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

February 03, 2010 | About:
10qk

10qk

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CSS Industries Inc. (CSS) filed Quarterly Report for the period ended 2009-12-31.

Css Industries Inc. has a market cap of $167.5 million; its shares were traded at around $17.37 with a P/E ratio of 13.5 and P/S ratio of 0.4. The dividend yield of Css Industries Inc. stocks is 3.4%.CSS is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

Interest expense, net of $1,674,000 in 2009 decreased from interest expense, net of $2,293,000 in 2008 due to lower borrowing levels during the nine months ended December 31, 2009 compared to the same period in the prior year.

Net income for the nine months ended December 31, 2009 was $17,102,000, or $1.77 per diluted share compared to $22,420,000, or $2.22 per diluted share in 2008. The decrease in net income was primarily the result of reduced Christmas sales volume and lower gross margins on domestically produced Christmas products. Partially offsetting these negative factors were improved gross margins related to imported seasonal products, reduced SG&A expenses primarily related to the impact of cost saving initiatives, and lower interest expense.

Interest expense, net of $645,000 in 2009 decreased from interest expense, net of $1,093,000 in 2008 due to lower borrowing levels during the three months ended December 31, 2009 compared to the same period in the prior year.

Net income for the three months ended December 31, 2009 was $12,700,000, or $1.31 per diluted share compared to $16,412,000, or $1.68 per diluted share in 2008. The decrease in net income for the quarter ended December 31, 2009 was primarily the result of lower Christmas sales volume and lower margins on domestically produced Christmas products and higher SG&A expenses, partially offset by improved gross margins on imported seasonal products.

At December 31, 2009, the Company had working capital of $136,589,000 and stockholders equity of $274,593,000. The increase in accounts receivable from March 31, 2009 reflected seasonal billings of current year Christmas accounts receivables, net of current year collections. The decrease in inventories from March 31, 2009 reflects the normal seasonal shipments during the fiscal 2010 shipping season and improved inventory management. The increase in other current liabilities was primarily due to higher accounts payable and increased accruals for income taxes, sales commissions and royalties. The increase in stockholders equity from March 31, 2009 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 $75,000,000 during peak seasonal periods and $25,000,000 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. The Company made its final repayment of 4.48% senior notes in December 2009. At December 31, 2009, the Companys borrowings consisted of $46,100,000 outstanding under the Companys short-term credit facilities and the Company has approximately $611,000 of capital leases outstanding. 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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