Item 1. Business General
CSS Industries, Inc. ("CSS" or the "Company") 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, calendars, 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' product breadth, product innovation, creative design, manufacturing and packaging flexibility, product quality and customer service are key to sustaining the Company's market leadership position. A substantial portion of CSS' products are manufactured, packaged and warehoused in twelve domestic facilities, with the remainder purchased primarily from Asian manufacturers. The Company's products are sold to its retail customers by national and regional account managers and product specialists and by a network of independent manufacturers' representatives. The Company is comprised of The Paper Magic Group, Inc. ("Paper Magic"), acquired by the Company in August 1988, Berwick Industries, Inc. ("Berwick"), acquired in May 1993, and Cleo Inc ("Cleo"), acquired in November 1995.
On December 23, 1997, CSS sold Rapidforms, Inc. and its subsidiaries. As a result of the sale, CSS no longer operates in the Direct Mail Business Products industry.
The Company has experienced growth through a combination of acquisitions and the expansion of existing operations. The Company's goal is to continue to expand by developing new or complementary products, by entering new markets, by acquiring companies that are complementary with its existing operating business and by acquiring other businesses with leading market positions.
Paper Magic
Principal Products Paper Magic designs, manufactures and distributes a broad range of seasonal and decorative products to the consumer primarily through the mass market distribution channel. Paper Magic products include Christmas boxed greeting cards, gift tags, classroom exchange Valentine cards, seasonal decorations for both inside and outside the home, Dudley's(R) brand of Easter egg dyes and related Easter seasonal products, a full line of Halloween merchandise including make-up, costumes, masks, novelties, and the Illusive Concepts'(TM) brand of highly crafted masks and collectibles. In addition, Paper Magic also designs and markets everyday decorative products and teachers aids to the education market through school supply distributors and direct to retail teachers' stores. On January 17, 1997, Paper Magic acquired all of the outstanding stock of Color-Clings, Inc. ("Color-Clings") for $7,875,000 and assumed and repaid $10,665,000 of debt. Color-Clings is a designer and marketer of seasonal and everyday vinyl home decorations sold primarily to mass market retailers in the United States and Canada.
Paper Magic's products are primarily produced and warehoused in five facilities in central and northeastern Pennsylvania. Manufacturing processes include a wide range of finishing, assembly and packaging operations. Paper Magic Halloween make-up and Easter egg dye products are manufactured to specific proprietary formulae by contract manufacturers who meet regulatory requirements for the formularization and packaging of such products. Other products are imported from Asian manufacturers.
Sales and Marketing Paper Magic products are sold in the United States and Canada by national and regional account sales managers and product specialists and by a network of CSS independent manufacturers' representatives. Products are displayed and presented in showrooms maintained by these representatives in major cities in the United States and Canada. Relationships are developed with key retail customers by Paper Magic sales management personnel and the independent manufacturers' representatives. Customers are generally mass merchandise retailers, warehouse clubs, drug and food chains, independent card shops and retail teacher stores. Paper Magic's revenues are seasonal with approximately 50% of sales related to the Christmas season and the remaining sales relating to the Halloween, Easter and Valentines day seasons and everyday product sales. Seasonal products are generally designed and sold beginning well over a year before the event and manufactured during an eight to ten month production cycle. With such long lead time requirements, timely
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communication with outsourcing factories, retail customers and independent manufacturers' representatives is critical to the timely production of seasonal inventory. Because the products themselves are seasonal, sales terms do not generally require payment until after the holiday in accordance with industry practices. In general, Paper Magic products are not sold under guaranteed or return privilege terms.
Each of the seasonal product groups is sold in an annual cycle. CSS maintains permanent showrooms in New York City and Memphis, Tennessee where major retail buyers will typically visit for a presentation and review of the new lines.
Competition Paper Magic competes with several companies. In Christmas boxed cards and gift trims, Paper Magic competes with the Plus Mark(R) line of American Greetings Corporation and the Kristen(R) line of Burgoyne, Inc., among others. Paper Magic's Dudley's(R) brand Easter egg dye products compete with the PAAS(R) brand of Schering-Plough HealthCare Products, among others. Competitors offering Halloween products include Disguise, Inc., Fun World, Inc. and Rubie's. Certain of these competitors are larger and have greater resources than the Company. Historically, Paper Magic has not competed directly, except to a limited extent, with Hallmark Cards, Inc. and other product offerings of American Greetings Corporation. Recently, certain of these companies have expanded their promotional offerings to the mass market retail distribution channel.
Paper Magic believes its products are positioned adequately for continued growth in their primary markets. Since competition is based primarily on price, timely delivery, creative design and increasingly, the ability to serve major retail customers with single, combined product shipments for each holiday event, Paper Magic's product driven focus combined with consistent service levels allows it to compete effectively in its core markets.
Berwick
Principal Products Berwick designs, manufactures and distributes an array of decorative ribbons, bows and related products to various markets under the following registered trademarks: Berwick(R), Flora Satin(R), Grand Prix(R), Brilliance(R), The Perfect Bow(R), Splendorette(R), Ribbon Magic(R), and Veltex(R). Approximately 88% of its products are manufactured by Berwick using extruded polypropylene resins. These products, together with fabric ribbon and accessories, which are either manufactured or purchased for resale, are sold to a diverse base of customers in the United States and in forty-seven countries around the world.
Berwick manufactures and warehouses its products in five facilities located in northeast Pennsylvania. The manufacturing process is vertically integrated. Most ribbon and bow products are made from polypropylene resin, a petroleum-based product, which is mixed with color pigment, melted and pressed through an extruder. Large rolls of extruded film go through various combinations of processes such as slitting, crimping, embossing, printing, laminating and hot-stamping before being made into bows or packaged on ribbon spools or reels as required by various markets and customers. Iridescent, holographic and metallic ribbon products are also made from polypropylene produced ribbon that is coated or laminated with a special film to produce an iridescent or metallic sheen.
Berwick imports several products for resale and also ships certain unfinished material, primarily large rolls of ribbon, to subcontractors for conversion into finished bows used, for example, to decorate Christmas trees and wreaths. Such items are more labor intensive than items produced at Berwick's manufacturing facilities and are manufactured to Berwick's specifications by subcontractors based in The People's Republic of China.
Sales and Marketing Berwick sells its products to customers primarily through three distribution channels. Seasonal and everyday products are sold to mass merchandise retailers, warehouse clubs, drug store chains, supermarket chains and variety stores. These customers are served by national account sales managers and product specialists and a network of CSS independent manufacturers' representatives. Products are also sold through independent sales representatives to wholesale distributors who serve the floral, craft and retail packaging trades. And, lastly, the company sells custom products to private label customers, to other social expression companies, and to converters of the company's bulk ribbon products. Custom products are sold and marketed by both independent manufacturers' representatives and by Berwick sales managers. Berwick's sales are highly seasonal with approximately 74% shipped for the Christmas selling season.
Competition Berwick competes primarily with a variety of large and small domestic companies, including the Plus Mark(R) line of American Greetings Corp., Hollywood Ribbon, Inc., CPS Corporation, Equality Specialties, Inc., Delaware Ribbon Manufacturers, Inc., C. M. Offray and Son, Inc. and Variety Accessories. Certain of these competitors are larger and have greater financial resources than the Company.
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Berwick believes that its products are established in its various markets and are positioned for continued growth. Berwick's new product development, product quality, breadth of product line, cost effective manufacturing techniques, extensive sales network and product pricing allow it to compete effectively in its various markets.
Cleo
Principal Products Cleo designs, manufactures and distributes a broad range of social expression products to mass market retailers, including Christmas and all-occasion gift wrap and gift wrap alternative products, such as gift bags and tissue, as well as calendars, boxed greeting cards and classroom exchange Valentines sold under the Cleo(R) brand name.
Manufacturing of gift wrap, including web printing, finishing, rewinding and packaging are performed in one facility in Memphis, Tennessee. Finished goods are warehoused and shipped from both the production facility and a separate facility in Memphis. Although designed to the specifications of Cleo, gift bags, tissue and calendars, are all purchased from outside vendors. Cleo(R) brand boxed greeting cards and classroom exchange Valentine cards are manufactured and packaged in Paper Magic facilities in central and northeastern Pennsylvania.
Sales and Marketing Cleo products are sold in the United States (including Puerto Rico), Canada and Mexico by an in-house dedicated sales organization and by a network of CSS independent manufacturers' representatives. Customers represent various classes of trade, including mass merchandise retailers, drug and food chains and warehouse clubs. In addition to the above markets, through sales and licensing agreements, Cleo also sells products to customers in Hong Kong/China and Australia.
Sales efforts are conducted through a combination of travel to retailers' offices, use of regional showrooms maintained by manufacturers' representatives, and an annual trade show in New York, where customers visit the Company's permanent showroom. Furthermore, because Cleo enjoys a strong working relationship with its key customers, many of them travel to Memphis annually to conduct their business on-site in CSS showrooms.
Cleo's revenues are highly seasonal with approximately 90% being Christmas related. Industry practices require production based on commitments or bookings early in the selling cycle with actual purchase orders received within a short period of time prior to shipment. Because the products are seasonal, sales terms do not require payment until after the Christmas season in accordance with industry practices.
Due to the ever increasing competitive retail environment, Cleo plays a crucial role in helping the retailer to develop programs to meet product performance objectives while appealing to consumers' tastes. These objectives are met through the development and manufacture of custom configured and designed products. Cleo's years of experience in program development and product quality are key competitive advantages in helping the retailers meet their objectives.
Competition In its core product line of Christmas gift wrap, Cleo competes primarily with Plus Mark(R), a division of American Greetings Corporation, and CPS Corporation. Historically, Cleo has not competed directly, except to a limited extent, with Hallmark Cards, Inc. and other product offerings of American Greetings Corporation. Recently, certain of these companies have expanded their promotional offerings to the mass market retail outlets in which Cleo sells its products.
Employees
At March 3, 1998, approximately 770 persons were employed by Paper Magic, 580 persons were employed by Berwick, 680 persons were employed by Cleo (with personnel increasing to approximately 1,700; 1,100 and 1,100, respectively, as seasonal employees are added), and 24 persons were employed at the Company's headquarters.
With the exception of the bargaining unit at Cleo, which included 395 employees as of March 3, 1998, the employees at Paper Magic, Berwick and Rapidforms are not represented by labor unions. Because of the seasonal nature of certain of its businesses, the number of Paper Magic, Berwick and Cleo production employees fluctuate during the year.
The Company believes that relationships with all of its employees are good.
Item 2.
Item 2. Properties
Paper Magic operates out of 810,000 square feet of owned warehouse space in five buildings in northeast Pennsylvania. Paper Magic also leases 63,000 square feet of space for creative design activities and general administrative purposes in Scranton, Pennsylvania, Concord, California, New York, New York and Bloomington and Minneapolis, Minnesota.
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Berwick owns four buildings in northeast Pennsylvania which represent 623,000 square feet of production, warehouse and office space and leases 425,000 square feet of additional warehouse space in two buildings located in northeast Pennsylvania. Cleo operates principally in two facilities in Memphis, Tennessee. The manufacturing operations, raw materials and finished goods warehouse and offices are in a 1,003,000 square foot leased facility while additional finished goods warehousing and distribution are in a 1,135,000 square foot owned facility, of which Cleo occupies 366,000 square feet and leases the remaining space to another user.
The headquarters and principal executive office of the Company are located in Philadelphia, Pennsylvania.
The Company is also the lessee of approximately 130,229 square feet of office and retail space (which was related to former operations) which have been subleased by the Company, as sublessor, to various sublessees.
Item 3.
Item 3. Legal Proceedings
Effective November 15, 1995, CSS acquired all of the outstanding shares of Cleo from Gibson Greetings, Inc. ("Gibson") in accordance with a stock purchase agreement dated October 3, 1995. The purchase price is subject to adjustment based on the Closing Date Statement of Net Equity of Cleo at November 15, 1995 (the "Statement"). Based upon the Statement prepared by Cleo, CSS has requested that Gibson consent to the release to CSS of the $12,000,000 of the purchase price currently held in escrow for the resolution of such purchase price adjustments and the payment of any indemnification claims. Gibson has indicated that it disagrees with the Statement and believes that none of the $12,000,000 held in escrow should be released to CSS. The disagreement relates primarily to the valuation of Cleo's inventory. CSS and Gibson have engaged an independent public accounting firm to resolve the disputed items on the Statement.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable. 5
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Part II Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters (a) Principal Market for Common Stock
The Common Stock of the Company is listed for trading on the New York Stock Exchange. The following table sets forth the high and low sales prices per share of that stock for each of the calendar quarters during 1997 and 1996.
High Low ---------- ------------ - ---- First Quarter .......... $30 1/8 $25 1/4 Second Quarter ......... 34 3/4 29 1/2 Third Quarter .......... 39 1/4 30 7/16 Fourth Quarter ......... 37 1/2 30 11/16
- ---- First Quarter .......... $22 1/4 $20 1/2 Second Quarter ......... 25 3/4 22 1/8 Third Quarter .......... 23 1/2 22 1/4 Fourth Quarter ......... 26 1/4 23
(b) Holders of Common Stock
At March 3, 1998, there were approximately 2,100 holders of the Company's Common Stock.
(c) Dividends
The Company has not declared or paid any dividends on its Common Stock for more than the past three fiscal years. The ability of the Company to pay any cash dividends on its Common Stock is dependent on the Company's earnings and profits and cash requirements and is further limited by the terms of the Company's revolving line of credit. The Company does not anticipate that it will declare or pay any cash dividends on its Common Stock for the foreseeable future.
At March 3, 1998, there were no shares of preferred stock outstanding.
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ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
(a) Restated to reflect the historical results of Rapidforms as a discontinued operation.
(b) Restated to reflect the historical results of Rapidforms and Ellisco as discontinued operations.
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Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Acquisitions and Divestitures
On December 23, 1997, the Company sold its Direct Mail Business Products Group, composed of Rapidforms and its subsidiaries, for approximately $84,635,000, resulting in a net gain of $17,521,000 and net cash proceeds of approximately $60,000,000 after income taxes and the buy out of the minority interest. Rapidforms designs and sells business forms, business supplies, in-house retail merchandising products, holiday greeting cards and advertising specialties to small and medium size businesses primarily through the direct mailing of catalogs and brochures. On January 8, 1997, Rapidforms sold its Standard Forms, Ltd. subsidiary for $4,083,000, resulting in a gain of $350,000. Sales from these discontinued operations were $81,654,000, $89,028,000 and $86,138,000 in 1997, 1996 and 1995, respectively.
On January 17, 1997, the Company acquired all of the outstanding stock of Color-Clings, Inc. ("Color-Clings") for $7,875,000 and assumed and repaid $10,665,000 of outstanding debt. Color-Clings is a designer and marketer of seasonal and everyday vinyl home decorations sold primarily to mass market retailers in the United States and Canada. Subsequent to the acquisition, a substantial portion of the operations of Color-Clings was merged into existing operations of the Company.
On October 29, 1996, the Company acquired the assets and business of Ribbon Magic, Inc. ("Ribbon Magic"). In consideration for the purchase of this business, CSS assumed and paid off $1,581,000 of outstanding debt. Ribbon Magic manufactured and distributed a line of upscale ribbon and bow products to mass market retailers in the United States and Canada. Subsequent to the acquisition, the operations of Ribbon Magic were merged into existing operations of the Company.
Seasonality
The seasonal nature of CSS' business results in low sales and operating losses for the first two quarters and high shipment levels and operating profits for the second half of the year, thereby causing significant fluctuations in the quarterly results of operations of the Company.
Because of the seasonality and the general industry practice of deferred payment terms, a material portion of the Company's trade receivables are collected in December and January, thus enabling the Company to repay the short-term debt borrowed to fund the inventory and accounts receivable build-up during the year.
Results of Operations
Consolidated sales from continuing operations for 1997 increased by 11% to $357,720,000 from $323,051,000. The increase was primarily attributable to incremental sales provided by the January 17, 1997 acquisition of Color-Clings. Excluding Color-Clings, sales increased 1% as increased Halloween, Valentine and ribbon and bow sales were substantially offset by a decrease in sales of Christmas paper products. The 60% increase in sales in 1996 primarily reflected incremental sales of Cleo, acquired in November 1995.
As a percentage of sales, cost of sales was 71% in 1997, 72% in 1996 and 71% in 1995. Cost of sales as a percentage of sales decreased to 71% in 1997 from 72% in 1996 due primarily to increased efficiencies at Berwick, reduced reserve requirements and lower sales of Cleo close-out merchandise, and reduced workers compensation expense due to better loss experience in recent years. These improvements were offset, in part, by lower selling prices of certain Christmas products and increased labor and overhead costs at Cleo caused by operational problems associated with the implementation of a new, fully integrated business management system. The increase in cost of sales as a percentage of sales in 1996 reflected competitive pricing pressures, the acquisition of lower margin businesses in 1995, the increasing importance of direct import sales and higher paper and resin costs.
Selling, general and administrative expenses, as a percentage of sales, was 19% in 1997, 18% in 1996 and 20% in 1995. The increase in 1997 was primarily due to incrementally higher selling, general and administrative expenses of Color-Clings, incremental costs associated with the implementation of a new, fully integrated business management system
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at Cleo, higher sales commissions and higher salaries. The decrease in 1996 compared to 1995 was due to incrementally lower selling, general and administrative costs of Cleo.
Interest expense, net was $7,178,000 in 1997, $8,035,000 in 1996 and $3,352,000 in 1995. The decrease in 1997 was primarily due to lower average borrowings during the year as operating cash generated from the 1996 selling season more than offset incremental cash expended for the acquisition of Color-Clings. The increase in 1996 was primarily due to increased borrowings to fund acquisitions in 1994 and 1995 and to finance additional working capital requirements.
Rental and other income, net was $2,143,000 in 1997, $1,158,000 in 1996 and $1,970,000 in 1995. The increase in 1997 was primarily due to the sale of a sublease interest and incremental rental income at Cleo. The decrease in 1996 resulted from the absence of sublease income related to a leasehold interest which expired in late 1995 and lower gains from sales of marketable securities.
Income before income taxes was $30,442,000, or 9% of sales in 1997, $27,499,000, or 9% of sales in 1996 and $16,733,000, or 8% of sales in 1995.
Income taxes as a percentage of income before income taxes was 38% in 1997 and 1996 and 40% in 1995. The decrease in 1997 and 1996 was primarily attributable to lower state tax expense.
Income from continuing operations increased 10% in 1997 to $18,871,000, and increased 70% in 1996 to $17,110,000. Income from continuing operations per diluted share rose 8% in 1997 to $1.67 per share and increased 67% in 1996 to $1.55 per share. The Company adopted SFAS No. 128, "Earnings per Share," effective December 15, 1997. As a result, the Company's reported earnings per share from continuing operations for 1996 and 1995 were restated. The effect of this accounting change on previously reported earnings per share from continuing operations data was not material.
Net income to common shareholders of $43,090,000 in 1997 reflected earnings from discontinued operations of $6,348,000 and a $17,871,000 gain on the sale of Rapidforms, net of income taxes.
Inflation
The Company attempts to alleviate inflationary material and labor pressures by increasing selling prices to help offset rising costs (subject to competitive conditions), increasing productivity, and improving design and manufacturing techniques. The net effect of inflation, as a percentage of sales, in 1997 was not material.
Liquidity and Capital Resources
At December 31, 1997, the Company had working capital of $129,245,000 and shareholders' equity of $221,649,000. The increase in accounts receivable, net of reserves, from $149,719,000 in 1996 to $165,761,000 in 1997 reflected increased sales of Color-Clings and later collections of Christmas receivables compared to 1996. Inventories, net of reserves, increased from $49,139,000 to $66,270,000 due primarily to the acquisition of Color-Clings, higher finished goods inventory carryover, and higher raw paper inventories. Property increased from $37,991,000 in 1996 to $44,868,000 in 1997 due to incremental investments in information systems and manufacturing equipment. The decrease in current liabilities reflected the paydown of debt from the proceeds of the sale of Rapidforms.
The Company relies primarily on cash generated from its operations and seasonal borrowings to meet its liquidity requirements. Most CSS revenues are seasonal with approximately 75 percent of sales being Christmas and Halloween related. As payment for sales of Christmas and Halloween related products is usually not received until after the respective holiday 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 borrowings are made under a $300,000,000 unsecured revolving credit facility with fourteen banks and financial institutions. The facility is available to fund the seasonal borrowing needs and to provide the Company with a source of capital for general corporate purposes. At December 31, 1997, there was $51,570,000 outstanding under this facility. For information concerning the revolving credit facility, see Note 6 of Notes to Consolidated Financial Statements.
On February 19, 1998, the Company announced that its Board of Directors authorized the buy back of up to 1,000,000 shares of Common Stock at prices and pursuant to other terms and conditions that the Company's officers deem appropriate.
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Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its ongoing cash needs for the foreseeable future.
Information Systems
The Company has initiated a series of information systems improvements in the past two years, including the implementation of fully integrated business management information systems at Cleo and the conversion of certain other computer systems for compliance with the Year 2000. Costs incurred to modify existing systems to process transactions regarding the Year 2000 have been and will be expensed as incurred and are not expected to have a significant impact on the Company's ongoing results of operations.
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CSS Industries, Inc. and Subsidiaries Item 8.
Item 8. Financial Statements
INDEX
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Report of Independent Public Accountants
To the Board of Directors and Shareholders of CSS Industries, Inc.:
We have audited the accompanying consolidated balance sheets of CSS Industries, Inc. (a Delaware Corporation) and subsidiaries as of December 31, 1997 and 1996 and the related consolidated statements of operations, cash flows and shareholders' equity for each of the three years in the period ended December 31, 1997. These consolidated financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CSS Industries, Inc. and subsidiaries as of December 31, 1997 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental schedule listed in Item 14(a) is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, PA February 19, 1998
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CSS Industries, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share amounts)
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CSS Industries, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share amounts)
See notes to consolidated financial statements.
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CSS Industries, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands)
See notes to consolidated financial statements.
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CSS Industries, Inc. and Subsidiaries Consolidated Statements of Shareholders' Equity (In thousands, except share amounts)
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CSS Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation
The consolidated financial statements include the accounts of CSS Industries, Inc. ("Company") and all subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. Gains and losses on foreign currency transactions are included in the consolidated statements of income.
Restatement of Prior Years Financial Statements
On December 23, 1997, the Company sold its Direct Mail Business Products Group, composed of Rapidforms, Inc. and its subsidiaries ("Rapidforms"). The gain on the sale and the operating results of Rapidforms prior to the sale have been accounted for as discontinued operations and, accordingly, have been segregated on the statement of operations. The prior year financial statements and footnotes have also been restated to conform to the current year presentation.
Certain other prior-period amounts have been reclassified to conform with current-year classification.
Nature of Business
CSS 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, calendars, classroom exchange Valentines, decorative ribbons and bows, Halloween masks, costumes, make-ups and novelties and Easter egg dyes and novelties. Due to the seasonality of the Company's business, the majority of sales occur in the third and fourth quarters and a material portion of the Company's trade receivables are due in December and January of each year. CSS is comprised of The Paper Magic Group, Inc., ("Paper Magic"), acquired by the Company in August 1988, Berwick Industries, Inc. ("Berwick"), acquired in May 1993, and Cleo Inc. ("Cleo"), acquired in November 1995.
As a result of the sale of Rapidforms on December 23, 1997, CSS no longer operates in the Direct Mail Business Products industry.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Marketable Securities
In accordance with Statement of Financial Accounting Standards No. 115 ("SFAS No. 115"), the Company values certain equity securities at market value at the end of each accounting period. Unrealized market value gains and losses are charged to earnings if the securities are traded for short-term profit. Otherwise, such unrealized gains and losses are charged or credited to a separate component of shareholders' equity.
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Inventories
Substantially all of the Company's inventories are stated at the lower of first-in, first-out (FIFO) cost or market. The remaining portion of the inventory is valued at the lower of last-in, first-out cost or market. Had all inventories been valued at the lower of FIFO cost or market, inventories would have been greater by $1,651,000 and $1,917,000 at December 31, 1997 and 1996, respectively. Inventories consisted of the following:
1997 1996 (in thousands) ---------- ---------- Raw material ............. $23,840 $16,371 Work-in-process .......... 9,789 7,970 Finished goods ........... 32,641 24,798 ------- ------- $66,270 $49,139 ======= =======
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and amortization are provided generally on the straight-line method and are based on estimated useful lives or terms of leases as follows:
When property is retired or otherwise disposed of, the related cost and accumulated depreciation and amortization are eliminated from the accounts. Any gain or loss from the disposition of property, plant and equipment is included in other income. Maintenance and repairs are expensed as incurred while improvements are capitalized and depreciated over their estimated useful lives.
Intangible Assets
The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of its intangible assets may warrant revision or that the remaining balance of goodwill may not be recoverable. Intangible assets, including goodwill, are amortized over periods not to exceed 40 years.
Income Taxes
The Company follows the liability method of accounting for deferred income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities. Deferred tax assets or liabilities at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered.
Revenue Recognition
The Company recognizes revenues in accordance with its shipping terms. Returns and allowances are reserved for based on specific need or historical experience.
Net Income Per Common Share
Basic net income per common share is based on the weighted average number of common shares outstanding during the period -- 10,850,000 in 1997, 10,731,000 in 1996, and 10,782,000 in 1995. Average outstanding shares used in the computation of diluted net income per share include the impact of dilutive stock options and were 11,292,000 in 1997, 11,007,000 in 1996 and 10,891,000 in 1995.
The Company adopted SFAS No. 128, "Earnings per Share," effective December 15, 1997. As a result, the Company's reported earnings per share from continuing operations for 1996 and 1995 were restated. The effect of this accounting change on previously reported earnings per share from continuing operations data was not material.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers all holdings of highly liquid debt instruments with original maturity of less than three months to be temporary investments.
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Supplemental Schedule of Cash Flow Information
(In thousands)
See Note 2 for supplemental disclosure of non-cash investing activities.
(2) BUSINESS ACQUISITIONS AND DIVESTITURES:
On December 23, 1997, the Company sold Rapidforms and its subsidiaries for approximately $84,635,000, resulting in a net gain of $17,521,000 and net cash proceeds of approximately $60,000,000 after income taxes and the buy out of the minority interest. Rapidforms designs and sells business forms, business supplies, in-house retail merchandising products, holiday greeting cards and advertising specialties to small and medium size businesses primarily through the direct mailing of catalogs and brochures. On January 8, 1997 Rapidforms sold its Standard Forms, Ltd. subsidiary for $4,083,000, resulting in a gain of $350,000. Sales from these discontinued operations were $81,654,000, $89,028,000 and $86,138,000, in 1997, 1996 and 1995, respectively.
On January 17, 1997, the Company acquired all of the outstanding stock of Color-Clings, Inc. ("Color-Clings") for $7,875,000 and assumed and repaid $10,665,000 of outstanding debt. Color-Clings is a designer and marketer of seasonal and everyday vinyl home decorations sold primarily to mass market retailers in the United States and Canada. The acquisition was accounted for as a purchase and the excess of cost over fair market value of $15,698,000 was recorded as goodwill and is being amortized over twenty years. Subsequent to the acquisition, a substantial portion of the operations of Color-Clings were merged into existing operations of the Company.
On October 29, 1996, the Company acquired the assets and business of Ribbon Magic, Inc. ("Ribbon Magic"). In consideration for the purchase of this business, CSS assumed and paid off $1,581,000 of outstanding debt. Ribbon Magic manufactured and distributed a line of upscale ribbon and bow products to mass market retailers in the United States and Canada. Subsequent to the acquisition, the operations of Ribbon Magic were merged into existing operations of the Company.
CSS acquired all of the outstanding stock of Cleo, effective November 15, 1995, for approximately $135,000,000. The purchase price included $12,000,000 held in escrow for certain post closing adjustments and indemnification obligations. The Company and the seller have disagreed on the disbursement of the escrow and have engaged an independent public accounting firm to resolve the disputed items. The $12,000,000 has been recorded by the Company as a receivable in Other Assets. Cleo designs, manufactures and distributes a wide range of promotional gift wrap and gift wrap accessories to mass market retailers in the United States and Canada. The acquisition was accounted for as a purchase and the excess of historical book value over the purchase price was recorded as a $28,528,000 reduction to property, plant and equipment, an accrual for restructuring expenses of $10,034,000, and a credit to goodwill of $7,243,000. Negative goodwill is included in intangible assets in the accompanying balance sheet and is being amortized over ten years.
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The unaudited consolidated results of operations of the Company and Cleo on a pro forma basis as though the transaction had been consummated at the beginning of 1995 were as follows:
(in thousands, except per share values) ----------- Sales ............................................ $342,988 Income from continuing operations ................ (57) Income from continuing operations per common share Basic ........................................... $ (.01) Diluted ......................................... $ (.01)
Pro forma adjustments included in the above results reflect (1) increased inventory obsolescence reserves required for the periods prior to November 15, 1995, (2) reduced rental expense related to a renegotiated lease and to leases on terminated facilities, (3) reduction of administrative payroll costs and management fees, and (4) the effect of purchase accounting adjustments on interest, depreciation, amortization and tax expense.
On June 6, 1995, the Company acquired substantially all of the assets and the business of Topstone Industries, Inc. ("Topstone") and Illusive Concepts, Inc. ("Illusive Concepts"). Topstone designs, markets and distributes Halloween masks, wigs, costumes, accessories and novelties sold to mass merchandisers, drug chains and party stores. Illusive Concepts designs and markets highly crafted latex masks, accessories and decorative displays sold primarily to party and gift shops and limited edition collectibles sold through various channels. In consideration for the purchase of these businesses, the Company assumed and paid off $8,740,000 of outstanding debt. The acquisition was accounted for as a purchase and the excess of cost over fair market value of $3,598,000 was recorded as goodwill in the accompanying balance sheet and is being amortized over forty years. Subsequent to the acquisition, a substantial portion of the operations of these acquisitions were merged into existing operations of the Company.
(3) STOCK OPTION PLANS:
Under the terms of the CSS Industries, Inc. 1995 Stock Option Plan for Non-Employee Directors ("1995 Plan"), non-qualified stock options to purchase up to 300,000 shares of common stock are available for grant to non-employee directors at exercise prices of not less than fair market value on the date of grant. Options to purchase 4,000 shares of the Company's common stock are to be granted automatically to each non-employee director on the last day of November through the year 2000. Options may be exercised at the rate of 25% per year commencing one year after the date of grant. At December 31, 1997, options to acquire 244,000 shares were available under the 1995 Plan.
Under the terms of the 1994 Equity Compensation Plan ("1994 Plan"), the Human Resources Committee ("Committee") of the Board of Directors may grant incentive stock options, non-qualified stock options, restricted stock grants, stock appreciation rights or combinations thereof to officers and other key employees. Grants under the 1994 Plan may be made through November 2004 and are exercisable at the discretion of the Committee but in no event greater than ten years from the date of grant. At December 31, 1997, options to acquire 898,000 shares were available for grant under the 1994 Plan.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans. Had compensation expense for the Company's stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's net income and earnings per share would have been reduced in 1997 and 1996 as follows:
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The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
Transactions from January 1, 1995 through December 31, 1997, under the above plans were as follows:
In 1997 the Company redeemed outstanding stock options granted to the former owner of a subsidiary. The amount paid of $1,000,000 was charged directly to additional paid in capital.
(4) PROFIT SHARING PLANS:
The Company maintains profit sharing plans covering substantially all of their employees as of December 31, 1997. Annual contributions under the plans are determined by the Board of Directors of the Company or each subsidiary, as appropriate. Consolidated profit sharing expense for the years ended December 31, 1997, 1996 and 1995 was $2,407,000, $2,164,000 and $1,327,000, respectively.
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(5) FEDERAL INCOME TAXES: The following table summarizes the provision for U.S. federal, state and foreign taxes on income:
1997 1996 1995 (in thousands) --------- ---------- ----------- Current: Federal ............... $ 6,971 $ 10,297 $ 7,803 State . ............... 530 717 684 Foreign ............... 822 590 268 ------- -------- -------- 8,323 11,604 8,755 ------- -------- -------- Deferred: Federal ............... 3,042 (1,646) (2,419) State ................. 206 431 313 Foreign ............... -- -- -- ------- -------- -------- 3,248 (1,215) (2,106) ------- -------- -------- $11,571 $ 10,389 $ 6,649 ======= ======== ========
The differences between the statutory and effective federal income tax rates on income from continuing operations before income taxes were as follows:
Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities and available tax credit carryforwards. The following temporary differences gave rise to net deferred income tax assets as of December 31, 1997 and 1996:
(6) LONG-TERM DEBT AND CREDIT ARRANGEMENTS:
Long-term debt consisted of the following:
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In conjunction with the acquisition of Cleo and the consolidation of other credit facilities, the Company entered into a $195,000,000 unsecured revolving credit facility with thirteen banks and financial institutions on November 15, 1995. This facility was amended on July 21, 1997 to provide CSS with an unsecured revolving credit facility with fourteen banks and financial institutions. The amended facility allows for borrowings up to $300,000,000, expires on April 30, 2001 and provides that borrowings are limited during a consecutive 30 day period during each year of the agreement. The loan agreement contains provisions to increase or reduce the interest pricing spread over LIBOR based upon the achievement of certain benchmarks related to the ratio of earnings to interest expense. As of December 31, 1997, at the Company's option, interest on the facility accrues at (1) the greater of the prime rate or 1/2% in excess of the Federal Funds Rate, or (2) LIBOR plus 3/4%. The loan agreement also contains covenants, the most restrictive of which pertain to net worth; the ratio of operating cash flow to fixed charges; the ratio of earnings to interest expense and the ratio of debt to capitalization. The weighted average interest rate under these loan agreements for 1997 and 1996 was 6.71% and 6.65%, respectively.
On August 13, 1996, CSS entered into an interest rate swap agreement to reduce the impact of changes in interest rates on its floating rate revolving credit facility. At December 31, 1997, the Company had a swap agreement with a total notional amount of $20,000,000. This agreement fixed the interest rate on $20,000,000 of the borrowings under the revolving credit facility at 7.125%. The interest rate swap agreement matured on February 13, 1998 and was not replaced. This agreement involved the exchange of fixed-rate and floating-rate interest payments periodically over the life of the agreement without the exchange of the underlying principal amounts. The differential to be paid or received was accrued as interest rates changed and recognized over the life of the agreement as an adjustment to interest expense. The fair value of this swap agreement was not material at December 31, 1997 and 1996, and was not recognized in the financial statements.
On September 18, 1996, CSS entered into a $20,000,000 term loan with a bank to provide additional capacity for seasonal requirements and general corporate purposes. The term loan was repaid on December 23, 1996.
On August 1, 1996, CSS utilized proceeds from its $195,000,000 unsecured revolving credit facility to redeem the outstanding principal balance of $12,880,000 related to economic development revenue bonds assumed in connection with the acquisition of Cleo. Cleo financed the construction of a distribution facility with the proceeds from these economic development revenue bonds. Cleo also maintained an Urban Development Action Grant ("UDAG") bearing interest at 8% and payable in quarterly installments. The UDAG was also repaid on October 2, 1996.
The Company and Berwick maintain various notes relating to the financing of manufacturing facilities which are secured by mortgages on the facilities. The Company and Berwick also maintain second mortgages on several facilities financed with Industrial Development Revenue Bonds. The bonds mature between 1998 and 2001, accrue interest at rates ranging from 3% to 9.25% and are secured by mortgages on the facilities.
In connection with the acquisition of Berwick in 1993, the Company entered into a term loan with the primary selling shareholder. The original term loan of $3,000,000 was reduced for indemnification claims and a payment of principal to $1,148,000 and is payable on May 3, 2003 with interest payable quarterly at a rate of 8% per year. The note is callable at the option of the noteholder, subject to then unresolved claims.
Long-term debt matures as follows:
(in thousands) 1998 ........................ $ 954 1999 ........................ 840 2000 ........................ 450 2001 ........................ 142 2002 ........................ 0 Thereafter .................. 1,148 ------ Total ....................... $3,534 ======
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(7) OPERATING LEASES:
The future minimum rental payments associated with all noncancelable lease obligations are as follows:
(in thousands) 1998 ........................ $ 4,163 1999 ........................ 3,835 2000 ........................ 3,357 2001 ........................ 2,724 2002 ........................ 1,169 Thereafter .................. 1,391 ------- Total ....................... $16,639 =======
Rent expense was $6,144,000, $4,710,000 and $2,376,000 in 1997, 1996 and 1995, respectively.
(8) CONCENTRATION RISKS:
One customer accounted for 21.2%, 17.9% and 13.3% of the Company's sales in 1997, 1996 and 1995, respectively.
(9) COMMITMENTS AND CONTINGENCIES:
The Company is subject to various lawsuits and claims arising out of the normal course of business. In the opinion of Company counsel and management the ultimate liabilities resulting from such lawsuits and claims will not materially affect the consolidated financial position of the Company.
(10) QUARTERLY FINANCIAL DATA (UNAUDITED):
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The seasonal nature of CSS' business results in low sales and operating losses for the first two quarters and high shipment levels and operating profits for the second half of the year, thereby causing significant fluctuations in the quarterly results of operations of the Company.
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Part III
Item 10.
Item 10. Directors and Executive Officers of the Registrant See "ELECTION OF DIRECTORS" and "EXECUTIVE OFFICERS OF CSS" in the Proxy Statement for the 1998 Annual Meeting of Stockholders of the Company, which will be incorporated herein by reference.
Item 11.
Item 11. Executive Compensation
See "EXECUTIVE COMPENSATION" in the Proxy Statement for the 1998 Annual Meeting of Stockholders of the Company, which will be incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
See "CSS SECURITY OWNERSHIP" in the Proxy Statement for the 1998 Annual Meeting of Stockholders of the Company, which will be incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions
See "CERTAIN TRANSACTIONS AND SUBSIDIARY MATTERS" in the Proxy Statement for the 1998 Annual Meeting of Stockholders of the Company, which will be incorporated herein by reference.
Part IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Attached hereto and filed as part of this report are the financial statement schedules and the exhibits listed below.
1. Financial Statements
Report of Independent Public Accountants
Consolidated Balance Sheets -- December 31, 1997 and 1996
Consolidated Statements of Operations -- for the years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows -- for the years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity -- for the years ended December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts
(b) Reports on Form 8-K filed during the last quarter of 1997
None.
(c) Exhibits, Including Those Incorporated by Reference The following is a list of exhibits filed as part of this annual report on Form 10-K. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated in parentheses.
Articles of Incorporation and By-laws
3.1 Restated Certificate of Incorporation filed December 5, 1990. (1) (Exhibit 3.1)
3.2 Amendment to Restated Certificate of Incorporation filed May 8, 1992. (2) (Exhibit 3.2)
3.3 Certificate eliminating Class 2, Series A, $1.35 Preferred Stock filed September 27, 1991. (3) (Exhibit 3.2)
3.4 Certificate eliminating Class 1, Series B, Convertible Preferred Stock filed January 28, 1993. (2) (Exhibit 3.5)
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3.5 By-laws of the Company, as amended to date (as last amended November 18, 1996). (8) (Exhibit 3.5)
Material Contracts
10.1 CSS Industries, Inc. 1991 Stock Option Plan for Non-Employee Directors. (2) (Exhibit 10.1)
10.2 CSS Industries, Inc. 1995 Stock Option Plan for Non-Employee Directors. (8) (Exhibit 10.2)
10.3 Registration Rights Grant dated January 21, 1993, between the Company and certain former holders of common stock in Philadelphia Industries, Inc. (2) (Exhibit 10.2)
*10.4 Loan Agreement among CSS Industries, Inc., the Lending Institutions listed therein, CoreStates Bank, N.A. as the Administrative Agent, and Merrill Lynch & Co. as the Syndication Agent, dated as of July 21, 1997.
10.5 Stock Purchase Agreement dated as of October 3, 1995 between the Company and Gibson Greetings, Inc. (6) (Exhibit 2.1)
10.6 Interest Rate Swap Master Agreement dated as of August 9, 1996 between CoreStates Bank, N.A. and CSS Industries, Inc. (8) (Exhibit 10.8)
Executive Compensation Plans and Arrangements
10.7 CSS Industries, Inc. 1985 Incentive Stock Option Plan, as last amended in 1991. (3) (Exhibit 10.1)
10.8 CSS Industries, Inc. 1994 Equity Compensation Plan (as last amended January 23, 1996). (8) (Exhibit 10.10)
10.9 CSS Industries, Inc. Non-Qualified Supplemental Executive Retirement Agreements, dated March 3, 1993, with certain executive officers of the Company. (2) (Exhibit 10.15)
10.10 CSS Industries, Inc. Non-Qualified Supplemental Executive Retirement Plan Guidelines, dated January 25, 1994. (4) (Exhibit 10.14)
10.11 Deferred Compensation Agreement between Jack Farber and CSS Industries, Inc., restated as of December 8, 1994. (5) (Exhibit 10.8)
10.12 CSS Industries, Inc. Annual Incentive Compensation Arrangement, Administrative Guidelines, dated March 15, 1993. (2) (Exhibit 10.17)
10.13 The Paper Magic Group, Inc. Management Incentive Bonus Program, Administrative Guidelines, dated March 15, 1993. (2) (Exhibit 10.28)
10.14 1994 Amendment to The Paper Magic Group, Inc. Management Incentive Bonus Program, Administrative Guidelines, dated March 2, 1994. (4) (Exhibit 10.26)
10.15 The Paper Magic Group, Inc. 1994 Incentive Stock Option Plan. (5) (Exhibit 10.16)
10.16 Berwick Industries, Inc. Incentive Bonus Plan, dated January 1, 1994. (4) (Exhibit 10.27)
10.17 Cleo Inc. Management Incentive Plan, dated March 7, 1996. (7) (Exhibit 10.23)
10.18 Berwick Industries, Inc. Non-Qualified Supplemental Executive Retirement Plan, dated November 18, 1996. (8) (Exhibit 10.26)
10.19 The Paper Magic Group, Inc. Non-Qualified Supplemental Executive Retirement Plan, dated December 5, 1996. (8) (Exhibit 10.27)
10.20 Stock Purchase Agreement between New England Business Service, Inc. and CSS Industries, Inc. dated December 5, 1997. (9) (Exhibit 2.1)
Subsidiaries
*21. List of Significant Subsidiaries of the Registrant
Footnotes to List of Exhibits
- ----------- * Filed with this Annual Report on Form 10-K.
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(1) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1990 and incorporated herein by reference.
(2) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1992 and incorporated herein by reference.
(3) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1991 and incorporated herein by reference.
(4) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1993 and incorporated herein by reference.
(5) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1994.
(6) Filed as an exhibit to the Quarterly Report on Form 10-Q (No. 1-2661) for the fiscal quarter ended September 30, 1995.
(7) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1995 and incorporated herein by reference.
(8) Filed as an exhibit to the Annual Report on Form 10-K (No. 1-2661) for the fiscal year ended December 31, 1996 and incorporated herein by reference.
(9) Filed as an exhibit to the current Report on Form 8-K (No. 1-2661) dated December 23, 1997.
The Company agrees to provide the SEC upon request with copies of certain long-term debt obligations of CSS Industries, Inc., Cleo Inc., Berwick Industries, Inc.
The Company agrees to furnish supplementally a copy of omitted Schedules and Exhibits, if any, with respect to Exhibits listed above upon request.
Stockholders who have been furnished a copy of this Report may obtain copies of any Exhibit listed above on payment of $.50 per page for reproduction and mailing charges by writing to the Secretary, CSS Industries, Inc., 1845 Walnut Street, Philadelphia, Pennsylvania 19103.
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CSS Industries, Inc. and Subsidiaries Schedule II Valuation and Qualifying Accounts (In thousands)
Notes: (a) Balance at acquisition of Color-Clings (b) Balance at acquisition of Cleo, Topstone and Illusive Concepts.
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on behalf of the undersigned hereunto duly authorized.
CSS INDUSTRIES, INC. --------------------------------------------------------- Registrant
By /s/ Jack Farber ------------------------------------------------------ Jack Farber, Chairman of the Board, President and Chief Executive Officer (principal executive officer)
Dated: March 5, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities on the date indicated.
Dated: March 5, 1998 /s/ Jack Farber ------------------------------------------------------- Jack Farber, Chairman of the Board, President and Chief Executive Officer (principal executive officer and a director)
Dated: March 5, 1998 /s/ James G. Baxter ------------------------------------------------------- James G. Baxter, Executive Vice President and Chief Financial Officer (principal financial and accounting officer and a director)
Dated: March 5, 1998 /s/ Willard M. Bright ------------------------------------------------------- Willard M. Bright, Director
Dated: March 5, 1998 /s/ James H. Bromley ------------------------------------------------------- James H. Bromley, Director
Dated: March 5, 1998 /s/ John R. Bunting, Jr. ------------------------------------------------------- John R. Bunting, Jr., Director
Dated: March 5, 1998 /s/ Stephen V. Dubin ------------------------------------------------------- Stephen V. Dubin, Director
Dated: March 5, 1998 /s/ Richard G. Gilmore ------------------------------------------------------- Richard G. Gilmore, Director
Dated: March 5, 1998 /s/ Leonard E. Grossman ------------------------------------------------------- Leonard E. Grossman, Director
Dated: March 5, 1998 /s/ James E. Ksansnak ------------------------------------------------------- James E. Ksansnak, Director
Dated: March 5, 1998 /s/ Michael L. Sanyour ------------------------------------------------------- Michael L. Sanyour, Director
Dated: March 5, 1998 /s/ William C. Warren ------------------------------------------------------- William C. Warren, Director
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