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CSS Industries, Inc. Reports Results Of Operations For The Three And Nine Months Ended December 31, 2013

CSS Industries, Inc. (NYSE:CSS) announced today its results of operations for the three and nine months ended December 31, 2013. As previously announced, the Company divested the Halloween portion of its Paper Magic Group, Inc. business during fiscal 2013. Halloween sales in the three and nine months ended December 31, 2012 totaled approximately $1,415,000 and $29,345,000, 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 third quarter of fiscal 2014 decreased to $106,295,000 from $116,020,000 in the third quarter of fiscal 2013. Approximately $1,299,000 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 Christmas products and narrow woven ribbon. Income from continuing operations before income taxes for the third quarter of fiscal 2014 was $16,316,000 compared to $17,019,000 in the third quarter of fiscal 2013. Income from continuing operations for the third quarter of fiscal 2014 was $10,988,000, or $1.18 per diluted share, versus $11,600,000, or $1.21 per diluted share, in the third quarter of the prior fiscal year. Net income for the third quarter of fiscal 2014, including discontinued operations, was $11,007,000, or $1.18 per diluted share, versus $11,611,000, or $1.22 per diluted share, in the third quarter of fiscal 2013. Results for the third quarter of fiscal 2014 and 2013 include income from Halloween operations and charges incurred as a result of the divestiture as detailed in the charts below.
             
Third Quarter of Fiscal 2014     Halloween Impact  

Non-GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 16,316,000 $ 123,000   $ - $ 16,193,000
Income tax expense 5,328,000 44,000 - 5,284,000
Income from continuing operations 10,988,000 79,000 - 10,909,000
Diluted net income per common share - continuing operations   $ 1.18   $ 0.01     $ -   $ 1.17
 
                 
Third Quarter of Fiscal 2013 Halloween Impact

Non-GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 17,019,000 $ (223,000 ) $ - $ 17,242,000
Income tax expense 5,419,000 (82,000 ) - 5,501,000
Income from continuing operations 11,600,000 (141,000 ) - 11,741,000
Diluted net income per common share - continuing operations   $ 1.21   $ (0.01 )   $ -   $ 1.23
 

Sales for the first nine months of fiscal 2014 decreased to $265,899,000 from $310,572,000 in the first nine months of fiscal 2013. Approximately $28,063,000 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 All Occasion stationery products, Christmas products and narrow woven ribbon. Income from continuing operations before income taxes for the first nine months of fiscal 2014 was $29,785,000 compared to $27,945,000 in the first nine months of fiscal 2013. Results for the first nine months of fiscal 2013 include a pretax loss of $4,352,000 relating to the Halloween business. This loss was comprised of $2,412,000 of income from Halloween operations offset by $6,764,000 of charges incurred as a result of the divestiture. Income from continuing operations for the first nine months of fiscal 2014 was $20,167,000, or $2.13 per diluted share, versus $17,573,000, or $1.83 per diluted share, in the first nine months of the prior fiscal year. Results in the first nine months of fiscal 2013 include a net loss of $3,651,000, or $0.39 per diluted share, relating to the Halloween business. Net income for the first nine months of fiscal 2014, including discontinued operations, was $20,298,000, or $2.14 per diluted share, versus $17,628,000, or $1.84 per diluted share, in the first nine months of fiscal 2013. Results for the first nine months of fiscal 2014 and 2013 include income from Halloween operations and charges incurred as a result of the divestiture as detailed in the charts below.
             
First Nine Months of Fiscal 2014     Halloween Impact  

Non-GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 29,785,000 $ (93,000 )   $ - $ 29,878,000
Income tax expense 9,618,000 (35,000 ) - 9,653,000
Income from continuing operations 20,167,000 (58,000 ) - 20,225,000
Diluted net income per common share - continuing operations   $ 2.13   $ (0.01 )   $ -     $ 2.14
 
                 
First Nine Months of Fiscal 2013 Halloween Impact

Non-GAAP
    As Reported   Operations   Charges   Results
Income from continuing operations before income taxes $ 27,945,000 $ 2,412,000 $ (6,764,000 ) $ 32,297,000
Income tax expense 10,372,000 831,000 (1,532,000 ) 11,073,000
Income from continuing operations 17,573,000 1,581,000 (5,232,000 ) 21,224,000
Diluted net income per common share - continuing operations   $ 1.83   $ 0.16     $ (0.55 )   $ 2.21
 

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.

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