Attached files
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| 8-K - 8-K - CSS INDUSTRIES INC | a8-kcover3x31x2014.htm |
Exhibit 99.1 | ||
FOR FURTHER INFORMATION CONTACT: | Vincent A. Paccapaniccia | |
Chief Financial Officer | ||
(215) 569-9900 | ||
FOR IMMEDIATE RELEASE
May 20, 2014
CSS INDUSTRIES, INC. REPORTS RESULTS OF OPERATIONS
FOR THE QUARTER AND YEAR ENDED MARCH 31, 2014
CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the quarter and year ended March 31, 2014. As previously announced, the Company divested the Halloween portion of its Paper Magic Group, Inc. business during fiscal 2013. Due to the divestiture, Halloween sales for the fiscal year ended March 31, 2013 of approximately $30,914,000 were reduced to $1,366,000 in fiscal 2014.
Sales for the fourth quarter of fiscal 2014 increased 1.8% to $54,560,000 from $53,621,000 in the fourth quarter of fiscal 2013. Excluding $1,569,000 of Halloween sales in the fourth quarter of the prior year, net sales increased 4.8%, primarily due to higher sales of All Occasion stationery products. Loss from continuing operations before income taxes for the fourth quarter of fiscal 2014 was $(2,085,000), compared to $(5,308,000) in the fourth quarter of fiscal 2013. Loss from continuing operations for the fourth quarter of fiscal 2014 was $(1,603,000), or $(0.17) per diluted share, versus $(1,985,000), or $(0.21) per diluted share, in the fourth quarter of the prior fiscal year. Net loss for the fourth quarter of fiscal 2014 was $(1,529,000), or $(0.16) per diluted share, versus $(2,401,000), or $(0.25) per diluted share, in the fourth quarter of fiscal 2013.
Sales for full year fiscal 2014 decreased 12.0% to $320,459,000 from $364,193,000 in full year fiscal 2013. Approximately $29,548,000 of the lower sales level is due to the divestiture of the Halloween business in the second quarter of fiscal 2013, with the balance primarily due to lower sales of Christmas products and All Occasion products. Income from continuing operations before income taxes for the full year fiscal 2014 was $27,700,000, compared to $22,637,000 in the prior year. Results for full year fiscal 2013 include a pretax loss of $4,363,000 relating to the Halloween business. This loss was comprised of $2,701,000 of income from Halloween operations offset by $7,064,000 of charges incurred as a result of the divestiture. Income from continuing operations for the full year fiscal 2014 was $18,564,000, or $1.97 per diluted share, versus $15,588,000, or $1.63 per diluted share, in the prior year. Net income for full year fiscal 2014 was $18,769,000, or $1.99 per diluted share, versus $15,227,000, or $1.59 per diluted share, in the prior fiscal year. The Company's seasonal orientation has historically resulted in operating losses in the first and fourth quarters of the fiscal year and operating profits in the second and third quarters. Results for full year fiscal 2014 and 2013 include income from Halloween operations and charges incurred as a result of the divestiture as detailed in the charts below.
Full Year Fiscal 2014 | Halloween Impact | Non-GAAP | ||||||||||
As Reported | Operations | Charges | Results | |||||||||
Income from continuing operations before income taxes | $ | 27,700,000 | $ | (52,000 | ) | $ | — | $ | 27,752,000 | |||
Income tax expense | 9,136,000 | (18,000 | ) | — | 9,154,000 | |||||||
Income from continuing operations | 18,564,000 | (34,000 | ) | — | 18,598,000 | |||||||
Diluted net income per common share-continuing operations | $ | 1.97 | $ | — | $ | — | $ | 1.97 | ||||
Full Year Fiscal 2013 | Halloween Impact | Non-GAAP | ||||||||||
As Reported | Operations | Charges | Results | |||||||||
Income from continuing operations before income taxes | $ | 22,637,000 | $ | 2,701,000 | $ | (7,064,000 | ) | $ | 27,000,000 | |||
Income tax expense | 7,049,000 | 933,000 | (1,636,000 | ) | 7,752,000 | |||||||
Income from continuing operations | 15,588,000 | 1,768,000 | (5,428,000 | ) | 19,248,000 | |||||||
Diluted net income per common share-continuing operations | $ | 1.63 | $ | 0.18 | $ | (0.57 | ) | $ | 2.01 | |||
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, note cards, infant and wedding photo albums, scrapbooks, and other gift items that commemorate life’s celebrations.
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management 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); 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; risks associated with acquisitions, including acquisition integration costs and the risk that the Company may not be able to integrate and derive the expected benefits from such acquisitions; 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 and customs laws; 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.
CSS’ consolidated results of operations for the three months and twelve months ended March 31, 2014 and 2013 and condensed consolidated balance sheets as of March 31, 2014 and March 31, 2013 follow:
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended | Twelve Months Ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales | $ | 54,560 | $ | 53,621 | $ | 320,459 | $ | 364,193 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales | 38,856 | 40,172 | 217,303 | 255,102 | |||||||||||
Selling, general and administrative expenses | 17,660 | 18,685 | 75,204 | 80,619 | |||||||||||
Disposition of product line, net | — | — | — | 5,798 | |||||||||||
Interest expense (income), net | 39 | 17 | 191 | (51 | ) | ||||||||||
Other expense, net | 90 | 55 | 61 | 88 | |||||||||||
56,645 | 58,929 | 292,759 | 341,556 | ||||||||||||
(Loss) income from continuing operations before income taxes | (2,085 | ) | (5,308 | ) | 27,700 | 22,637 | |||||||||
Income tax (benefit) expense | (482 | ) | (3,323 | ) | 9,136 | 7,049 | |||||||||
(Loss) income from continuing operations | (1,603 | ) | (1,985 | ) | 18,564 | 15,588 | |||||||||
Income (loss) from discontinued operations, net of tax | 74 | (416 | ) | 205 | (361 | ) | |||||||||
Net (loss) income | $ | (1,529 | ) | $ | (2,401 | ) | $ | 18,769 | $ | 15,227 | |||||
Net (loss) income per common share | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | (0.17 | ) | $ | (0.21 | ) | $ | 1.98 | $ | 1.63 | |||||
Discontinued operations | $ | 0.01 | $ | (0.04 | ) | $ | 0.02 | $ | (0.04 | ) | |||||
Total | $ | (0.16 | ) | $ | (0.25 | ) | $ | 2.00 | $ | 1.59 | |||||
Diluted: | |||||||||||||||
Continuing operations | $ | (0.17 | ) | $ | (0.21 | ) | $ | 1.97 | $ | 1.63 | |||||
Discontinued operations | $ | 0.01 | $ | (0.04 | ) | $ | 0.02 | $ | (0.04 | ) | |||||
Total | $ | (0.16 | ) | $ | (0.25 | ) | $ | 1.99 | $ | 1.59 | |||||
Weighted average shares outstanding | |||||||||||||||
Basic | 9,294 | 9,467 | 9,389 | 9,562 | |||||||||||
Diluted | 9,294 | 9,467 | 9,436 | 9,568 | |||||||||||
Cash dividends per share of common stock | $ | 0.15 | $ | 0.15 | $ | 0.60 | $ | 0.60 | |||||||
CSS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, | March 31, | ||||||
2014 | 2013 | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 68,200 | $ | 87,108 | |||
Short-term investments | 29,862 | — | |||||
Accounts receivable, net | 44,243 | 43,133 | |||||
Inventories | 59,252 | 62,598 | |||||
Deferred income taxes | 4,414 | 4,520 | |||||
Other current assets | 13,472 | 13,073 | |||||
Current assets of discontinued operations | 1 | 2 | |||||
Total current assets | 219,444 | 210,434 | |||||
PROPERTY, PLANT AND EQUIPMENT, NET | 27,063 | 27,956 | |||||
DEFERRED INCOME TAXES | 1,965 | 3,974 | |||||
OTHER ASSETS | |||||||
Goodwill | 14,522 | 14,522 | |||||
Intangible assets, net | 26,309 | 28,004 | |||||
Other | 4,232 | 4,290 | |||||
Total other assets | 45,063 | 46,816 | |||||
Total assets | $ | 293,535 | $ | 289,180 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accrued customer programs | $ | 4,820 | $ | 4,015 | |||
Other current liabilities | 26,582 | 30,718 | |||||
Current liabilities of discontinued operations | 233 | 644 | |||||
Total current liabilities | 31,635 | 35,377 | |||||
LONG-TERM OBLIGATIONS | 4,684 | 4,825 | |||||
STOCKHOLDERS’ EQUITY | 257,216 | 248,978 | |||||
Total liabilities and stockholders’ equity | $ | 293,535 | $ | 289,180 | |||
CSS Industries, Inc.
Reconciliation of Certain Non-GAAP Measures
(Unaudited)
(in thousands, except per share amounts)
The following is a reconciliation and computation of income from continuing operations before income taxes, income tax expense, income from continuing operations and diluted income per share from continuing operations to exclude income from Halloween operations and charges incurred as a result of the divestiture of the Halloween portion of the Paper Magic Group, Inc. business:
Twelve Months Ended March 31, 2014 | |||||||||||||||
Income from Continuing Operations Before Income Taxes | Income Tax Expense | Income from Continuing Operations | Diluted Income Per Share, Continuing Operations | ||||||||||||
As Reported | $ | 27,700 | $ | 9,136 | $ | 18,564 | $ | 1.97 | |||||||
Included in operating results | 52 | 18 | 34 | — | |||||||||||
Non-GAAP Measurement | $ | 27,752 | $ | 9,154 | $ | 18,598 | $ | 1.97 | |||||||
Twelve Months Ended March 31, 2013 | |||||||||||||||
Income from Continuing Operations Before Income Taxes | Income Tax Expense | Income from Continuing Operations | Diluted Income Per Share, Continuing Operations | ||||||||||||
As Reported | $ | 22,637 | $ | 7,049 | $ | 15,588 | $ | 1.63 | |||||||
Included in operating results | (2,701 | ) | (933 | ) | (1,768 | ) | (0.18 | ) | |||||||
Charges included in cost of sales | 1,266 | 458 | 808 | 0.08 | |||||||||||
Charges included in disposition of product line, net | 5,798 | 1,178 | 4,620 | 0.48 | |||||||||||
Non-GAAP Measurement | $ | 27,000 | $ | 7,752 | $ | 19,248 | $ | 2.01 | |||||||
Management believes that presentation of results of operations adjusted for the affects of the disposition of the Halloween product line provides useful information to investors with respect to the Company’s operating results for the twelve months ended March 31, 2014 and March 31, 2013 because it enhances comparability between the reporting periods.