CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the quarter ended June 30, 2011. Sales for the first quarter of fiscal 2012 increased 3% to $55,040,000 from $53,288,000 in the first quarter of fiscal 2011. The net loss for the first quarter of fiscal 2012 was $7,569,000, or $0.78 per share, versus a net loss of $5,737,000, or $0.59 per share, in the first quarter of prior fiscal year. The Company’s highly 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.
As previously announced, the Company, as part of a continuing review of its Cleo gift wrap business, approved a plan to close its manufacturing facility located in Memphis, Tennessee, with an exit to be completed by no later than December 31, 2011. As part of such closing, the Company plans to transition the sourcing of all gift wrap products to foreign suppliers. During the first quarter of fiscal 2012, the Company incurred pre-tax expenses of $5,540,000 ($2,498,000 of which is included in cost of sales) associated with the approved plan, which primarily related to staff reduction costs, which are expected to result in cash expenditures during the second and third quarters of fiscal 2012, and non cash charges to write down inventory to net realizable value. The foregoing charge was partially offset by a $1,993,000 tax benefit. The impact of the charge, net of the associated tax benefit, in the first quarter of fiscal 2012 was $0.36 per share. Excluding the charge, net of tax benefit, in the first quarter of fiscal 2012, net loss would have been $4,022,000, $0.41 per share versus the net loss of $5,737,000, $0.59 per share in the first quarter of fiscal 2011. During our fiscal year ending March 31, 2012, we expect to incur pre-tax expenses of up to $10,300,000 (inclusive of the $5,540,000 expensed in the first quarter) associated with the approved plan, which costs primarily relate to cash expenditures for facility and staff costs (approximately $7,100,000) and non-cash asset write-downs (approximately $3,200,000). Additionally, the Company expects to incur $1,300,000 in cash spending during fiscal 2012 relating to this plan which was expensed previously.
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