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CSS Industries Closing Memphis Factory

Moves all wrap sourcing overseas

GDA Staff -- Gifts and Dec, 5/25/2011 2:01:08 PM

Philadelphia, PA - Stationery and seasonal product manufacturer CSS Industries decided to close its Cleo factory in Memphis, TN, by the end of the year, and transition the sourcing of all giftwrap products to foreign suppliers. CSS Industries is the parent company of Berwick Offray LLC, Cleo Wrap and The Paper Magic Group.

"The decision to close our Memphis facility was difficult, in part because of Cleo's historic connection to the Memphis area," said Christopher J. Munyan, CSS' president and CEO. "We recognize the efforts of our Memphis-based personnel to our Cleo business. However, we believe that this action will enable the company to more effectively respond to the changing requirements of our customers."
The news came in the company's fourth quarter financial report for the quarter ended March 31, which also announced that the company's fourth quarter sales increased 20 percent to $62,846,000, driven by higher craft and all occasion business. However the company incurred an impairment charge of $11,051,000 due to the factory closing. Though offset by a nearly $4 million tax benefit, as a result the company's net loss for the quarter was nearly $10 million.

During the next fiscal year, which will end on March 31, 2012, CSS expects to incur pre-tax expenses of up to $10,300,000 as a result of the plan to close the factory and move sourcing overseas. Approximately $7.1 million of that will be facility and staff costs, and the remaining $3.2 million will be non-cash asset write-downs. About half of the charges are expected to be recognized in the first quarter of fiscal 2012, and the company expects to complete the restructuring plan by the end of fiscal 2012.

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