFAS No. 123(R) was adopted using the modified prospective method of application, which requires the Company to recognize compensation cost on a prospective basis. Under this method, the Company did not have any stock-based compensation expense for awards granted prior to, but not yet vested as of January 1, 2006, using the fair value amounts determined for pro forma disclosures under SFAS No. 123. For stock-based awards granted after January 1, 2006, the Company recognizes compensation expense based on estimated grant date fair value using the Black-Scholes option-pricing model. The Company recorded no compensation expense as a result of the adoption of SFAS No. 123(R) as no stock options were granted during 2006.
(h)	Income Taxes
	C.R. Gibson, Inc. has elected to be treated as an “S Corporation” under the Internal Revenue Code. No provision for federal or state income taxes has been recorded in the accompanying financial statements as C.R. Gibson, Inc.’s income or loss and other tax attributes for federal and state income tax purposes is passed on to its stockholders.
(i)	Advertising
	The Company expenses advertising costs as incurred (primarily related to the production and issuance of catalogs). Advertising credits from vendors are offset against advertising costs. Advertising expense (net of credits) was approximately $368,000 for the year ended December 31, 2006.

(Continued)

7

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(j)	Recent Accounting Pronouncements
	In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. SFAS No. 157 defines fair value, establishes a framework for the measurement of fair value, and enhances disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measures. SFAS No. 157 is effective for fair value measures already required or permitted by other standards for fiscal years beginning after November 15, 2007. The Company is required to adopt SFAS No. 157 beginning on January 1, 2008. SFAS No. 157 is required to be applied prospectively, except for certain financial instruments. Any transition adjustment will be recognized as an adjustment to opening retained earnings in the year of adoption. The Company is currently evaluating the impact of adopting SFAS No. 157 on its results of operations and financial position.
	Effective January 1, 2006, the Company adopted SFAS No. 151, Inventory Costs — an Amendment of ARB No. 43, Chapter 4 (SFAS No. 151). SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) requiring that those items be recognized as current-period charges. In addition, SFAS No. 151 requires that allocation of fixed production overheads be based on the normal capacity of the production facilities. The Company’s current procedures follow these guidelines and therefore the adoption of SFAS No. 151 had no impact on the valuation of inventory or charges to cost of sales.

(2)	Risk Concentrations
	For the year ended December 31, 2006, two customers accounted for 41% of Company sales. Accounts receivable from these customers aggregated approximately $3,184,000 at December 31, 2006.
(3)	Inventories
	Inventories by product consist of the following as of December 31, 2006:

Finished goods:
Paper	$	5,487,476
Photo/social		3,521,707
Baby		2,807,419
All other		164,516
		11,981,118
Less reserves		(823,447	)
Inventory, net	$	11,157,671

(Continued)

8

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(4)	Property and Equipment
	Property and equipment consists of the following as of December 31, 2006:

	Useful lives	2006
Leasehold improvements	Shorter of useful life or lease term	$	263,103
Equipment	2 – 7 years		2,945,906
Furniture and fixtures	7 years		438,324
			3,647,333
Less accumulated depreciation and amortization			(1,735,929	)
Property and equipment, net		$	1,911,404

(5)	Debt
	The Company utilizes a credit agreement maintained by C.R. Gibson, Inc. with a bank for a $55 million revolving loan expiring in December 2009. Available borrowings under the loan are limited to a borrowing base that consists of percentages of eligible accounts receivable and inventories. The credit agreement is collateralized by substantially all of the assets of C.R. Gibson, Inc. Borrowings under the loan require payments of interest monthly at a base rate or LIBOR plus an applicable margin, all as defined in the agreement (8.25% at December 31, 2006). At December 31, 2006, the Company had available allocated borrowing limits of approximately $11 million and had borrowings outstanding of approximately $699,000.
	The debt agreement contains certain restrictive covenants that, among other things, limit the ability to incur additional indebtedness, enter into guarantees, pay certain dividends, enter into affiliate transactions, and engage in mergers or consolidations. C.R. Gibson, Inc. was in compliance with these covenants or obtained waivers of noncompliance at December 31, 2006.
	Debt and interest expense have been allocated to the Company based upon actual borrowings from the facility.
	Subsequent to year-end, the credit agreement was amended to, among other items, decrease the revolving loan to $50 million and amend certain restrictive covenants.

(Continued)

9

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(6)	Commitments and Contingencies
	The Company utilizes leases entered into by C.R. Gibson, Inc. for office space, showrooms, and equipment under noncancelable operating leases with third parties. Future minimum lease payments under noncancelable leases as of December 31, 2006 are as follows:

	Total
Year:
2007	$	979,205
2008		962,646
2009		968,192
2010		817,443
2011		488,688
Thereafter		285,068
	$	4,501,242

	Rent expense totaled approximately $1,041,000 for the year ended December 31, 2006.
	Through C.R. Gibson, Inc. the Company has license agreements for use of certain character art and design property rights in its products, which expire on various dates through December 2008. The agreements require a percentage fee payment on products sold using the character art and designs. In connection with these agreements, the Company paid nonrefundable advance and minimum guarantees of $625,000 for the period from January 2007 through December 2008. License expense for these agreements approximated $1,562,000 during 2006.
	The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.
(7)	Stock Option Plan
	In December 2001, C.R. Gibson, Inc. adopted a stock plan which authorizes the issuance of up to 1,000,000 shares of common stock to certain of C.R. Gibson Inc.’s employees, officers, and directors under incentive or nonqualified options and other stock awards. Under the plan, stock options may be granted with an exercise price of no less than fair value at the date of grant. There were no options issued or outstanding during 2006. Effective in November 2006 the stock plan was terminated and cancelled.

(Continued)

10

THE C.R. GIBSON BUSINESS

Notes to Financial Statements

December 31, 2006

(8)	Related-Party Transactions
	The Company conducts business with affiliates of C.R. Gibson, Inc. related through common control. Related party transactions consisted of the following for the year ended December 31, 2006:

Statement of operations data:
Sales to affiliates	$	321,000
Agent fees included in cost of sales		1,405,000
Service agreement expense		4,410,000
Other operating expenses		2,000
Balance sheet data (end of period):
Accounts receivable	$	407,000
Accounts payable		713,000
Statement of cash flows data:
Payment of current year equity transactions	$	700,000
Payment of prior year equity transactions		373,000

(9)

Retirement Plan

C.R. Gibson, Inc. maintains a 401(k) plan under which eligible employees may contribute up to 15% of their earnings subject to certain limitations. Employees age 21 or over are eligible to participate in the plan after one year of service. At C.R. Gibson, Inc.’s discretion, C.R. Gibson, Inc. matches 50% of employee contributions up to 6% of the employee’s salary and may make other contributions to the plan. During 2006, the Company expensed approximately $103,000 for its contributions to the plan.

11

EX-99.2

EXHIBIT 99.2

The C.R. Gibson Business
Unaudited Balance Sheet
September 22, 2007
(in thousands)

Assets
Current assets:
Cash	$	2
Accounts receivable, net of allowance for doubtful accounts of $230		13,393
Inventories, net		14,191
Prepaid expenses and other current assets		571
Total current assets		28,157
Property and equipment, net		1,721
	$	29,878
Liabilities and Owner’s Net Investment
Current liabilities:
Accounts payable	$	10,573
Accrued expenses		1,904
Reserve for future returns and customer allowances		1,033
Total current liabilities		13,510
Long-term debt		2,235
Total liabilities		15,745
Owner’s net investment		14,133
Total liabilities and owner’s net investment	$	29,878

See accompanying notes to unaudited financial statements.

1 of 6

The C.R. Gibson Business
Unaudited Statement of Operations
For the Period From January 1, 2007 to September 22, 2007
(in thousands)

Sales, net of returns and allowances	$	40,141
Cost of sales		23,075
Gross profit		17,066
Operating expenses:
Selling costs		3,363
Depreciation		336
General and administrative costs		10,045
Total operating expenses		13,744
Income from operations		3,322
Other income		(2	)
Interest expense, net		129
Net income	$	3,195

See accompanying notes to unaudited financial statements

2 of 6

The C.R. Gibson Business
Unaudited Statement of Owner’s Net Investment
For the Period From January 1, 2007 to September 22, 2007
(in thousands)

Balance at December 31, 2006	$	10,937
Net income		3,195
Net amounts remitted to C.R. Gibson, Inc.		(1	)
Balance at September 22, 2007	$	14,133

See accompanying notes to unaudited financial statements

3 of 6

The C.R. Gibson Business
Unaudited Statement of Cash Flows
For the Period from January 1, 2007 to September 22, 2007
(in thousands)

Cash flows from operating activities:	$	3,195
Net income
Adjustments to reconcile net income to net cash used in operating activities
Depreciation & amortization		336
Provision for doubtful accounts receivable		297
Provision for markdowns, returns and allowances		3,501
Change in operating assets and liabilities
Accounts receivable		(5,234	)
Inventories		(6,667	)
Prepaid expenses and other current assets		25
Accounts payable		2,572
Accrued expenses		374
Other assets		212
Net cash used in operating activities		(1,389	)
Cash flows from investing activities:
Purchase of equipment		(146	)
Net cash used in investing activities		(146	)
Cash flows from financing activities:
Borrowings under bank credit agreement		1,535
Net cash provided by financing activities		1,535
Net increase (decrease) in cash		—
Cash, beginning of period		2
Cash, end of period	$	2

See accompanying notes to unaudited financial statements

4 of 6

The C.R. GIBSON BUSINESS
Notes to Unaudited Financial Statements
September 22, 2007

(1)	Significant Accounting Policies
	C.R. Gibson, Inc. publishes, designs, markets and distributes premium albums, memory products and paper goods and sells its products to a variety of specialty and mass-market retailers. In May 2006, C.R. Gibson, Inc. acquired certain assets and liabilities of a photo frame company, formed as a wholly owned subsidiary of C.R. Gibson, Inc. and herein defined as Burnes Home Accents, LLC.
	The accompanying financial statements are referred to as The C.R. Gibson Business (the Company) and include the assets, liabilities and related operations of C.R. Gibson, Inc. excluding its Burnes Home Accents, LLC subsidiary. These financial statements give effect to certain assets, liabilities and expenses historically recorded or incurred at the C.R. Gibson, Inc. level, which related to or were incurred on behalf of the Company and have been identified and allocated to the stand-alone financial statements of the Company for the period presented. Allocations were made primarily based on specific identification. Management believes the methodology applied in the allocation of these costs is reasonable.
	Use of Estimates: The preparation of financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	Revenue Recognition: The Company recognizes sales revenue when products are shipped, the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed and determinable. At that time, the Company also provides reserves for future product returns and future customer allowances. Such reserves are included in current liabilities or as a reduction to accounts receivable in the accompanying unaudited balance sheet. Accounts receivable are recorded at the invoiced amounts and do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statement of cash flows.
	Inventories: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method (FIFO) for all inventories and are shown net of valuation reserves for obsolete and slow moving inventory.
	Income Taxes: C.R. Gibson Inc. has elected to be treated as an “S” Corporation under the Internal Revenue Code. No provision for federal or state income taxes has been recorded in the accompanying financial statements as C.R. Gibson. Inc.’s income or loss and other tax attributes for federal and state income tax purposes is passed on to its stockholders.

5 of 6

(2)	Related-Party Transactions
	The Company conducts business with affiliates of C.R. Gibson, Inc. related through common control. Related party transactions consisted of the following for period from January 1, 2007 to September 22, 2007:

Statement of operations data:
Sales to affiliates	$	1,530
Agent fees included in cost of sales		750
Service agreement expense		3,034
Balance sheet data (end of period):
Accounts receivable	$	27

6 of 6

EX-99.3

EXHIBIT 99.3

CSS INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 2007
(In thousands, except per share data)

										Pro Forma
	Historical			Historical			Reclasses			Adjustments			Pro Forma as
	CSS (c)			CRG (d)			(i)			(a)			Adjusted
SALES	$	530,686		$	50,229		$	1,579		$	—		$	582,494
COSTS AND EXPENSES
Cost of Sales		394,045			27,773			4,775			—			426,593
Selling, general and administrative expenses		96,125			18,026			(3,203	)		1,310	(h)		112,258
Restructuring expenses		2,327			—			—			—			2,327
Interest expense, net		2,285			408			—			2,725	(f)		5,418
Other income, net		(900	)		(4	)		7			—			(897	)
INCOME BEFORE INCOME TAXES		36,804			4,026			—			(4,035	)		36,795
INCOME TAX EXPENSE		12,915			—			—			(3	)(j)		12,912
NET INCOME		23,889			4,026			—			(4,032	)		23,883
NET INCOME PER COMMON SHARE
Basic	$	2.25											$	2.25
Diluted	$	2.19											$	2.19
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		10,622												10,622
Diluted		10,919												10,919
COMPREHENSIVE INCOME
Net income	$	23,889		$	4,026		$	—		$	(4,032	)	$	23,883
Foreign currency translation adjustment		1			—			—			—			1
Comprehensive income	$	23,890		$	4,026		$	—		$	(4,032	)	$	23,884

See accompanying footnotes to pro-forma financial information

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CSS INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED DECEMBER 31, 2007
(In thousands, except per share data)

										Pro Forma
	Historical			Historical			Reclasses			Adjustments			Pro Forma as
	CSS (b)			CRG (e)			(i)			(a)			Adjusted
SALES	$	441,854		$	39,656		$	(1,717	)	$	—		$	479,793
COSTS AND EXPENSES
Cost of Sales		320,990			22,309			4,380			—			347,679
Selling, general and administrative expenses		71,493			17,297			(6,097	)		873	(h)		83,566
Restructuring expenses		(2	)		—			—			—			(2	)
Interest expense, net		720			87			—			2,036	(g)		2,843
Other income, net		(452	)		(116	)		—			—			(568	)
INCOME BEFORE INCOME TAXES		49,105			79			—			(2,909	)		46,275
INCOME TAX EXPENSE		17,143			—			—			(991	)(j)		16,152
NET INCOME		31,962			79			—			(1,918	)		30,123
NET INCOME PER COMMON SHARE
Basic	$	2.95											$	2.78
Diluted	$	2.88											$	2.71
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		10,833												10,833
Diluted		11,115												11,115
COMPREHENSIVE INCOME
Net income	$	31,962		$	79		$	—		$	(1,918	)	$	30,123
Foreign currency translation adjustment		2			—			—			—			2
Comprehensive income	$	31,964		$	79		$	—		$	(1,918	)	$	30,125

See accompanying footnotes to pro-forma financial information

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Notes to Pro-Forma Financial Information

The aggregate purchase price for the acquisition of substantially all of the assets of C.R. Gibson, Inc. (“C.R. Gibson”) through a newly-formed subsidiary, C.R. Gibson, LLC, was approximately $68,000,000 in cash plus the assumption of liabilities of approximately $4,943,000 and transaction costs of approximately $200,000. A portion of the purchase price is being held in escrow for certain post closing adjustments and indemnification obligations. The acquisition was accounted for as a purchase and the preliminary estimated excess of cost over the fair market value of the net tangible and identifiable intangible assets acquired of $17,482,000 was recorded as goodwill. For tax purposes, goodwill resulting from this acquisition is deductible.

The pro forma adjustments are based upon available information and upon certain assumptions that CSS Industries, Inc. (the “Company”) believes are reasonable. The unaudited combined pro forma financial statements are provided for informational purposes only and are not necessarily indicative of the Company’s results of operations that would actually have been obtained had this acquisition been completed as of the beginning of the periods presented, or that may be obtained in the future. Included in the pro forma results are intercompany charges from C.R. Gibson’s previous parent company of $3,150,000 and $2,261,000 for the year ended March 31, 2007 and nine months ended December 31, 2007, respectively. The Company does not expect to incur these charges in the future.

(a) The unaudited pro forma combined statement of operations gives effect to the transaction as if it occurred at the beginning of the periods presented.

(b) Represents the historical consolidated financial statements of the Company for the nine months ended December 31, 2007. Included in these consolidated financial results are approximately one-month of activity related to the newly formed C.R. Gibson, LLC.

(c) Represents the historical consolidated financial statements of the Company for the year ended March 31, 2007.

(d) Represents the historical results of operations of the C.R. Gibson Business for the year ended December 31, 2006.

(e) Represents the historical results of operations of the C.R. Gibson Business for the period from March 25, 2007 to November 30, 2007.

(f) Reflects an adjustment for additional interest expense due to the acquisition of substantially all of the assets of C.R. Gibson, Inc. for the nine months ended December 31, 2007.

(g) Reflects an adjustment for additional interest expense due to the acquisition of substantially all of the assets of C.R. Gibson, Inc. for the year ended March 31, 2007.

(h) Reflects an adjustment for estimated intangible asset amortization, which included trademarks, customer relationships and non-compete agreements. An appraisal was performed to determine the fair value of intangible assets acquired as part of the C.R. Gibson Business. Intangible asset amortization was $1,310 and $873 and for the year ended March 31, 2007 and the nine months ended December 31, 2007, respectively.

(i) Certain reclassification adjustments have been made to the audited presentation of C.R. Gibson Business results to conform with the historical presentation of CSS Industries, Inc. financial results of operations.

(j) Represents estimated income tax expense adjustment as a result of the inclusion of the C.R. Gibson Business and estimated pro forma adjustments.

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