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CSS Industries Inc. Reports Operating Results (10-Q)

February 09, 2011 | About:
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10qk

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CSS Industries Inc. (CSS) filed Quarterly Report for the period ended 2010-12-31.

Css Industries Inc. has a market cap of $181.9 million; its shares were traded at around $20.25 with a P/E ratio of 25.3 and P/S ratio of 0.4. The dividend yield of Css Industries Inc. stocks is 3.2%.Mutual Fund and Other Gurus that owns CSS: Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Interest expense, net of $1,018,000 in 2010 decreased from interest expense, net of $1,674,000 in 2009 due to lower borrowing levels during the nine months ended December 31, 2010 compared to the same period in the prior year.

Net income for the nine months ended December 31, 2010 was $15,583,000, or $1.61 per diluted share compared to $17,102,000, or $1.77 per diluted share in 2009. The decrease in net income for the nine months ended December 31, 2010 was primarily due to reduced sales volume, partially offset by lower incentive and stock compensation expenses and lower interest expense.

Interest expense, net of $425,000 in 2010 decreased over interest expense, net of $645,000 in 2009 due to lower borrowing levels during the three months ended December 31, 2010 compared to the same period in the prior year.

Net income for the three months ended December 31, 2010 was $12,855,000, or $1.32 per diluted share compared to $12,700,000, or $1.31 per diluted share in 2009. The increase in net income for the quarter ended December 31, 2010 was primarily due to lower payroll related expenses and interest expense, partially offset by the impact of lower sales volume.

At December 31, 2010, the Company had working capital of $149,956,000 and stockholders equity of $246,257,000. The increase in accounts receivable from March 31, 2010 reflected seasonal billings of current year Christmas accounts receivables, net of current year collections. The decrease in inventories from March 31, 2010 reflects the normal seasonal shipments during the fiscal 2011 shipping season. The increase in other current liabilities from March 31, 2010 was primarily due to higher accounts payable and increased accruals for income taxes, sales commissions and royalties. The increase in other long-term obligations was primarily attributable to the recording of the asset retirement obligation (see Note 1) and the Seastone royalty earn out obligation (see Note 4). The increase in stockholders equity from March 31, 2010 was primarily attributable to year-to-date net income, partially offset by 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 75% 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 $60,000,000 during peak seasonal periods and $15,000,000 during off-peak seasonal periods. 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 December 31, 2010, the Companys borrowings consisted of $33,300,000 outstanding under the Companys short-term credit facilities and the Company has approximately $166,000 of capital leases outstanding. As of the date of this filing, the Companys borrowings under its short-term credit facilities was $0. 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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