CSS Industries Inc. (CSS, Financial) filed Quarterly Report for the period ended 2009-06-30.
CSS Industries Inc. is a consumer products company primarily engaged in the manufacture and sale to mass market retailers of seasonal social expression products including gift wrap gift bags boxed greeting cards gift tags tissue paper paper and vinyl decorations seasonal candles classroom exchange Valentines decorative ribbons and bows Halloween masks costumes make-ups and novelties and Easter egg dyes and novelties. CSS provides its retail customers the opportunity to use a single vendor for much of their seasonal product requirements. CSS Industries Inc. has a market cap of $220.9 million; its shares were traded at around $23 with a P/E ratio of 13 and P/S ratio of 0.4. The dividend yield of CSS Industries Inc. stocks is 2.6%.
Interest expense, net of $368,000 in 2009 increased over interest expense, net of $284,000 in 2008 due to higher borrowing levels during the three months ended June 30, 2009 compared to the same period in the prior year.
The net loss for the three months ended June 30, 2009 was $4,490,000, or $.47 per diluted share compared to $4,496,000, or $.44 per diluted share in 2008. The net loss for the quarter ended June 30, 2009 was in line with the first quarter of the prior year due to lower sales and margins which were substantially offset by decreased selling, general and administrative expenses, primarily as a result of initiatives to reduce spending, including the impact of a reduction in workforce initiated in March 2009. The net loss per diluted share of $.47 for the quarter ended June 30, 2009 increased from a net loss of $.44 per diluted share in the prior year as a result of lower shares outstanding due to stock repurchases in the prior fiscal year.
At June 30, 2009, the Company had working capital of $109,786,000 and stockholders equity of $253,912,000. The increase in inventories and other current liabilities from March 31, 2009 was primarily a result of the normal seasonal inventory build necessary for the fiscal 2010 shipping season. Inventory levels decreased compared to the same period in the prior year as a result of improved inventory management and the absence of advanced paper purchases which occurred in the prior year in anticipation of scheduled price increases from vendors. The decrease in stockholders equity from March 31, 2009 was primarily attributable to the first quarter net loss and payments of cash dividends.
The Company relies primarily on cash generated from its operations and seasonal borrowings to meet its liquidity requirements. Historically, a significant portion of the Companys revenues have been seasonal with approximately 80% of sales recognized in the second and third quarters. As payment for sales of Christmas related products is usually not received until just before or just after the holiday selling season in accordance with general industry practice, short-term borrowing needs increase throughout the second and third quarters, peaking prior to Christmas and dropping thereafter. Seasonal financing requirements are met under a $110,000,000 revolving credit facility with four banks and an accounts receivable securitization facility with an issuer of receivables-backed commercial paper. This facility has a funding limit of $75,000,000 during peak seasonal periods and $25,000,000 during off-peak seasonal periods. In addition, the Company has outstanding $10,000,000 of 4.48% senior notes due in December 2009. These financing facilities are available to fund the Companys seasonal borrowing needs and to provide the Company with sources of capital for general corporate purposes, including acquisitions as permitted under the revolving credit facility. At June 30, 2009, the Companys borrowings consisted of $10,000,000 outstanding under the senior notes and $36,700,000 outstanding under the Companys short-term credit facilities. In addition, the Company has approximately $758,000 of capital leases outstanding at June 30, 2009. Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its future cash needs for at least the next 12 months.
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CSS Industries Inc. is a consumer products company primarily engaged in the manufacture and sale to mass market retailers of seasonal social expression products including gift wrap gift bags boxed greeting cards gift tags tissue paper paper and vinyl decorations seasonal candles classroom exchange Valentines decorative ribbons and bows Halloween masks costumes make-ups and novelties and Easter egg dyes and novelties. CSS provides its retail customers the opportunity to use a single vendor for much of their seasonal product requirements. CSS Industries Inc. has a market cap of $220.9 million; its shares were traded at around $23 with a P/E ratio of 13 and P/S ratio of 0.4. The dividend yield of CSS Industries Inc. stocks is 2.6%.
Highlight of Business Operations:
Sales for the three months ended June 30, 2009 decreased 2% to $53,677,000 from $54,647,000 in the three months ended June 30, 2008 primarily due to lower sales of all occasion products, primarily everyday ribbon and school products. The sales decline was impacted by various factors, including the continuing slowness or reduction in order patterns related to the current economic downturn. Partially offsetting the sales decline were sales of acquired businesses, primarily Hampshire Paper, which was acquired on August 5, 2008, as well as increased sales of C. R. Gibson branded infant products. Excluding sales of acquired businesses, sales for the quarter declined 7% compared to the same quarter in the prior year.Interest expense, net of $368,000 in 2009 increased over interest expense, net of $284,000 in 2008 due to higher borrowing levels during the three months ended June 30, 2009 compared to the same period in the prior year.
The net loss for the three months ended June 30, 2009 was $4,490,000, or $.47 per diluted share compared to $4,496,000, or $.44 per diluted share in 2008. The net loss for the quarter ended June 30, 2009 was in line with the first quarter of the prior year due to lower sales and margins which were substantially offset by decreased selling, general and administrative expenses, primarily as a result of initiatives to reduce spending, including the impact of a reduction in workforce initiated in March 2009. The net loss per diluted share of $.47 for the quarter ended June 30, 2009 increased from a net loss of $.44 per diluted share in the prior year as a result of lower shares outstanding due to stock repurchases in the prior fiscal year.
At June 30, 2009, the Company had working capital of $109,786,000 and stockholders equity of $253,912,000. The increase in inventories and other current liabilities from March 31, 2009 was primarily a result of the normal seasonal inventory build necessary for the fiscal 2010 shipping season. Inventory levels decreased compared to the same period in the prior year as a result of improved inventory management and the absence of advanced paper purchases which occurred in the prior year in anticipation of scheduled price increases from vendors. The decrease in stockholders equity from March 31, 2009 was primarily attributable to the first quarter net loss and payments of cash dividends.
The Company relies primarily on cash generated from its operations and seasonal borrowings to meet its liquidity requirements. Historically, a significant portion of the Companys revenues have been seasonal with approximately 80% of sales recognized in the second and third quarters. As payment for sales of Christmas related products is usually not received until just before or just after the holiday selling season in accordance with general industry practice, short-term borrowing needs increase throughout the second and third quarters, peaking prior to Christmas and dropping thereafter. Seasonal financing requirements are met under a $110,000,000 revolving credit facility with four banks and an accounts receivable securitization facility with an issuer of receivables-backed commercial paper. This facility has a funding limit of $75,000,000 during peak seasonal periods and $25,000,000 during off-peak seasonal periods. In addition, the Company has outstanding $10,000,000 of 4.48% senior notes due in December 2009. These financing facilities are available to fund the Companys seasonal borrowing needs and to provide the Company with sources of capital for general corporate purposes, including acquisitions as permitted under the revolving credit facility. At June 30, 2009, the Companys borrowings consisted of $10,000,000 outstanding under the senior notes and $36,700,000 outstanding under the Companys short-term credit facilities. In addition, the Company has approximately $758,000 of capital leases outstanding at June 30, 2009. Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its future cash needs for at least the next 12 months.
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