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CSS Industries, Inc. Reports Results Of Operations For The Three And Six Months Ended September 30, 2013

CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the three and six months ended September 30, 2013. As previously announced, the Company divested the Halloween portion of its Paper Magic Group, Inc. business during the second quarter of fiscal 2013. Halloween sales in the three and six months ended September 30, 2012 totaled approximately $19,089,000 and $27,930,000, respectively. Due to the divestiture, this level of sales did not recur in fiscal 2014. 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.

Sales for the second quarter of fiscal 2014 decreased to $112,487,000 from $133,485,000 in the second quarter of fiscal 2013. Approximately $18,440,000 of the lower sales level is due to the divestiture of the Halloween business as discussed above, with the balance of the lower sales level primarily due to lower sales of All Occasion stationery products. Income from continuing operations before income taxes for the second quarter of fiscal 2014 was $16,040,000 compared to $12,259,000 in the second quarter of fiscal 2013. Results in the second quarter of fiscal 2013 include a pretax loss of $4,695,000 relating to the Halloween business. This loss was comprised of $2,069,000 of income from Halloween operations prior to the divestiture offset by $6,764,000 of charges incurred as a result of the divestiture. Income from continuing operations for the second quarter of fiscal 2014 was $10,846,000, or $1.14 per diluted share, versus $6,840,000, or $0.71 per diluted share, in the second quarter of the prior fiscal year. Results in the second quarter of fiscal 2013 include a net loss of $3,880,000, or $0.40 per diluted share, relating to the Halloween business. Net income for the second quarter of fiscal 2014, including discontinued operations, was $10,958,000, or $1.16 per diluted share, versus $6,921,000, or $0.72 per diluted share, in the second quarter of fiscal 2013. Results for the second quarter of fiscal 2014 and 2013 excluding income from Halloween operations prior to the divestiture and charges incurred as a result of the divestiture are detailed in the charts below.

             
Second Quarter of Fiscal 2014     Halloween Impact   Non GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 16,040,000 $ 131,000   $ - $ 16,171,000
Income tax expense 5,194,000 48,000 - 5,242,000
Income from continuing operations 10,846,000 83,000 - 10,929,000
Diluted net income per common share - continuing operations   $ 1.14   $ 0.01     $ -   $ 1.15
 
                 
Second Quarter of Fiscal 2013 Halloween Impact Non GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 12,259,000 $ (2,069,000 ) $ 6,764,000 $ 16,954,000
Income tax expense 5,419,000 (717,000 ) 1,532,000 6,234,000
Income from continuing operations 6,840,000 (1,352,000 ) 5,232,000 10,720,000
Diluted net income per common share - continuing operations   $ 0.71   $ (0.14 )   $ 0.54   $ 1.11
 

Sales for the first six months of fiscal 2014 decreased to $159,604,000 from $194,552,000 in the first six months of fiscal 2013. Approximately $26,764,000 of the lower sales level is due to the divestiture of the Halloween business as discussed above, with the balance primarily due to lower sales of All Occasion stationery products. Income from continuing operations before income taxes for the first six months of fiscal 2014 was $13,469,000 compared to $10,926,000 in the first six months of fiscal 2013. Results in the first six months of fiscal 2013 include a pretax loss of $4,129,000 relating to the Halloween business. This loss was comprised of $2,635,000 of income from Halloween operations prior to the divestiture offset by $6,764,000 of charges incurred as a result of the divestiture. Income from continuing operations for the first six months of fiscal 2014 was $9,179,000, or $0.96 per diluted share, versus $5,973,000, or $0.62 per diluted share, in the first six months of the prior fiscal year. Results in the first six months of fiscal 2013 include a net loss of $3,510,000, or $0.37 per diluted share, relating to the Halloween business. Net income for the first six months of fiscal 2014, including discontinued operations, was $9,291,000, or $0.98 per diluted share, versus $6,017,000, or $0.63 per diluted share, in the first six months of fiscal 2013. Results for the first six months of fiscal 2014 and 2013 excluding income from Halloween operations prior to the divestiture and charges incurred as a result of the divestiture are detailed in the charts below.

             
First Half of Fiscal 2014     Halloween Impact   Non GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 13,469,000 $ 216,000   $ - $ 13,685,000
Income tax expense 4,290,000 79,000 - 4,369,000
Income from continuing operations 9,179,000 137,000 - 9,316,000
Diluted net income per common share - continuing operations   $ 0.96   $ 0.01     $ -   $ 0.98
 
                 
First Half of Fiscal 2013 Halloween Impact Non GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 10,926,000 $ (2,635,000 ) $ 6,764,000 $ 15,055,000
Income tax expense 4,953,000 (913,000 ) 1,532,000 5,572,000
Income from continuing operations 5,973,000 (1,722,000 ) 5,232,000 9,483,000
Diluted net income per common share - continuing operations   $ 0.62   $ (0.18 )   $ 0.54   $ 0.99
 

CSS is a consumer products company primarily engaged in the design, manufacture, procurement, distribution and sale of seasonal and all occasion social expression products, principally to mass market retailers. These seasonal and all occasion 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.

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