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UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

Washington,D.C.20549________________________________________

FORM10-Q________________________________________

(MarkOne)

x QUARTERLYREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

ForthequarterlyperiodendedJune30,2019

or

¨ TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

Forthetransitionperiodfromto

Commissionfilenumber1-2661________________________________________

CSSINDUSTRIES,INC.(Exactnameofregistrantasspecifiedinitscharter)

________________________________________

Delaware 13-1920657(Stateorotherjurisdictionofincorporationororganization)

(I.R.S.EmployerIdentificationNo.)

450PlymouthRoad,Suite300,PlymouthMeeting,PA 19462(Addressofprincipalexecutiveoffices) (ZipCode)

(610)729-3959(Registrant’stelephonenumber,includingareacode)

SecuritiesregisteredpursuanttoSection12(b)oftheAct:

Titleofeachclass TradingSymbol NameofeachexchangeonwhichregisteredCommonStock,$.10parvalue CSS NewYorkStockExchange

________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging

growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x

Non-accelerated filer ¨ Smaller reporting company x

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of July 26, 2019 , there were 8,852,852 shares of common stock outstanding which excludes shares which may still be issued upon exercise of stock options orupon vesting of restricted stock unit grants.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

PAGE NO.

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Operations and Comprehensive Income (Loss) – Three months ended June 30, 2019 and 2018 3Consolidated Balance Sheets – June 30, 2019, March 31, 2019 and June 30, 2018 4Consolidated Statements of Cash Flows – Three months ended June 30, 2019 and 2018 5Consolidated Statement of Stockholders' Equity - Three months ended June 30, 2019 and 2018 6Notes to Consolidated Financial Statements 7Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22Item 4. Controls and Procedures 26Part II - OTHER INFORMATION Item 6. Exhibits 27Signatures 28

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CSS INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)(In thousands, except per share amounts)

Three Months Ended June 30,

2019 2018

Net sales $ 57,537 $ 64,127Cost of sales 45,431 52,480

Gross profit 12,106 11,647Selling, general and administrative expenses 23,047 28,929Restructuring expenses 2,054 —Impairment of goodwill — 1,390

Operating income (loss) (12,995) (18,672)Interest expense (income), net 928 262Other expense (income), net (87) (117)

Income (loss) before income taxes (13,836) (18,817)Income tax expense (benefit) 412 (341)

Net income (loss) $ (14,248) $ (18,476)

Basic and diluted net income (loss) per common share $ (1.61) $ (2.03)

Weighted average basic and diluted shares outstanding 8,840 9,120

Net income (loss) $ (14,248) $ (18,476)Other comprehensive income (loss), net:

Currency translation adjustments: (215) (720)Total currency translation gain (loss) (215) (720)

Interest rate swap agreement: Fair value adjustment, net of tax $59 in 2018 — 265

Total effects of interest rate swap agreement — 265Other comprehensive income (loss), net: (215) (455)Comprehensive income (loss) $ (14,463) $ (18,931)

See accompanying notes to consolidated financial statements.

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CSS INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

(Unaudited)(In thousands, except share and per share amounts)

June 30,

2019 March 31,

2019 June 30,

2018ASSETS

Current assets: Cash and cash equivalents $ 12,251 $ 17,100 $ 33,103Accounts receivable, net of allowances of $1,652, $2,198 and $1,640 45,658 53,835 51,908Inventories 107,299 96,231 117,944Asset held for sale 131 131 —Prepaid expenses and other current assets 10,883 12,568 12,851

Total current assets 176,222 179,865 215,806Property, plant and equipment, net 51,341 50,920 53,133

Operating lease right-of-use assets 49,306 — —

Deferred income taxes — — 10,560

Intangible assets, net 36,617 40,285 57,794

Other assets 15,119 14,525 9,828Total assets $ 328,605 $ 285,595 $ 347,121

LIABILITIESANDSTOCKHOLDERS'EQUITY Current liabilities:

Short-term borrowings $ 43,661 $ 26,139 $ —Current portion of long-term debt 79 316 229Accounts payable 23,913 27,916 25,751Accrued payroll and other compensation 6,428 6,962 9,994Accrued customer programs 10,777 12,101 13,937Accrued income taxes 129 — —Accrued other expenses 13,339 14,468 11,387Current portion of operating lease liabilities 7,661 — —

Total current liabilities 105,987 87,902 61,298Long-term debt, net of current portion 10 13 40,170Deferred income taxes 612 619 1,500Operating lease liabilities 40,608 — —Other long-term obligations 5,889 7,130 10,745

Total liabilities 153,106 95,664 113,713Commitments and contingencies (Note 8) Stockholders' equity:

Preferred stock, Class 2, $.01 par, 1,000,000 shares authorized, no shares issued — — —Common stock, $.10 par, 25,000,000 shares authorized, 14,703,084 shares issued at June 30, 2019,March 31, 2019 and June 30, 2018 1,470 1,470 1,470Additional paid-in capital 60,994 60,921 59,348Retained earnings 262,583 277,613 318,785Accumulated other comprehensive income (loss), net of tax 250 465 708Common stock in treasury, 5,850,235, 5,865,846 and 5,583,338 shares, at cost (149,798) (150,538) (146,903)

Total stockholders' equity 175,499 189,931 233,408Total liabilities and stockholders' equity $ 328,605 $ 285,595 $ 347,121

See accompanying notes to consolidated financial statements.

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CSS INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)(In thousands)

Three Months Ended June 30,

2019 2018Cash flows from operating activities:

Net income (loss) $ (14,248) $ (18,476)Adjustments to reconcile net income (loss) to net cash used for operating activities:

Depreciation and amortization 3,215 3,297Amortization of operating lease right-of-use assets 2,272 —Amortization of inventory step-up 284 5,043Amortization of financing transaction costs 115 —Accretion of asset retirement obligation 32 31Accretion of contingent earn-out consideration 16 —Write-off of deferred financing transaction costs 344 —Impairment of goodwill — 1,390Provision for accounts receivable allowances 659 733Deferred tax (benefit) provision (9) (218)Share-based compensation expense 73 471Loss (gain) on sale or disposal of assets — 2Changes in assets and liabilities, net of effects of purchase of a business:

Accounts receivable 7,466 10,709Inventories (11,417) (20,312)Prepaid expenses and other assets 1,743 (1,445)Accounts payable (3,365) 4,995Lease liabilities (2,003) —Accrued expenses and long-term obligations (2,512) (1,624)

Net cash used for operating activities (17,335) (15,404)Cash flows from investing activities:

Final payment of purchase price for a business previously acquired — (2,500)Purchase of a business — (2,500)Purchase of property, plant and equipment (3,464) (3,159)Proceeds from sale of fixed assets 59 —

Net cash used for investing activities (3,405) (8,159)Cash flows from financing activities:

Borrowings on credit facility 87,085 —Payments on credit facility (69,563) —Payments on long-term debt (240) (57)Dividends paid — (1,824)Payment of financing transaction costs (1,340) —Tax effect on stock awards (42) —

Net cash provided by (used for) financing activities 15,900 (1,881)Effect of exchange rate changes on cash (9) (13)Net decrease in cash and cash equivalents (4,849) (25,457)Cash and cash equivalents at beginning of period 17,100 58,560Cash and cash equivalents at end of period $ 12,251 $ 33,103

See accompanying notes to consolidated financial statements.

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CSS INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)(In thousands, except share and per share amounts)

Accumulated

Additional Other CommonStock

CommonStock Paid-in Retained Comprehensive inTreasury

Shares Amount Capital Earnings Income(Loss) Shares Amount Total

Balance, March 31, 2019 14,703,084 $ 1,470 $ 60,921 $ 277,613 $ 465 (5,865,846) $ (150,538) $ 189,931

Share-based compensation expense — — 73 — — — — 73

Issuance of common stock under equity plan — — — (782) — 15,611 740 (42)

Other comprehensive income (loss) — — — — (215) — — (215)

Net income (loss) — — — (14,248) — — — (14,248)

Balance, June 30, 2019 14,703,084 $ 1,470 $ 60,994 $ 262,583 $ 250 (5,850,235) $ (149,798) $ 175,499

Accumulated

Additional Other CommonStock

CommonStock Paid-in Retained Comprehensive inTreasury

Shares Amount Capital Earnings Income(Loss) Shares Amount Total

Balance, March 31, 2018 14,703,084 $ 1,470 $ 58,877 $ 339,088 $ 1,163 (5,583,338) $ (146,903) $ 253,695

Share-based compensation expense — — 471 — — — — 471

Cash dividends ($.20 per common share) — — — (1,827) — — — (1,827)

Other comprehensive income (loss) — — — — (455) — — (455)

Net income (loss) — — — (18,476) — — — (18,476)

Balance, June 30, 2018 14,703,084 $ 1,470 $ 59,348 $ 318,785 $ 708 (5,583,338) $ (146,903) $ 233,408

See accompanying notes to consolidated financial statements.

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CSS INDUSTRIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

CSS Industries, Inc. (collectively with its subsidiaries, “CSS” or the “Company”) has prepared the consolidated financial statements included hereinpursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnotedisclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United Statespursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments)required for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. These consolidated financialstatements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form10-K for the fiscal year ended March 31, 2019 . The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The Company’s fiscal year ends on March 31. References to a particular fiscal year refer to the fiscal year ending in March of that year. For example, “fiscal2020 ” refers to the fiscal year ending March 31, 2020 .

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions and accounts have beeneliminated in consolidation.

Nature of BusinessCSS is a creative consumer products company, focused on the craft, gift and seasonal categories. For these design-driven categories, the Company engagesin the creative development, manufacture, procurement, distribution and sale of our products with an omni-channel approach focused primarily on massmarket retailers.

Craft The craft category includes sewing patterns, ribbons and trims, buttons, knitting needles, needle arts and kids crafts. These products are sold to massmarket, specialty, and online retailers, and are generally ordered on a replenishment basis throughout the year.

Gift The gift category includes products designed to celebrate certain life events or special occasions, such as weddings, birthdays, anniversaries,graduations, or the birth of a child. Products include ribbons and bows, floral accessories, infant products, journals, gift card holders, all occasion boxedgreeting cards, memory books, scrapbooks, stationery, and other items that commemorate life's celebrations. Products in this category are primarily sold intomass, specialty, and online retailers, floral and packaging wholesalers and distributors, and are generally ordered on a replenishment basis throughout theyear.

Seasonal The seasonal category includes holiday gift packaging items such as ribbon, bows, greeting cards, bags, tags and gift card holders, in addition tospecific holiday-themed decorations, accessories, and activities, such as Easter egg dyes and novelties and Valentine's Day classroom exchange cards. Theseproducts are sold to mass market retailers, and production forecasts for these products are generally known well in advance of shipment.

CSS’ product breadth provides its retail customers the opportunity to use a single vendor for much of their craft, gift and seasonal product requirements. Asubstantial portion of CSS’ products are manufactured and packaged in the United States and warehoused and distributed from facilities in the UnitedStates, the United Kingdom and Australia, with the remainder sourced from foreign suppliers, primarily in Asia. The Company also has a manufacturingfacility in India that produces certain craft products, including trims, braids and tassels, and also has a distribution facility in India. The Company’s productsare sold to its customers by national and regional account sales managers, sales representatives, product specialists and by a network of independentmanufacturers’ representatives. CSS maintains purchasing offices in Hong Kong and China to administer Asian sourcing opportunities.

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Foreign Currency Translation and Transactions

The Company's foreign subsidiaries generally use the local currency as the functional currency. The Company translates all assets and liabilities at periodend exchange rates and all income and expense accounts at average rates during the period. Translation adjustments are recorded in accumulated othercomprehensive income (loss) in stockholders’ equity. Gains and losses on foreign currency transactions (denominated in currencies other than the localcurrency) are not material and are included in other expense (income), net in the consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during the reporting period. Judgments and assessments of uncertainties arerequired in applying the Company’s accounting policies in many areas. Such estimates pertain to revenue recognition, the valuation of inventory andaccounts receivable, the assessment of the recoverability of other intangible and long-lived assets and resolution of litigation and other proceedings. Actualresults could differ from these estimates.

Inventories

The Company records inventory when title is transferred, which occurs upon receipt or prior to receipt dependent on supplier shipping terms. The Companyadjusts unsaleable and slow-moving inventory to its estimated net realizable value. Substantially all of the Company’s inventories are stated at the lower offirst-in, first-out (FIFO) cost or net realizable value. The remaining portion of the inventory is valued at the lower of last-in, first-out (LIFO) cost or netrealizable value. Inventories consisted of the following (in thousands):

June 30, 2019 March 31, 2019 June 30, 2018Raw material $ 16,304 $ 14,246 $ 13,207Work-in-process 20,737 16,816 16,495Finished goods 70,258 65,169 88,242

$ 107,299 $ 96,231 $ 117,944

In connection with the acquisitions of substantially all of the net assets and business of The McCall Pattern Company on December 13, 2016, SimplicityCreative Group ("Simplicity") on November 3, 2017 and Fitlosophy, Inc. ("Fitlosophy") on June 1, 2018, the Company recorded a step-up to fair value ofthe inventory acquired of $ 21,773,000 , $ 10,214,000 , and $ 312,000 , respectively, at the date of each such acquisition. This was a result of the inventoryacquired being marked up to an estimated net selling price in purchase accounting and is recognized through cost of sales as the inventory is sold. Theamount of step-up to fair value of the acquired inventory remaining as of June 30, 2019 , March 31, 2019 and June 30, 2018 was $ 0 , $ 284,000 and $5,923,000 , respectively.

Asset Held for Sale

Asset held for sale of $ 131,000 as of June 30, 2019 and March 31, 2019 represents a distribution facility in Danville, Pennsylvania which the Company is inthe process of selling. The Company expects to sell this facility within 12 months and at the end of fiscal 2019, the Company ceased depreciating thisfacility at the time it was classified as held for sale. There were no assets classified as held for sale as of June 30, 2018 .

Property, Plant and Equipment

Property, plant and equipment are stated at cost and include the following (in thousands):

June 30, 2019 March 31, 2019 June 30, 2018Land $ 5,738 $ 5,738 $ 7,025Buildings, leasehold interests and improvements 40,918 40,893 45,348Machinery, equipment and other 116,756 113,946 106,292

163,412 160,577 158,665Less - Accumulated depreciation and amortization (112,071) (109,657) (105,532)Net property, plant and equipment $ 51,341 $ 50,920 $ 53,133

Depreciation expense was $2,414,000 and $2,030,000 for the quarters ended June 30, 2019 and 2018 , respectively.

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Leases

Effective April 1, 2019, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842 -Leases ("ASC 842") using the modified retrospective transition approach. See Note 5 for more information.

The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use (“ROU”) assets are included in operatinglease right-of-use assets on the consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the currentportion of operating lease liabilities and operating lease liabilities, respectively, on the consolidated balance sheets. Finance leases are not material to theCompany’s consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the leaseterm. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information availableon the adoption date for existing leases and as of the commencement date for new leases in determining the present value of future payments. The operatinglease ROU assets are subsequently measured throughout the lease term at the carrying amount of the lease liability, adjusted for any prepaid or accrued rentpayments, lease incentives and initial direct costs incurred. Certain leases may include options to extend or terminate the lease. Lease expense for minimumlease payments is recognized on a straight-line basis over the lease term.

The Company elected the package of transition practical expedients related to lease identification, lease classification, and initial direct costs. In addition,the Company made the following accounting policy elections for all asset classes: (1) the Company will not separate lease and non-lease components byclass of underlying asset, (2) the Company will apply the short-term lease exemption by class of underlying asset, and, (3) the Company will apply theportfolio approach to the development of its discount rates for the leases to be recorded in accordance with ASC 842. The Company has chosen not to electthe hindsight practical expedient for its transition to ASC 842. A modified retrospective transition approach is required, applying the new standard to allleases existing at the date of initial application.

Long-Lived Assets including Other Intangible Assets and Property, Plant and Equipment

The Company performs an annual impairment test of the carrying amount of goodwill and indefinite-lived intangible assets in the fourth quarter of its fiscalyear. Additionally, the Company would perform its impairment testing at an interim date if events or circumstances indicate that goodwill or intangiblesmight be impaired.

Other indefinite lived intangible assets consist of tradenames which are required to be tested annually for impairment. An entity has the option to first assessqualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. To perform a qualitative assessment,an entity must identify and evaluate changes in economic, industry and entity-specific events and circumstances that could affect the significant inputs usedto determine the fair value of an indefinite-lived intangible asset. If the result of the qualitative analysis indicates it is more likely than not that an indefinite-lived intangible asset is impaired, a more detailed fair value calculation will need to be performed which is used to identify potential impairments and tomeasure the amount of impairment losses to be recognized, if any. The fair value of the Company’s tradenames is calculated using a “relief from royaltypayments” methodology. This approach involves first estimating reasonable royalty rates for each trademark then applying these royalty rates to a net salesstream and discounting the resulting cash flows to determine the fair value. The royalty rate is estimated using both a market and income approach. Themarket approach relies on the existence of identifiable transactions in the marketplace involving the licensing of tradenames similar to those owned by theCompany. The income approach uses a projected pretax profitability rate relevant to the licensed income stream. The Company believes the use of multiplevaluation techniques results in a more accurate indicator of the fair value of each tradename. This fair value is then compared with the carrying value ofeach tradename to determine if impairment exists.

Long-lived assets (including property, plant and equipment), except for goodwill and indefinite lived intangible assets, are reviewed for impairment whenevents or circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by acomparison of the carrying amount of the asset group to future net cash flows estimated by the Company to be generated by such assets. If such asset groupis considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset group exceeds the fair value of theasset group. Assets to be disposed of are recorded at the lower of their carrying value or estimated net realizable value.

There were no triggering events identified during the first quarter of fiscal 2020 or fiscal 2019 that required interim impairment testing for long-lived assets.

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Revenue Recognition

Revenue from the sale of the Company's products is recognized when control of the promised goods is transferred to customers, in the amount that reflectsthe consideration the Company expects to be entitled to receive from its customers in exchange for those goods. The Company's revenue is recognized usingthe five-step model identified in ASC 606, "Revenue from Contracts with Customers." These steps are: (i) identify the contract with the customer; (ii)identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations inthe contract; and (v) recognize revenue as the performance obligations are satisfied.

The Company's contracts with customers generally include one performance obligation under the revenue recognition standard. For most product sales, theperformance obligation is the delivery of a specified product, and is satisfied at the point in time when control of the product has transferred to the customer,which takes place when title and risk of loss transfer in accordance with the applicable shipping terms, typically either at shipping point or at delivery to aspecified destination. The Company has certain limited products, primarily sewing patterns, that are sold on consignment at mass market retailers. TheCompany recognizes revenue on these products as they are sold to end consumers as recorded at point-of-sale terminals, which is the point in time whencontrol of the product is transferred to the customer.

Revenue is recognized based on the consideration specified in a contract with the customer, and is measured as the amount of consideration to which theCompany expects to be entitled to receive in exchange for transferring the goods. When applicable, the transaction price includes estimates of variableconsideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Variable consideration consists of revenues that aresubject to reductions to the transaction price for customer programs, which may include special pricing arrangements for specific customers, volumeincentives and other promotions. The Company has significant historical experience with customer programs and estimates the expected considerationconsidering historical trends. The related reserves are included in accrued customer programs in the consolidated balance sheets. The Company adjusts itsestimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. In limited cases, theCompany may provide the right to return product to certain customers. The Company also records estimated reductions to revenue, based primarily onknown claims, for customer returns and chargebacks that may arise as a result of shipping errors, product damaged in transit or for other reasons thatbecome known subsequent to recognizing the revenue. These provisions are recorded in the period that the related sale is recognized and are reflected as areduction from gross sales. The related reserves are included as a reduction of accounts receivable in the consolidated balance sheets. If the amount of actualcustomer returns and chargebacks were to increase or decrease from the estimated amount, revisions to the estimated reserve would be recorded.

The Company treats shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise totransfer the product. Costs related to shipping of product are recorded as incurred and classified in cost of sales in the consolidated statements of operationsand comprehensive income (loss).

Payment terms with customers vary by customer, but generally range from 30 to 90 days . Certain seasonal revenues have extended payment terms inaccordance with general industry practice. Since the term between invoicing and expected payment is less than one year, the Company does not adjust thetransaction price for the effects of a financing component.

Sales commissions are earned and recognized as expense as the related revenue is recognized at a point in time. These costs are recorded in selling, generaland administrative expenses. Taxes collected from customers are excluded from revenue and credited directly to obligations to the appropriate governmentalagencies.

The Company operates as a single reporting segment, engaged in the creative development, manufacture, procurement, distribution, and sale of craft, giftand seasonal products, primarily to mass market retailers in the United States.

The following represents our net sales disaggregated by product category (in thousands):

Three Months Ended June 30,

2019 2018

Craft $ 35,659 $ 35,288

Gift 19,829 24,040

Seasonal 2,049 4,799

Total $ 57,537 $ 64,127

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Net Income (Loss) Per Common Share

Due to the Company's net losses in the first quarter of fiscal 2020 and 2019, potentially dilutive securities of 607,000 shares and 552,000 shares as of June30, 2019 and June 30, 2018, respectively, consisting of outstanding stock options and unearned time-based restricted stock units, were excluded from thediluted net loss per common share calculation due to their antidilutive effect. Market-based and performance-based restricted stock units are consideredcontingently issuable shares for diluted income per common share purposes and the dilutive impact, if any, is not included in the weighted-average sharesuntil the market or performance conditions are met even when the Company is profitable for the respective period.

Components of Accumulated Other Comprehensive Income (Loss), Net

Three Months Ended June 30,

2019 2018

(in thousands)Accumulatedeffectofcurrencytranslationadjustment:

Balance at beginning of period $ 12 $ 988Currency translation adjustment during period (215) (720)Balance at end of period $ (203) $ 268

Accumulatedeffectofpensionandpostretirementbenefits:

Balance at beginning and end of period $ 453 $ 259

Accumulatedeffectinterestrateswapagreement:

Balance at beginning of period $ — $ (84)Fair value adjustment — 265Balance at end of period $ — $ 181

(2) ACQUISITIONS

On June 1, 2018, a subsidiary of the Company completed the acquisition of substantially all of the business and net assets of Fitlosophy for $2,500,000 incash. In addition to the $2,500,000 paid at closing, the Company may pay up to an additional $10,500,000 of contingent earn-out consideration, in cash, ifnet sales of certain products meet or exceed five different thresholds during the period from the acquisition date through March 31, 2023. If earned, thecontingent consideration payments will be paid, generally within 20 days after the end of each rolling twelve-month measurement period (quarterly throughMarch 31, 2023). No such payments of contingent consideration have been earned or paid as of June 30, 2019 . At the date of acquisition, the estimated fairvalue of the contingent earn-out consideration was $1,600,000 . The estimated fair value of the contingent earn-out consideration was determined using aMonte Carlo simulation discounted to a present value. The following table summarizes the purchase price at the date of acquisition (in thousands):

Cash $ 2,500Contingent earn-out consideration 1,600

Purchase price $ 4,100

Fitlosophy is devoted to creating, marketing, and distributing innovative products that inspire people to develop healthy habits by focusing on effectivegoal-setting through journaling. Products include a complete line of fitness and wellness planning products all sold under the fitlosophy TM , live life fit TM

and fitbook TM brands. The acquisition was accounted for using the acquisition method and the excess of cost over the fair market value of the net tangibleand identifiable intangible assets acquired of $ 1,390,000 was recorded as goodwill. This goodwill was subsequently deemed impaired as a result of thecontinued discrepancy between the Company's stockholders' equity balance and its market capitalization, and therefore, was expensed during the firstquarter of fiscal 2019.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

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Accounts receivable $ 389Inventory 452Other assets 5

Total current assets 846Intangible assets 2,032Goodwill 1,390

Total assets acquired 4,268Current liabilities (168)

Net assets acquired $ 4,100

The Company's consolidated statements of operations include the operating results of Fitlosophy from the acquisition date through June 30, 2019 . Proforma results of operations for this acquisition have not been presented as the financial impact to our consolidated results of operations is not material.

(3) RESTRUCTURING PLANS

Business Restructuring

In the first quarter of fiscal 2019, the Company announced a restructuring plan to combine its operations in the United Kingdom and Australia, respectively.This restructuring was undertaken in order to improve profitability and efficiency through the elimination of (i) redundant back office functions; (ii) certainstaffing positions and (iii) excess distribution and warehouse capacity, and was substantially completed in the second quarter of fiscal 2019. Commencing inthe second quarter of fiscal 2019, the Company recorded an initial restructuring reserve, subsequent additions, and has made cash payments as part of thisrestructuring plan. Also, in connection with this restructuring plan, the Company recorded an impairment of property, plant and equipment at one of theaffected facilities in the United Kingdom of $1,398,000 in the second quarter of fiscal 2019, which was included in restructuring expenses. As of June 30,2019 , the remaining liability of $11,000 was classified in accrued other expenses in the accompanying consolidated balance sheet.

Selected information relating to the aforementioned restructuring follows (in thousands):

Employee Termination

Costs Facility Exit Costs Other Costs Total

Restructuring reserve as of March 31, 2019 $ 1 $ 24 $ 14 $ 39

Charges (reversals) to expense (1) (24) 3 (22)

Cash paid — — (6) (6)

Restructuring reserve as of June 30, 2019 $ — $ — $ 11 $ 11

Strategic Business Initiative

In the third quarter of fiscal 2019, the Company announced that it engaged an international consulting firm to perform a comprehensive review of itsoperating structure with the goal of improving the alignment of processes across the business, as the Company continues to integrate recent acquisitions andevaluate its portfolio. Commencing in the third quarter of fiscal 2019, the Company recorded an initial restructuring reserve, subsequent additions, and hasmade cash payments in connection with this initiative. As of June 30, 2019 , the remaining liability of $422,000 was classified in accrued other expenses inthe accompanying consolidated balance sheet.

Selected information relating to the aforementioned restructuring follows (in thousands):

Employee

Termination Costs

Restructuring reserve as of March 31, 2019 $ 634Cash paid (212)

Restructuring reserve as of June 30, 2019 $ 422

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Performance Improvement Initiative

In the first quarter of fiscal 2020, the Company announced a restructuring plan with the goal of reducing the Company’s cost base to improve businessperformance, profitability and cash flow generation. Commencing in the first quarter of fiscal 2020, the Company recorded an initial restructuring reserveand has made cash payments in connection with this initiative. As of June 30, 2019 , the remaining liability of $1,586,000 was classified in accrued otherexpenses in the accompanying consolidated balance sheet.

Selected information relating to the aforementioned restructuring follows (in thousands):

Employee

Termination Costs

Initial reserve $ 2,076Cash paid (490)

Restructuring reserve as of June 30, 2019 $ 1,586

(4) SHARE-BASED COMPENSATION

Under the terms of the Company’s 2013 Equity Compensation Plan (“ 2013 Plan ”), the Company may grant incentive stock options, non-qualified stockoptions, stock units, restricted stock grants, stock appreciation rights, stock bonus awards and dividend equivalents to officers and other employees and non-employee directors. Under the 2013 Plan, a committee of the Company's Board of Directors (the "Board") approves grants to officers and other employees,and the Board approves grants to non-employee directors. Grants under the 2013 Plan may be made through July 29, 2023. The term of each grant is at thediscretion of the Company, but in no event greater than ten years from the date of grant, and at the date of grant the Company has discretion to determine thedate or dates on which granted options become exercisable. Service-based stock options outstanding as of June 30, 2019 become exercisable at the rate of25% per year commencing one year after the date of grant. Market-based stock options outstanding as of June 30, 2019 become exercisable only if certainmarket conditions and service requirements are satisfied, and the dates on which they become exercisable will depend on the period in which such marketconditions and service requirements are met, if at all, except that vesting and exercisability are accelerated upon a change of control. Outstanding service-based restricted stock units ("RSUs") granted to employees vest at either: (i) the rate of 50% of the shares underlying the grant at each of the third and fourthanniversaries of the date on which the award was granted or (ii) the rate of 25% of the shares underlying the grant on each of the first four anniversaries ofthe date on which the award was granted. Service-based RSUs granted to directors and outstanding as of June 30, 2019 vested on July 29, 2019. Market-based and performance-based RSUs outstanding as of June 30, 2019 will vest only if certain market or performance conditions and service requirementshave been met, and the dates on which they vest will depend on the period in which such market or performance conditions and service requirements aremet, if at all, except that vesting and redemption are accelerated upon a change of control. The Company recognizes grants, cancellations, and forfeitures asthey occur. As of June 30, 2019 , there were 570,508 shares available for grant under the 2013 Plan.

The fair value of each stock option granted under the above plan is estimated on the date of grant using a Black-Scholes option pricing model. There wereno stock options granted during the first quarter of fiscal 2020 and fiscal 2019.

The fair value of each performance-based and service-based RSU granted to employees is estimated on the day of grant based on the closing price of theCompany's common stock reduced by the present value of the expected dividend stream during the vesting period using the risk-free interest rate. The fairvalue of each service-based RSU granted to directors, for which dividend equivalents are paid upon vesting of the underlying awards, is estimated on theday of grant based on the closing price of the Company's common stock.

During the three months ended June 30, 2019 and 2018 , the Company granted 213,804 and 157,803 RSUs, respectively, with a weighted average fair valueper share of $6.28 and $14.50 , respectively. As of June 30, 2019 , there were 285,000 and 416,958 outstanding stock options and RSUs, respectively.

As of June 30, 2019 , there was $451,000 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’sequity incentive plans which is expected to be recognized over a weighted average period of 1.7 years . As of June 30, 2019 , there was $2,819,000 of totalunrecognized compensation cost related to non-vested service-based, market-based and performance-based RSUs granted under the Company’s equityincentive plans which is expected to be recognized over a weighted average period of 2.2 years .

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Compensation cost related to stock options and RSUs recognized in operating results (included in selling, general and administrative expenses) was $73,000and $471,000 in the quarters ended June 30, 2019 and 2018 , respectively.

(5) LEASES

The Company adopted ASC 842 as of April 1, 2019, using the modified retrospective transition approach wherein the Company applied the new leasestandard at the adoption date. Accordingly, all periods prior to April 1, 2019 were presented in accordance with the previous ASC Topic 840 - Leases ("ASC840"), and no retrospective adjustments were made to the comparative periods presented. Adoption of ASC 842 resulted in the recording of operating leaseROU assets of $ 51,486,000 , operating lease liabilities of $ 50,180,000 , a reduction of favorable lease assets of $2,866,000 and a reduction of net deferredrent liabilities of $1,560,000 as of April 1, 2019. Finance leases are not material to the Company and are not impacted by the adoption of ASC 842, asfinance lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC 840. The adoption did notmaterially impact the Company’s consolidated statements of operations or cash flows.

The Company has operating leases for corporate offices, distribution facilities, manufacturing plants, and certain equipment and vehicles. Leases with aninitial term of 12 months or less, which are immaterial to the Company, are not recorded in the balance sheet. For all asset classes, the Company has electedthe practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thuscausing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which amongother things, allows the Company to carry forward historical lease classification. Variable lease payment amounts that cannot be determined at thecommencement of the lease such as increases in lease payments based on changes in index rates or usage, are not recorded in the balance sheet.

ROU assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to makelease payments arising from the lease. ROU assets and liabilities are recognized on the adoption date for existing leases and on the commencement date fornew leases based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate thelease when it is reasonably certain that the Company will exercise that option. ROU assets also include any advance lease payments. As most of theCompany’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available on theadoption date for existing leases and as of the commencement date for new leases in determining the present value of lease payments. The Company appliesthe portfolio approach based on the rate of interest that it would have to pay to borrow an amount equal to the lease payments on collateralized basis over asimilar term to the development of its discount rates.

The components of lease costs are as follows (in thousands):

Three Months Ended

June 30, 2019

Lease costs: Operating lease costs $ 2,888Variable operating lease costs 77

Total $ 2,965

Supplemental cash flow information is as follows (in thousands):

Three Months Ended

June 30, 2019

Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 2,003

Total $ 2,003

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Three Months Ended

June 30, 2019

Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 51,597

Total $ 51,597

The aggregate future lease payments for operating leases as of June 30, 2019 is projected to be as follows (in thousands):

Remainder of fiscal 2020 $ 9,739Fiscal 2021 8,763Fiscal 2022 8,182Fiscal 2023 6,882Fiscal 2024 5,959Thereafter 20,028Total lease payments 59,553Less: Interest (11,284)Present value of lease liabilities $ 48,269

The future minimum lease payments associated with all non-cancelable lease obligations under ASC 840 as of March 31, 2019 is as follows (in thousands):

Fiscal 2020 $ 10,520Fiscal 2021 9,360Fiscal 2022 8,446Fiscal 2023 7,364Fiscal 2024 6,200Thereafter 21,818Total lease payments $ 63,708

Weighted-average lease terms and discount rates are as follows:

June 30, 2019

Weighted-average remaining lease term (years) of operating leases 7.1Weighted-average discount rate of operating leases 5.77%

(6) GOODWILL, OTHER INTANGIBLE ASSETS AND LONG-LIVED ASSETS

During the first quarter of fiscal 2019, the Fitlosophy acquisition was accounted for using the acquisition method and the excess of cost over the fair marketvalue of the net tangible and identifiable intangible assets acquired of $1,390,000 was recorded as goodwill. The Company determined that a triggeringevent occurred due to the fact that the Company’s total stockholders’ equity was in excess of the Company's market capitalization. Given this circumstance,the Company bypassed the option to assess qualitative factors to determine the existence of impairment and proceeded directly to the quantitative goodwillimpairment test. Based on the results of its impairment test, the Company recorded an impairment charge of $1,390,000 . As of June 30, 2019 and 2018, theCompany had no goodwill.

The change in the carrying amount of goodwill during the three months ended June 30, 2018 is as follows (in thousands):

Balance as of March 31, 2018 $ —Acquisition of Fitlosophy 1,390Impairment charge (1,390)

Balance as of June 30, 2018 $ —

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The gross carrying amount and accumulated amortization of other intangible assets is as follows (in thousands):

June 30, 2019 March 31, 2019 June 30, 2018

GrossCarryingAmount

AccumulatedAmortization

GrossCarryingAmount

AccumulatedAmortization

GrossCarryingAmount

AccumulatedAmortization

Tradenames and trademarks $ 15,054 $ — $ 15,054 $ — $ 24,353 $ —Customer relationships 44,037 24,615 44,037 23,942 48,657 20,976Favorable lease contracts — — 3,882 1,016 3,882 478Trademarks 2,435 717 2,435 645 2,435 425Patents 1,466 1,092 1,466 1,059 1,164 971Covenants not to compete 530 481 530 457 530 377

$ 63,522 $ 26,905 $ 67,404 $ 27,119 $ 81,021 $ 23,227

Amortization expense related to intangible assets was $801,000 and $1,267,000 for the quarters ended June 30, 2019 and 2018 , respectively. Based on thecurrent composition of intangibles, amortization expense for the remainder of fiscal 2020 and each of the succeeding four years is projected to be as follows(in thousands):

Remainder of fiscal 2020 $ 2,382Fiscal 2021 2,997Fiscal 2022 2,900Fiscal 2023 2,604Fiscal 2024 2,518

(7) SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS

On March 7, 2019, the Company entered into a $125,000,000 asset based senior secured credit facility with three banks (the “ABL Credit Facility”). TheCompany used the proceeds from borrowings under the ABL Credit Facility to repay in full the Company’s prior credit facility with two banks (the “PriorCredit Facility”), under which the maximum credit available to the Company at any one time (the “Committed Amount”) was $50,000,000 at the time thePrior Credit Facility was repaid and terminated on March 7, 2019. The ABL Credit Facility has a maturity date of March 7, 2024, unless earlier terminated.

On May 23, 2019, the Company entered into a Second Amendment (the “Amendment”) to the ABL Credit Facility. The Amendment reduced the maximumamount available under the revolving credit facility from $125,000,000 to $100,000,000 . Availability under the Amendment is equal to the lesser of$100,000,000 or a Borrowing Base (as defined in the Amendment), in each case minus (i) revolving loans outstanding and (ii) $15,000,000 until the Agent’sreceipt of a compliance certificate demonstrating compliance with the amended financial covenants. The Amendment requires the Company to not permitthe Fixed Charge Coverage Ratio (as defined in the Amendment), as of the end of any calendar month (commencing with the twelve-month period endingMarch 31, 2020), to be less than 1.00 to 1.00. In addition, commencing with the month ending April 30, 2019 and continuing until the month ending March31, 2020, the Company is required to have, at the end of each calendar month during such period, EBITDA for the corresponding period (which such periodshall be based on a cumulative monthly build-up commencing with the month ending April 30, 2019) then ending of not less than the corresponding amountset forth in the Amendment. The Amendment also limits Capital Expenditures (as defined in the Amendment) for fiscal 2020 to $8,000,000 or less.

Permitted Acquisitions (as defined in the ABL Credit Facility) are no longer permitted under the Amendment, and certain Restricted Payments (as definedin the ABL Credit Facility) including dividends previously allowed based upon meeting certain leverage ratio and average Availability (as defined in theABL Credit Facility) criteria are no longer allowed.

At the Company’s election, loans made under the ABL Credit Facility will bear interest at either: (i) a base rate (“Base Rate”) plus an applicable rate or (ii)an “Adjusted LIBO Rate” (as defined in the ABL Credit Facility) plus an applicable rate, subject to adjustment if an event of default under the ABL CreditFacility has occurred and is continuing. The Base Rate means the highest of (a) the Agent’s “prime rate,” (b) the federal funds effective rate plus 0.50% and(c) the Adjusted LIBO Rate for an interest period of one month plus 1% . During the period prior to March 31, 2020, Adjusted LIBO Rate loans made underthe ABL Credit Facility will bear interest at the Adjusted LIBO Rate plus an applicable rate of 2.50% , and Base Rate loans made under the ABL CreditFacility will bear interest at the Base Rate plus an applicable rate of

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1.50% . After March 31, 2020, the applicable rate will be adjusted based on the Company’s Fixed Charge Coverage Ratio (as defined in the ABL CreditFacility) as further set forth in the ABL Credit Facility. Additionally, the Company is subject to a commitment fee equal to 0.25% per annum on the averagedaily unused portion of the revolving commitment, payable monthly to the Agent for the ratable benefit of the lenders.

The ABL Credit Facility is secured by a first priority perfected security interest in substantially all of the assets of the Company, including certain realestate, subject to certain exceptions and exclusions as set forth in the ABL Credit Facility and other loan documents, including the Pledge and SecurityAgreement (the “Pledge Agreement”) entered into by the Company and the Agent contemporaneously with their execution of the ABL Credit Facility.

The ABL Credit Facility contains certain affirmative and negative covenants that are binding on the Company, including, but not limited to, restrictions(subject to specified exceptions and qualifications) on the ability of the Company to incur indebtedness, to create liens, to merge or consolidate, to makedispositions, to make restricted payments such as dividends, distributions or equity repurchases, to make investments or undertake acquisitions, to prepayother indebtedness, to enter into certain transactions with affiliates, to enter into sale and leaseback transactions, or to enter into any restrictive agreements.In addition, the ABL Credit Facility requires the Company to abide by certain financial covenants calculated for the Company and its subsidiaries as notedabove.

The ABL Credit Facility contains customary events of default (which are in some cases subject to certain exceptions, thresholds, notice requirements andgrace periods), including, but not limited to, non-payment of principal or interest or other amounts, misrepresentations, failure to perform or observecovenants, cross-defaults with certain other material indebtedness, certain change in control events, voluntary or involuntary bankruptcy proceedings,certain judgments or decrees, failure of the ABL Credit Facility o r other loan documents to be in full force and effect, certain ERISA events and judgments.The ABL Credit Facility also contains certain prepayment provisions, representations, warranties and conditions. As of June 30, 2019, the Company was incompliance with all debt covenants under the ABL Credit Facility.

Under the ABL Credit Facility, all collections on account of collateralized accounts receivable are required to be deposited into lock boxes that are subjectto the control of the administrative agent (“Agent”) for the ABL Credit Facility (“Agent-Controlled Lock Boxes”). All funds deposited into Agent-Controlled Lock Boxes are swept daily and are required to be applied by the Agent as repayments of amounts owed by the Company under the ABL CreditFacility. Accordingly, the Company has classified its outstanding loan balance under the ABL Credit Facility as a current liability. The outstanding balanceunder the ABL Credit Facility as of June 30, 2019 and March 31, 2019 was $ 43,661,000 and $ 26,139,000 , respectively. As of June 30, 2018, there was$40,000,000 outstanding under the Company's Prior Credit Facility classified as a long term liability.

The Company leases certain equipment under finance leases which is classified in the accompanying balance sheets as follows (in thousands):

June 30, 2019 March 31, 2019 June 30, 2018

Current portion of long-term debt $ 11 $ 145 $ 73

Long-term debt, net of current portion 10 13 102

$ 21 $ 158 $ 175

The Company also finances certain equipment which is classified in the accompanying balance sheets as follows (in thousands):

June 30, 2019 March 31, 2019 June 30, 2018

Current portion of long-term debt $ 68 $ 173 $ 156

Long-term debt, net of current portion — — 68

$ 68 $ 173 $ 224

(8) COMMITMENTS AND CONTINGENCIES

CSS and its subsidiaries are involved in ordinary, routine legal proceedings that are not considered by management to be material. In the opinion ofCompany counsel and management, the ultimate liabilities resulting from such legal proceedings will not materially affect the consolidated financialposition of the Company or its results of operations or cash flows.

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(9) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The Company historically used certain derivative financial instruments as part of its risk management strategy to reduce interest rate and foreign currencyrisk. The Company recognized all derivatives on the consolidated balance sheets at fair value based on quotes obtained from financial institutions. As ofMarch 31, 2019, the interest rate swap agreement was discontinued and the fair value of the interest rate swap agreement as of March 31, 2019 of $580,000was reclassified into earnings with a realized loss included in other expense (income), net in the consolidated statement of operations and comprehensiveincome (loss). There was no interest rate swap agreement as of June 30, 2019. There were no foreign currency contracts outstanding as of June 30, 2019 andMarch 31, 2019.

The Company maintains a nonqualified Deferred Compensation Plan (the "Deferred Comp Plan") for qualified employees. The Deferred Comp Planprovides eligible key employees with the opportunity to elect to defer up to 50% of their eligible compensation under the Deferred Comp Plan. TheCompany may make matching or discretionary contributions, at the discretion of the Board. All compensation deferred under the Deferred Comp Plan isheld by the Company. The Company maintains separate accounts for each participant to reflect deferred contribution amounts and the related gains or losseson such deferred amounts. A participant’s account is notionally invested in one or more investment funds and the value of the account is determined withrespect to such investment allocations. The related liability is recorded as deferred compensation and included in other long-term obligations in theconsolidated balance sheets as of June 30, 2019 and March 31, 2019 .

The Company maintains life insurance policies in connection with the Deferred Comp Plan discussed above. The Company also maintains two lifeinsurance policies in connection with separate deferred compensation arrangements with two former executives. The cash surrender value of the policies isrecorded in other long-term assets in the consolidated balance sheets and is based on quotes obtained from insurance companies as of June 30, 2019 andMarch 31, 2019 .

In connection with the acquisition of Fitlosophy in fiscal 2019, the Company may pay up to an additional $10,500,000 of contingent earn-out consideration,in cash, if net sales of certain products meet or exceed five different thresholds during the period from the acquisition date through March 31, 2023. Theestimated fair value of the contingent earn-out consideration is determined using a Monte Carlo simulation discounted to a present value which is accretedover the earn-out period. The contingent consideration liability is included in accrued other expenses in the consolidated balance sheets as of June 30, 2019and March 31, 2019.

Selected information relating to the aforementioned contingent consideration follows (in thousands):

Contingent Earn-out

Consideration

Estimated fair value as of June 1, 2018 $ 1,600Accretion 64Remeasurement adjustment (298)

Contingent Earn-out Consideration as of March 31, 2019 1,366Accretion 16

Contingent Earn-out Consideration as of June 30, 2019 $ 1,382

To increase consistency and comparability in fair value measurements, the FASB established a fair value hierarchy that prioritizes the inputs to valuationtechniques into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets orliabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial assets and liabilities fall withindifferent levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The Company’s recurring assets and liabilities recorded on the consolidated balance sheets are categorized based on the inputs to the valuation techniques asfollows:

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that theCompany has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable eitherdirectly or indirectly for substantially the full term of the asset or liability. Examples of

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Level 2 inputs include quoted prices for identical or similar assets or liabilities in non-active markets and pricing models whose inputs are observable forsubstantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable andsignificant to the overall fair value measurement.

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis in itsconsolidated balance sheets as of June 30, 2019 and March 31, 2019 (in thousands):

June 30, 2019

Quoted Prices InActive Markets

for IdenticalAssets (Level 1)

Significant OtherObservable

Inputs (Level 2)

SignificantUnobservable

Inputs (Level 3)Assets:

Cash surrender value of life insurance policies $ 2,805 $ — $ 2,805 $ —Total assets $ 2,805 $ — $ 2,805 $ —

Liabilities: Contingent earn-out consideration $ 1,382 $ — $ — $ 1,382Deferred compensation plans 1,263 1,263 — —

Total liabilities $ 2,645 $ 1,263 $ — $ 1,382

March 31, 2019

Quoted Prices InActive Markets

for IdenticalAssets (Level 1)

Significant OtherObservable

Inputs (Level 2)

SignificantUnobservable

Inputs (Level 3)Assets:

Cash surrender value of life insurance policies $ 2,765 $ — $ 2,765 $ —Total assets $ 2,765 $ — $ 2,765 $ —

Liabilities: Contingent earn-out consideration $ 1,366 $ — $ — $ 1,366Interest rate swap agreement 580 — 580 —Deferred compensation plans 1,156 1,156 — —

Total liabilities $ 3,102 $ 1,156 $ 580 $ 1,366

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value in the consolidated balance sheetsand such amounts are a reasonable estimate of their fair values due to the short-term nature of these instruments. The outstanding balance of the Company’sshort-term borrowings and long-term debt approximated its fair value based on the current rates available to the Company for debt of the same maturity andrepresents Level 2 financial instruments.

Nonrecurring Fair Value Measurements

The Company’s nonfinancial assets which are measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangibleassets and certain other assets. These assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certaincircumstances, such as when there is evidence that an impairment may exist. In making the assessment of impairment, recoverability of assets to be held andused is measured by a comparison of the carrying amount of the asset group to future net cash flows estimated by the Company to be generated by suchassets. If such asset group is considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the asset groupexceeds the fair value of the asset group. Assets to be disposed of are recorded at the lower of their carrying value or estimated net realizable value.

As discussed in Note 2, a subsidiary of the Company acquired substantially all of the business and net assets of Fitlosophy on June 1, 2018 and determinedthat the aggregate fair value of acquired intangible assets, consisting of tradenames, was $ 2,032,000 . The Company estimated the fair value of theaforementioned acquired intangible assets using discounted cash flow techniques which included an estimate of future cash flows discounted to presentvalue with an appropriate risk-adjusted discount rate (Level 3). The Company determined that the aggregate fair value of the acquired inventory in theFitlosophy acquisition was $ 452,000 , which was estimated as the selling price less costs of disposal (Level 2). The Company estimated the fair value of theFitlosophy contingent earn-out consideration of $ 1,600,000 using a Monte Carlo simulation discounted to a present value (Level 3).

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Goodwill and indefinite-lived intangibles are subject to impairment testing on an annual basis, or sooner if events or circumstances indicate a condition ofimpairment may exist. Impairment testing is conducted through valuation methods that are based on assumptions for matters such as interest and discountrates, growth projections and other future business conditions (Level 3). These valuation methods require a significant degree of management judgmentconcerning the use of internal and external data. In the event these methods indicate that fair value is less than the carrying value, the asset is recorded at fairvalue as determined by the valuation models. In the first quarter of fiscal 2019, the Company recorded an impairment charge of $ 1,390,000 due toimpairment of goodwill associated with the acquisition of Fitlosophy. See Note 2 and 6 for further discussion.

(10) INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating lossand credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in taxrates is recognized in income in the period that includes the enactment date.

The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. Management assesses allavailable positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize existing deferred tax assets. Asignificant piece of objective negative evidence evaluated in fiscal 2019 was the cumulative U.S. pretax loss incurred over the then most recent three-yearperiod. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future taxable income. On the basis of thatevaluation, as of December 31, 2018, a full valuation allowance was recorded to fully offset the U.S. net deferred tax assets, as they more likely than notwill not be realized. Management updated this assessment as of June 30, 2019, and concluded that the full valuation allowance for U.S. net deferred taxassets is still required.

The Company recognizes the impact of an uncertain tax position if it is more likely than not that such position will be sustained on audit, based solely on thetechnical merits of the position.

The income tax provision for interim periods is comprised of tax on ordinary income (loss) provided at the most recent estimated annual effective tax rate,adjusted for the tax effect of discrete items. Management estimates the annual effective tax rate quarterly based on the forecasted pretax income (loss)results of its U.S. and non-U.S. jurisdictions. Items unrelated to current year ordinary income (loss) are recognized entirely in the period identified as adiscrete item of tax. These discrete items generally relate to changes in tax laws, adjustments to the actual liability determined upon filing tax returns, andadjustments to previously recorded reserves for uncertain tax positions.

(11) RECENT ACCOUNTING PRONOUNCEMENTS

In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changesto the Disclosure Requirements for Fair Value Measurement," which is designed to improve the effectiveness of disclosures by removing, modifying andadding disclosures related to fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, including interimperiods within those fiscal years. The Company is currently evaluating the impact of the adoption of this standard, but it does not expect that it will have amaterial impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): DisclosureFramework - Changes to the Disclosure Requirements for Defined Benefits Plans" ("ASU 2018-14"), which is designed to improve the effectiveness ofdisclosures by removing and adding disclosures related to defined benefit pension or other postretirement plans. ASU 2018-14 is required to be applied on aretrospective basis to all periods presented and is effective for the Company in its fiscal year ending March 31, 2021. Early adoption is permitted. TheCompany is currently evaluating the impact of the adoption of this standard, but it does not expect that it will have a material impact on the Company'sconsolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting forImplementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," ("ASU 2018-15"). ASU 2018-15 aligns the accounting forimplementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costsincurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the updatedguidance requires an entity to determine the stage of a project that the implementation activity relates to and the nature of the associated costs in order todetermine whether those costs should be expensed as incurred or capitalized. Capitalized implementation costs related to a hosting arrangement that is aservice contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting

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arrangement is ready for its intended use. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods withinthose fiscal years. The Company is currently evaluating the impact of the adoption of this standard, but it does not expect that it will have a material impacton the Company's consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income" ("ASU 2018-02"). ASU 2018-02 allows a reclassification from accumulated other comprehensiveincome (loss) to retained earnings for stranded tax effects resulting from the Tax Act. The amount of the reclassification is calculated based on the effect ofthe change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of the enactment of the Tax Act related to items thatremained in accumulated other comprehensive income (loss) at that time. This ASU is effective for fiscal years beginning after December 15, 2018,including interim periods within those fiscal years. The Company elected not to reclassify any stranded tax effects resulting from the Tax Act fromaccumulated other comprehensive income (loss) to retained earnings.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

STRATEGIC OVERVIEW

The overall objective of the Company is to grow profitable sales and improve return on invested capital ("ROIC") through five strategic pillars. These strategicpillars include:

* Defendthebasebusiness- Design, product innovation, category leadership

* Expandtoadjacentcategorieswithafocusonbrands- Focus on fragmented markets, brands, omni-channel

* Buildanomni-channelbusinessmodel- Dedicated resources, leverage technology

* ImproveROICbymaximizingmarginswhileminimizingcapitalinvestment- Streamline and focus on economic value add and working capital

* Buildacollaborative,OneCSSculture- Communication, accountability, diversity

Approximately 70% of the Company’s net sales are attributable to products within our craft and gift categories, with the remainder attributable to products in theseasonal category. The craft product category reflects products used for craft activities and includes ribbons, trims, buttons, sewing patterns, knitting needles,needle arts and kids crafts. Craft products are sold to mass market, specialty, and online retailers and are generally ordered on a replenishment basis throughout theyear. The gift product category is defined as products primarily designed to celebrate certain life events or special occasions such as weddings, birthdays,anniversaries, graduations, or the birth of a child. Gift products are primarily sold into mass, specialty, and online retailers, floral and packaging wholesalers anddistributors, and are generally ordered on a replenishment basis throughout the year. The seasonal product category is defined as products designed, produced andsold to mass market and online retailers for holidays and seasonal events, including Christmas, Valentine’s Day, Easter and back-to-school. Production forecastsfor these products are known well in advance of shipment.

The Company has relatively high market share in many products across its categories. Most of these markets have declined in recent years. The Companycontinues to confront significant price pressure as its competitors source certain products from overseas and its customers increase direct sourcing from overseasfactories. Increasing customer concentration has augmented customers' bargaining power, which has also contributed to price pressure. In recent fiscal years, theCompany has experienced lower sales in certain Christmas product lines, craft ribbon product lines, gift stationery product lines, its infant product line, and in itsnon-retail packaging and floral product lines due to factors such as continued price pressure, inventory destocking, as well as a decline in brick and mortar retailtraffic.

The Company has taken several measures to respond to sales volume, cost and price pressures. The Company believes it continues to have strong core productofferings which have allowed it to operate effectively in this competitive market. In addition, the Company is pursuing new product initiatives related to craft, giftand seasonal products, including new licensed and non-licensed product offerings, as well as increased investment in omni-channel offerings.

CSS continually invests in product and packaging design and product knowledge to assure that it can continue to provide unique added value to its customers. Inaddition, CSS maintains purchasing offices in Hong Kong and China to be able to provide foreign-sourced products at competitive prices. CSS continuallyevaluates the efficiency and productivity of its production and distribution facilities and of its back office operations to maintain its competitiveness.

CSS' domestically-manufactured plastic decorative ribbon product lines have experienced price pressure and reduced sales volume because of competition fromlow-priced imports from China. In December 2017, our Berwick Offray company filed trade remedy petitions with the U.S. International Trade Commission(“ITC”) and the U.S. Department of Commerce (“Commerce Department”) asserting that the competing Chinese products are being imported at less-than-fairvalue and that they benefit from unfair governmental subsidies. In the petitions, Berwick Offray requested the imposition of trade remedies in the form ofantidumping (“AD”) and countervailing (“CV”) duties on plastic decorative ribbon from China. The ITC and the Commerce Department completed theirrespective investigations and issued their final determinations during the fourth quarter of fiscal 2019. In February 2019, the ITC found that U.S. producers ofplastic decorative ribbon have been materially injured by unfairly traded imports of plastic decorative ribbon from China. In March 2019, the CommerceDepartment imposed trade remedies, in the form of AD and CV duties, on imports of plastic decorative ribbon from China at combined AD and CV duty ratesranging from 78.14% to 464.71%. These rates are subject to possible adjustment through an annual administrative review

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process, and the AD and CV duty orders issued by the Commerce Department are subject to a sunset review once every five years. The potential impact of theseproceedings is not determinable at this time.

The Company will continue to build on existing relationships with craft, gift and seasonal customers by expanding and diversifying its product lines and therebygrowing its presence in the largest retailers in North America. This includes both capitalizing on opportunities for organic growth in existing businesses as well asacquiring companies which fit into appropriate acquisition parameters. Though we are pausing on acquisitions in the near term, we will continue to actively meetwith craft, gift and seasonal companies to review and assess potential acquisition targets. Historically, significant revenue growth at CSS has come throughacquisitions. Over the long term, management anticipates that it will continue to consider acquisitions as a strategy to stimulate growth.

On June 1, 2018, a subsidiary of the Company completed the acquisition of substantially all of the business and net assets of Fitlosophy, Inc. ("Fitlosophy") for$2,500,000 in cash. In addition to the $2,500,000 paid at closing, the Company may pay up to an additional $10,500,000 of contingent earn-out consideration, incash, if net sales of certain products meet or exceed five different thresholds during the period from the acquisition date through March 31, 2023. The contingentconsideration payments will be paid, if at all, generally within 20 days after the end of each rolling twelve-month measurement period (quarterly through March31, 2023). At the date of acquisition, the estimated fair value of the contingent earn-out consideration was $1,600,000. As of March 31, 2019 and June 30, 2019,we updated our assessment of the fair value of the contingent consideration to be $1,366,000 and $1,382,000, respectively, which is included in accrued otherexpenses in the consolidated balance sheets. Refer to Note 9 for subsequent accretion charges and June 30, 2019 balance. Fitlosophy is devoted to creating,marketing, and distributing innovative products that inspire people to develop healthy habits by focusing on effective goal-setting through journaling. Productsinclude a complete line of fitness and wellness planning products all sold under the fitlosophy TM , live life fit TM and fitbook TM brands. The acquisition wasaccounted for using the acquisition method and the excess of cost over the fair market value of the net tangible and identifiable intangible assets acquired of$1,390,000 was recorded as goodwill. The Company determined that a triggering event occurred due to the fact that the Company’s total stockholders’ equity wasin excess of the Company's market capitalization. Given this circumstance, the Company bypassed the option to assess qualitative factors to determine theexistence of impairment and proceeded directly to the quantitative goodwill impairment test. Based on the results of its impairment test, the Company recorded animpairment charge of $1,390,000. As of June 30, 2019, March 31, 2019 and June 30, 2018, the Company had no goodwill.

RESULTS OF OPERATIONS

The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively highersales levels and operating profits in the second and third quarters of the Company’s fiscal year, thereby causing significant fluctuations in the quarterly results ofoperations of the Company.

The following table presents the key results of our operations for the three months ended June 30, 2019 and 2018 (in thousands):

Three Months Ended June 30,

2019 2018

Net sales $ 57,537 $ 64,127

Gross Profit 12,106 11,647

Selling, general and administrative expenses 23,047 28,929

Restructuring expenses 2,054 —

Impairment of goodwill — 1,390

Interest expense (income), net 928 262

Other expense (income), net (87) (117)

Income tax expense 412 (341)

Net income (loss) (14,248) (18,476)

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018Net sales for the three months ended June 30, 2019 decreased to $57,537,000 from $64,127,000 in the three months ended June 30, 2018. This decrease was drivenby a $4,211,000 decrease in gift sales and a $2,750,000 decrease in seasonal sales, partially offset by an increase of $371,000 in craft sales that was driven byhigher replenishment of ribbons and buttons. The decrease in gift sales was primarily due to lower replenishment orders of social stationery products, packagingand wholesale products and everyday trim-a-package products. The decrease in seasonal sales was primarily due to the previously announced exit of theCompany’s sports-licensed back-to-school product line.

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Gross profit for the three months ended June 30, 2019 increased to $12,106,000 from $11,647,000 in the three months ended June 30, 2018. The increase in grossprofit was primarily driven by $4,708,000 of lower inventory step-up amortization and $1,227,000 of lower integration costs, which was partially offset by lowersales volume and customer mix of $4,316,000, and higher supply chain costs of $1,185,000.

Selling, general and administrative ("SG&A") expenses of $ 23,047,000 in the three months ended June 30, 2019 decreased from $ 28,929,000 in the three monthsended June 30, 2018 primarily due to lower personnel related costs of $3,868,000. Further decreases in SG&A were driven by lower consulting and technologycosts of $826,000, lower product development costs of $250,000, and lower travel related expenses of $504,000.

Restructuring expenses of $ 2,054,000 were recorded in the three months ended June 30, 2019 associated with the performance improvement initiative, as well asthe Company's strategic business initiative. See further discussion of these restructuring initiatives in Note 3 to the consolidated financial statements. There wereno such restructuring expenses recorded in the three months ended June 30, 2018 .

An impairment of goodwill of $1,390,000 was recorded in the three months ended June 30, 2018 associated with the acquisition of Fitlosophy on June 1, 2018. Seefurther discussion in Notes 2 and 6 to the consolidated financial statements. There was no such impairment recorded in the three months ended June 30, 2019.

Interest expense, net of $ 928,000 in the three months ended June 30, 2019 increased from $ 262,000 in the three months ended June 30, 2018 primarily due to thewrite-off of deferred financing transaction costs of $344,000.

Other income, net of $87,000 in the three months ended June 30, 2019 decreased from $ 117,000 in the three months ended June 30, 2018 primarily due to adecrease in royalty income.

Income tax expense (benefit), as a percentage of income (loss) before income taxes, was (3)% and 2% in the three months ended June 30, 2019 and 2018,respectively. The change was primarily attributable to the impact of a valuation allowance that fully offset the Company’s U.S. net deferred tax assets as of June30, 2019, but not as of June 30, 2018.

The net loss for the three months ended June 30, 2019 was $14,248,000 , or $1.61 per diluted share compared to net loss of $18,476,000 , or $2.03 per diluted sharefor the three months ended June 30, 2018 .

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2019 , the Company had working capital of $ 70,235,000 and stockholders’ equity of $ 175,499,000 . Operating activities used net cash of$17,335,000 during the three months ended June 30, 2019 compared to $15,404,000 in the three months ended June 30, 2018 . Net cash used for operatingactivities during the three months ended June 30, 2019 reflected our working capital requirements which resulted in an increase in inventory of $11,417,000 due tothe normal seasonal inventory build necessary for the fiscal 2020 shipping season, a decrease in accounts receivable of $7,466,000 , a decrease in accounts payableof $3,365,000 and a decrease in accrued expenses and long-term obligations of $ 2,512,000 . Included in net income (loss) for the three months ended June 30,2019 were non-cash charges such as depreciation and amortization of $3,215,000 , amortization of operating lease right-of-use assets of $2,272,000 , amortizationof inventory step-up of $284,000 , amortization of financing transaction costs of $115,000 , write-off of financing transaction costs of $344,000 , provision foraccounts receivable allowances of $659,000 , and share-based compensation of $ 73,000 . Net cash used for operating activities during the three months endedJune 30, 2018 reflected our working capital requirements which resulted in an increase in inventories of $20,312,000 due to the normal seasonal inventory buildnecessary for the fiscal 2019 shipping season, a decrease in accounts receivable of $10,709,000, an increase in accounts payable of $4,995,000, and a decrease inaccrued expenses and long-term obligations of $1,624,000. Included in net income (loss) for the three months ended June 30, 2018 were non-cash charges foramortization of inventory step-up of $5,043,000, depreciation and amortization of $3,297,000, impairment of goodwill of $1,390,000 associated with theacquisition of Fitlosophy, provision for accounts receivable allowances of $733,000, share-based compensation of $471,000 and deferred tax benefit of $218,000.

Our investing activities used net cash of $3,405,000 in the three months ended June 30, 2019 , consisting of capital expenditures of $3,464,000 primarily related toinformation technology and other integration projects. In the three months ended June 30, 2018 , our investing activities used net cash of $8,159,000, consisting ofcapital expenditures of $3,159,000, the purchase of Fitlosophy of $2,500,000 and the final payment of purchase price of $2,500,000 related to the Simplicitybusiness previously acquired.

Our financing activities provided net cash of $15,900,000 in the three months ended June 30, 2019 , consisting primarily of net borrowings of $ 17,522,000 ,partially offset by payments of financing transaction costs of $1,340,000 . In the three months ended June 30, 2018 , our financing activities used net cash of$1,881,000, consisting primarily of payments of cash dividends of $1,824,000.

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The seasonal nature of CSS’ business has historically resulted in lower sales levels and operating losses in the first and fourth quarters and comparatively highersales levels, approximately 64% of the Company's annual net sales in fiscal 2019, and operating profits in the second and third quarters of the Company’s fiscalyear. As payment for seasonal related products is usually not received until just before or just after the holiday selling season in accordance with general industrypractice, working capital has historically increased in the second and third quarters, peaking prior to Christmas and dropping thereafter. As such, the Companyrelies on seasonal borrowings under its ABL Credit Facility, cash on hand and cash generated from its operations to meet its liquidity requirements throughout theyear.

On March 7, 2019, the Company entered into a $125,000,000 asset based senior secured credit facility with three banks (the “ABL Credit Facility”). The Companyused the proceeds from borrowings under the ABL Credit Facility to repay in full the Company’s prior credit facility with two banks (the “Prior Credit Facility”),under which the maximum credit available to the Company at any one time (the “Committed Amount”) was $50,000,000 at the time the Prior Credit Facility wasrepaid and terminated on March 7, 2019. On May 23, 2019, the Company entered into a Second Amendment (the “Amendment”) to the ABL Credit Facility. TheAmendment reduced the maximum amount available under the revolving credit facility from $125,000,000 to $100,000,000. Availability under the Amendment isequal to the lesser of $100,000,000 or a Borrowing Base (as defined in the Amendment), in each case minus (i) revolving loans outstanding and (ii) $15,000,000until the Agent’s receipt of a compliance certificate demonstrating compliance with the amended financial covenants. For information concerning the ABL CreditFacility, see Note 7 to the consolidated financial statements. As of June 30, 2019 , there was $ 43,661,000 outstanding under the Company’s ABL Credit Facility.

Based on its current operating plan, the Company believes its sources of available capital are adequate to meet its ongoing cash needs for at least the next 12months.

The Company had approximately $68,000 of other debt outstanding and approximately $21,000 of finance leases outstanding as of June 30, 2019 .

As of June 30, 2019 , the Company’s letter of credit commitments are as follows (in thousands):

Less than 1

Year1-3

Years4-5

YearsAfter 5Years Total

Letters of credit $ 2,182 — — — $ 2,182

The Company has a reimbursement obligation with respect to stand-by letters of credit that guarantee the funding of workers compensation claims and a leasesecurity deposit. The Company has no financial guarantees with any third parties or related parties other than with respect to certain obligations of its subsidiaries.

In connection with the acquisition of Fitlosophy on June 1, 2018, the Company recorded a contingent earn-out obligation of $1,600,000. See further discussion inNotes 2 and 9 to the consolidated financial statements.

As of June 30, 2019 , the Company is committed to pay guaranteed minimum royalties attributable to sales of certain licensed products. Reference is made tocontractual obligations included in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2019 . There have been no significant changesto such contractual obligations.

In the ordinary course of business, the Company enters into arrangements with vendors to purchase merchandise in advance of expected delivery. These purchaseorders do not contain any significant termination payments or other penalties if cancelled.

LABOR RELATIONS

With the exception of the bargaining unit at the ribbon manufacturing facility in Hagerstown, Maryland, which totaled 81 employees as of June 30, 2019 , CSSemployees are not represented by labor unions. The collective bargaining agreement with the labor union representing the Hagerstown-based production andmaintenance employees remains in effect until December 31, 2020 . Historically, we have been successful in renegotiating expiring agreements without anydisruption of operating activities.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The preparation of thesefinancial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results coulddiffer from those estimates.

The significant accounting policies of the Company are described in the notes to the consolidated financial statements included in the Annual Report on Form 10-Kfor the fiscal year ended March 31, 2019 . Judgments and estimates of uncertainties are

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required in applying the Company’s accounting policies in many areas. Following are some of the areas requiring significant judgments and estimates: revenue; theassessment of the recoverability of other intangible and long-lived assets; the valuation of inventory and accounts receivable and resolution of litigation and otherproceedings. With the exception of leases (see Note 5 to the consolidated financial statements), there have been no material changes to the critical accountingpolicies affecting the application of those accounting policies as noted in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 .

ACCOUNTING PRONOUNCEMENTS

See Note 11 to the consolidated financial statements for information concerning recent accounting pronouncements and the impact of those standards.

FORWARD-LOOKING STATEMENTS

Any statements contained in this report that do not describe historical facts, including estimates and other statements regarding matters that are to occur in thefuture, as well as statements regarding future operations, are neither promises nor guarantees and may constitute “forward-looking statements” as that term isdefined in the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include words such as “may,” “might,” “will,”“should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparableterminology. Any such forward-looking statements contained herein are based on current assumptions, estimates and expectations, but are subject to a number ofknown and unknown risks and significant business, economic and competitive uncertainties that may cause actual results to differ materially from expectations.Numerous factors could cause actual future results to differ materially from current expectations expressed or implied by such forward-looking statements,including the risks and other risk factors detailed in various publicly available documents filed by CSS from time to time with the Securities and ExchangeCommission (SEC), which are available at www.sec.gov, including but not limited to, such information appearing under the caption “Risk Factors” in CSS’Annual Report on Form 10-K filed with the SEC on May 31, 2019. Any forward-looking statements should be considered in light of those risk factors. CSScautions readers not to rely on any such forward-looking statements, which speak only as of the date they are made. CSS disclaims any intent or obligation topublicly update or revise any such forward-looking statements to reflect any change in Company expectations or future events, conditions or circumstances onwhich any such forward-looking statements may be based, or that may affect the likelihood that actual results may differ from those set forth in such forward-looking statements.

ITEM 4. CONTROLS AND PROCEDURES

(a) EvaluationofDisclosureControlsandProcedures. As of the end of the period covered by this report, the Company’s management, with the participationof the Company’s President and Chief Executive Officer and Executive Vice President – Finance and Chief Financial Officer, evaluated the effectivenessof the Company’s disclosure controls and procedures in accordance with Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Basedupon that evaluation, the President and Chief Executive Officer and Executive Vice President – Finance and Chief Financial Officer concluded that theCompany’s disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company inreports that it files under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the President and Chief Executive Officerand Executive Vice President – Finance and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

(a) ChangesinInternalControls. The Company implemented the new lease accounting standard under Accounting Standards Codification Topic 842 as ofApril 1, 2019. In connection with this change, the Company implemented certain modifications to internal controls over financial reporting, including thedocumentation of the policy regarding the new accounting for leases, implementation of processes to address various judgments and assessments necessaryduring the life of a lease, as well as implementing new controls to capture the expanded disclosures required under Accounting Standards CodificationTopic 842.

Except as described above, there was no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) aspromulgated by the Securities and Exchange Commission under the Exchange Act) during the first quarter of fiscal 2020 that has materially affected, or isreasonably likely to materially affect, the Company's internal control over financial reporting.

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CSS INDUSTRIES, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 6. Exhibits

Exhibit 10.1 Amendment No. 2 to Credit Agreement, dated as of May 23, 2019, among CSS Industries, Inc., as borrower, certainsubsidiaries of CSS Industries, Inc., as guarantors, JPMorgan Chase Bank, N.A., as administrative agent and as a lender, andBank of America, N.A. and KeyBank National Association, as a lender (incorporated by reference to Exhibit 99.1 to theRegistrant's Current Report on Form 8-K filed on May 30, 2019) .

Exhibit 10.2 Cooperation Agreement dated as of June 28, 2019, by and among CSS Industries, Inc., Varana Capital LLC, Varana CapitalPartners, LP, Varana Capital Focused, LP, Stone Bay Varana, LLC, Philip R. Broenniman and Ezra M. Gardner (incorporatedby refernce to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on July 3, 2019) .

Exhibit 10.3 CSS Industries, Inc. FY 2020 Management Incentive Program Criteria (filed herewith) .Exhibit 10.4 Grant Instrument for performance-based restricted stock units with adjusted EBITDA performance condition granted May 28,

2019 (filed herewith) .Exhibit 10.5 Grant Instrument for performance-based restricted stock units with net sales performance condition granted May 28, 2019 (filed

herewith) .*Exhibit 31.1 Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange

Act of 1934 .*Exhibit 31.2 Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(a) under the Securities Exchange

Act of 1934 .*Exhibit 32.1 Certification of the Chief Executive Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange

Act of 1934 and 18 U. S. C. Section 1350 .*Exhibit 32.2 Certification of the Chief Financial Officer of CSS Industries, Inc. required by Rule 13a-14(b) under the Securities Exchange

Act of 1934 and 18 U. S. C. Section 1350 .*101.INS XBRL Instance Document.*101.SCH XBRL Schema Document.*101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.*101.LAB XBRL Taxonomy Extension Label Linkbase Document.*101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.*101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

* Filed with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

CSS Industries, Inc. (Registrant)

Date: August 2, 2019 By: /s/ Christopher J. Munyan Christopher J. Munyan President and Chief Executive Officer (principal executive officer)

Date: August 2, 2019 By: /s/ Keith W. Pfeil Keith W. Pfeil Executive Vice President – Finance and Chief Financial Officer (principal financial officer)

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Exhibit 10.3

CSS INDUSTRIES, INC.FY2020 Management Incentive Program Criteria

CSS Industries, Inc.

These FY2020 Management Incentive Program Criteria have been approved by the Human Resources Committee (the “Committee”) of theBoard of Directors of CSS Industries, Inc. (“CSS” or the “Company”) in connection with the CSS Industries, Inc. Management IncentiveProgram (the “Program”). All defined terms used herein and not otherwise defined shall have the respective meanings set forth in theProgram. These FY2020 Management Incentive Program Criteria are not intended in any way to alter, modify or supercede the terms of theProgram, and reference should be made to such Program for a full description of the terms of the Program.

ForCSS’fiscalyearendingMarch31,2020,theseFY2020ManagementIncentiveProgramCriteriashallapplysolelytoeligibleParticipantswhoareemployedbytheCompanyoroneofitsaffiliatesorsubsidiariesandwhoaredesignatedtoparticipatehereunder.

Notwithstanding any provision in this document or otherwise to the contrary, the Committee, in its sole discretion, reserves the right (a) todetermine the eligibility requirements for participation in the Program; (b) to determine whether an employee satisfies the eligibilityrequirements for participation in the Program; (c) to award an Award, if any, to a Participant under the Program; (d) to deny payment of anAward to a Participant otherwise eligible under the terms of the Program or this document; (e) to make an Award, if any, to a Participant in agreater or lesser amount than provided for in the Program or this document; and/or (f) to make an Award, if any, in a manner or on a scheduleother than as provided for in the Program or this document.

Participants

IndividualseligibletobeParticipantsundertheProgramarelimitedtotheCompany’sfull-timeemployeesorfull-timeemployeesoftheCompany’saffiliatesorsubsidiariesasdeterminedfromtimetotime,andatanytime,atthesolediscretionoftheCompany’sPresident; provided, however, that Committee approval shall be required for any individual who is an executive officer of theCompanyorwhohasanannualbasesalaryinexcessof$250,000.Notwithstanding any provision in this document or otherwise to thecontrary, the Committee, in its sole discretion, reserves the right to change or modify the eligibility requirements for participation in theProgram at any time and from time to time, and to determine whether an employee satisfies the eligibility requirements for participation inthe Program. Any new or existing Company employee who becomes eligible for the first time to participate in the Program may, at theCompany President’s sole discretion, be eligible to receive a bonus payment, if any, prorated for the months he or she is eligible to receive anAward under the Program; provided, however, that Committee approval shall be required for any Award under the Program to any newlyeligible Company employee who is an executive officer of the Company or who has an annual base salary in excess of $250,000. TobeeligibletoreceivepaymentofanAwardhereunder,theapplicableParticipantmustbeafull-timeemployeeoftheCompanyorofoneor more of the Company’s affiliates or subsidiaries on the date upon which such Award is actually paid. Notwithstanding theforegoing, in the event that a Participant has remained continuously employed by the Company or by one of the Company’s affiliates orsubsidiaries through the last day of the Company’s fiscal year ending March 31, 2020, but thereafter dies or is unable to care for his or heraffairs because of illness or accident, the Committee, in its sole discretion, may determine to pay an Award for such performance period tothe Participant or to his or her executors, legal representatives, administrators, heirs or assigns or any other person claiming under or throughsuch Participant.

ParticipantPerformanceCriteria

For the Company’s fiscal year ending March 31, 2020, each Participant is eligible to receive an Award calculated using a base amount equalto such Participant’s Target Index Amount (as such term is defined below). Unless otherwise determined by the Committee in its solediscretion at the time of approval thereof, each Award is divided

into three parts: (a) a part entirely contingent upon the achievement by CSS of at least a minimum threshold level, as determined by theCommittee in its sole discretion, of Adjusted EBITDA (as defined herein) (the “Adjusted EBITDA Component”) (b) a part entirelycontingent upon the achievement by CSS of at least a minimum threshold level, as determined by the Committee in its sole discretion, of NetSales (as defined herein) (the “Net Sales Component”), and (c) an individual part determined by the Committee in its sole discretion basedupon, among other things, each Participant’s achievement of his or her specific goals and objectives and/or CSS’ achievement of its corporategoals. For purposes of this Program, “Adjusted EBITDA” is defined as the Company’s consolidated earnings before interest expense, incometaxes, depreciation and amortization (“EBITDA”), each as reported in CSS’ consolidated financial statements for the Company’s fiscal yearending March 31, 2020, as adjusted to reflect any adjustments to EBITDA determined by the Committee, in its sole discretion, at the timethat these FY2020 Management Incentive Program Criteria are approved by the Committee. For purposes of this Program, “Net Sales” isdefined in the same manner used by the Company for purposes of publicly reporting the Company’s net sales (for clarity, as of the approvaldate of this Program, the Company determines “net sales” as amounts invoiced to the Company’s customers less (i) estimated amounts forspecial programs to customers, such as volume incentives, new store allowances, defective goods, and other programs, and (ii) allowances forreturns, damaged goods, shipping errors, and other items).

At the time that it approves these FY2020 Management Incentive Program Criteria, the Committee, in its sole discretion, shall determine: (i)the minimum threshold levels of Adjusted EBITDA and Net Sales that must be achieved in order for there to be payouts under the AdjustedEBITDA Component and the Net Sales Component (each a “Component”), respectively, (ii) the amount to be paid under each Component ifthe threshold level for that Component is attained, and (iii) the amount to be paid under each Component if the threshold for that Componentis exceeded, i.e., the payout amount that corresponds to a specified level of achievement in excess of the threshold amount for eachComponent, including the levels of achievement required in order for the portion of each Award attributable to each Component to be paid atthe target and maximum levels, respectively. If the minimum threshold level is not achieved for a Component contingent upon achievement of such level, no Award for that Componentwill be paid.

Target Index Amount

The “Target Index Amount” for each Participant is determined by multiplying (i) the Participant’s guideline percentage (based upon theParticipant’s position and determined at the sole discretion of the Committee or, if not specifically determined by the Committee, at the solediscretion of the Company’s President) by (ii) the Participant’s base salary effective as of the later of April 1, 2019 or the date upon whichsuch Participant becomes eligible to participate in the Program, as determined at the sole discretion of the Committee or, if not specificallydetermined by the Committee, at the sole discretion of the Company’s President.

Example: a Participant has a base salary of $40,000 effective as of April 1, 2019 and has a guideline percentage of 15%.

Guideline BaseSalary TargetIndexPercentage * as of 4/1/19 = Amount15% * $40,000 = $6,000

A Participant who changes job positions during the Fiscal Year (i.e., moves to a higher or lower job level that is an eligible position under theProgram) will be eligible to receive an Award that is based upon the employee’s annual salary and level in effect as of April 1, 2019, plus orminus any pro rata adjustment that is effective with the change in position.

Receipt of an Award is not a guarantee that the applicable Participant will receive a payout thereunder equal to his or her Target IndexAmount, or that the Participant will receive any payout under such Award.

Allocation of Target Index AmountFor purposes of determining payouts under each Award, the Target Index Amount is allocated as follows:

(a) 50% is entirely contingent upon the Company’s level of achievement under the Adjusted EBITDA Component;

(b) 20% is entirely contingent upon the Company’s level of achievement under the Net Sales Component; and (c) 30% is based on individual performance, determined by the Committee based upon, among other things, each Participant’sachievement of his or her specific goals and objectives and/or CSS’ and/or the Company’s achievement of its respective corporategoals (the “Discretionary Component”).

Adjusted EBITDA Component

The payout, if any, under the Adjusted EBITDA Component will be equal to the payout level, as determined by the Committee at thetime that these FY2020 Management Incentive Program Criteria were approved, that corresponds to the level of Adjusted EBITDAachieved by the Company during its 2020 fiscal year. No portion of the Adjusted EBITDA Component of an Award will be paidunless and until the Committee shall have certified the actual level of Adjusted EBITDA achieved by the Company during its 2020fiscal year in relation to the corresponding payout levels established by the Committee at the time that these FY2020 ManagementIncentive Program Criteria were approved.

Net Sales Component

The payout, if any, under the Net Sales Component will be equal to the payout level, as determined by the Committee at the time thatthese FY2020 Management Incentive Program Criteria were approved, that corresponds to the level of Net Sales achieved by theCompany during its 2020 fiscal year. No portion of the Net Sales Component of an Award will be paid unless and until theCommittee shall have certified the actual level of Net Sales achieved by the Company during its 2020 fiscal year in relation to thecorresponding payout levels established by the Committee at the time that these FY2020 Management Incentive Program Criteriawere approved.

Discretionary Component

The payout, if any, under the Discretionary Component willbedeterminedatthesolediscretionoftheCommittee, and may bebased upon, among other things, each Participant’s achievement of his or her specific goals and objectives and/or CSS’ achievementof its corporate goals. Each Participant will develop with his or her supervisor specific goals and objectives to be achieved by theParticipant during the Company’s fiscal year ending March 31, 2020. Such goals and objectives should be documented in a manneracceptable to CSS’ President, in his or her sole discretion, either at the beginning of the fiscal year, the date upon which theParticipant becomes eligible to participate in the Program, the date upon which such Participant’s position with the Companychanges, or such other date as selected by CSS’ President, in his or her sole discretion. At the end of the Company’s fiscal yearending March 31, 2020, the level of each Participant’s achievement of his or her goals and objectives will be determined by theapplicable Participant’s supervisor, in his or her sole discretion, and submitted to CSS’ President for review and approval, in his orher sole discretion. With respect to Participants who are executive officers of CSS or who have annual base salaries in excess of$250,000, the Committee, in its sole discretion, will review and approve, disapprove or modify the Company’s determination as toeach such Participant’s level of achievement of his or her goals and objectives. The Program is not intended to duplicate theCompany’s merit salary review process, and a Participant’s Discretionary Component ratings may vary from his or her merit salaryreview performance rating.

Although a Participant’s achievement of his or her goals and objectives may exceed 100%, the aggregate amount payable to allCompany Participants attributable to the Discretionary Component shall not exceed the Company’s budgeted bonus amountattributable to the Discretionary Component without the prior approval of the Committee, in its sole discretion.

Exhibit 10.4

Performance-BasedForm(“AdjustedEBITDA”PerformanceGrant)

CSS INDUSTRIES, INC.

2013 EQUITY COMPENSATION PLAN

RESTRICTED STOCK UNIT GRANT

This RESTRICTED STOCK UNIT GRANT, dated as of ___________ __, 20__ (the “ Date of Grant ”), is delivered by CSSIndustries, Inc. (the “ Company ”) to «FirstName» «LastName» (the “ Grantee ”).

RECITALS

WHEREAS, the Human Resources Committee of the Board of Directors of the Company (the “ Committee ”) hasdetermined to grant the Grantee stock units that will be converted to shares of common stock of the Company, par value $0.10 pershare, (the “ Company Stock ”); and

WHEREAS, the Committee has determined that the stock units granted to the Grantee shall be issued under the CSSIndustries, Inc. 2013 Equity Compensation Plan (the “ Plan ”) and the terms and conditions of such stock units shall be memorializedin this Stock Unit Grant (the “ Grant ”).

NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby, agree as follows:

1. Grant of Stock Units . Subject to the terms and conditions set forth in this Grant and the Plan, the Company hereby grantsto the Grantee _____ stock units (collectively, the “ Restricted Stock Units ”). The Restricted Stock Units are contingently awardedand will be earned and distributable if and only to the extent that the performance goal and other conditions set forth in this Grant aremet. Each Restricted Stock Unit shall be a phantom right and shall be equivalent to one share of Company Stock on the applicableRedemption Date (as defined below). The number of Restricted Stock Units set forth above is equal to the target number of shares ofCompany Stock that the Grantee will earn for 100% achievement of the performance goal described in Paragraph 3 below (the “Target Award ”).2. Restricted Stock Unit Account . The Company shall establish and maintain a Restricted Stock Unit account as abookkeeping account on its records (the “ Restricted Stock Unit Account ”) for the Grantee and shall record in such Restricted StockUnit Account the number of Restricted Stock Units granted to the Grantee. The Grantee shall not have any interest in any fund orspecific assets of the Company by reason of this Grant or the Restricted Stock Unit Account established for the Grantee.3. Performance Goal .

(a) Unless a Change of Control (as defined below) occurs prior to the end of the Performance Period (as definedbelow), the distribution of shares of Company Stock attributable to the Restricted Stock Units is contingent based on the averagelevel of attainment of the Performance Measure (as defined below) for each Annual Measurement Period (as defined below) in thePerformance Period, in accordance with the schedule determined by the Committee at the time the Performance Measures andapplicable Performance Goals are established by the Committee and the Grantee satisfying the continuation of

employment with the Employer (as defined in the Plan) requirement described in Paragraph 3(a)(iii) and 4 below.(i) The Committee shall establish, within ninety (90) days following the beginning of each Annual

Measurement Period, the Performance Measure and the Performance Goals with respect to each Performance Measure thatmust be attained for threshold, target and maximum performance for each Annual Measurement Period. The PerformanceMeasure and Performance Goals for each Annual Measurement Period will be provided to the Grantee in a separatenotification.

(ii) As soon as administratively practicable following the end of each Annual Measurement Period in thePerformance Period, the Committee will determine whether and to what extent the Performance Goal has been met for suchAnnual Measurement Period, based on the attainment of the Performance Goal for the Performance Measure established bythe Committee for that Annual Measurement Period. Unless otherwise specified by the Committee at the time thePerformance Goal is determined for an Annual Measurement Period, the percentage of achievement of the Performance Goalfor such Annual Measurement Period shall be interpolated, on a mathematical straight-line basis, to reflect attainedperformance between the ends of the applicable spectrum.

(iii) As soon as administratively practicable following the end of the Performance Period, but not later thanwithin seventy-five (75) days following the end of the Performance Period, the percentage of achievement of thePerformance Goal for each Annual Measurement Period in the Performance Period will be averaged by the Committee todetermine the actual percentage of Restricted Stock Units that are distributable under this Grant, subject to the other termsand conditions of this Grant, including that, except as described in Paragraph 4 below, the Grantee must be Employed by theEmployer (as defined in the Plan) on the Redemption Date in order to earn the Restricted Stock Units. In no event will thecalculation of a positive distribution percentage for any Annual Measurement Period be construed to guarantee that anyshares of Company Stock will be distributed to the Grantee on the Redemption Date. The distribution percentages for eachAnnual Measurement Period are determined solely for purposes of determining the average Annual Measurement Periodpercentage for the Performance Period. The date following the end of the Performance Period on which the Committeecertifies the level of achievement of the actual percentage of Restricted Units that may be distributed based on the averagepercentages for the Performance Period is referred to as the “ Certification Date ”.

(iv) Definitions . For purposes of this Grant, the following terms shall have the following meanings:(1) “ Performance Goal ” means the level of performance that must be attained with respect to a

Performance Measure for an Annual Measurement Period for attainment of the threshold, target, maximum and any other specifieddistribution percentages for such Annual Measurement Period.

(2) “ Performance Measure ” means for any Annual Measurement Period a financial measure based onAdjusted EBITDA (as such term is defined by the Committee for the Annual Measurement Period), as determined by theCommittee.

(3) “ Performance Period ” means the period beginning on [ _____________] and ending[___________]. The Performance Period consists of [_________] “ Annual Measurement Periods. ” The Annual MeasurementPeriods shall begin and end as follows: [_________________].

(b) If a Change of Control occurs prior to the end of the Performance Period, then the Performance Period will end onthe date of the Change of Control, the Performance Goal will be deemed achieved at the Target Level as of the date of the Change ofControl, and the Restricted Stock Units at the Target Level will be earned as of the date of the Change of Control, provided that theGrantee is Employed by the Employer on the date of the Change of Control. For purposes of this Grant, the term “ Change ofControl ” shall mean as such term is defined in the Plan, except that a Change of Control shall

not be deemed to have occurred for purposes of this Grant unless the event constituting the Change of Control constitutes a changein ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, withinthe meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) and its corresponding regulations.

(c) Any Restricted Stock Units that may not be distributable as of the end of the Performance Period will beimmediately forfeited, unless forfeited earlier as provided in this Grant.4. Termination of Employment .

(a) If, at least one year after the beginning of the Performance Period, but prior to the Redemption Date, the Granteeceases to be Employed by the Employer on account of termination by the Employer on account of Disability (as defined in theEmployer’s long-term disability plan) or Retirement (as defined in the Plan), the Grantee will earn, if any, a pro-rata portion of theRestricted Stock Units, based on the level of achievement of the average level of attainment of the Performance Measure for eachAnnual Measurement Period in the Performance Period and if the requirements of this Grant are met as of the last day of thePerformance Period. The prorated portion will be determined as the number of Restricted Stock Units that would have been earned ifthe Participant had remained employed through the Redemption Date, multiplied by a fraction, the numerator of which is the numberof days that the Grantee was employed by the Employer during the Performance Period and the denominator of which is the numberof days in the Performance Period. If the Grantee ceases to be Employed by the Employer on account of termination by theEmployer on account of Disability or Retirement as provided in this subparagraph, the prorated number of Restricted Stock Units, ifany, will be distributed in accordance with Paragraph 5.

(b) If, prior to the Redemption Date, the Grantee ceases to be Employed by the Employer on account of death, theGrantee will earn, if any, a pro-rata portion of the Restricted Stock Units, based on the level of achievement of the average level ofattainment of the Performance Measure for each Annual Measurement Period in the Performance Period and if the requirements ofthis Grant are met as of the last day of the Performance Period. The prorated portion will be determined as the number of RestrictedStock Units that would have been earned if the Participant had remained employed through the Redemption Date, multiplied by afraction, the numerator of which is the number of days that the Grantee was employed by the Employer during the PerformancePeriod and the denominator of which is the number of days in the Performance Period. If the Grantee ceases to be Employed by theEmployer on account of death the prorated number of Restricted Stock Units, if any, will be distributed in accordance withParagraph 5.

(c) Except as provided in subparagraphs (a) or (b) above or subparagraph (d) below, if at any time prior to theRedemption Date, the Grantee’s employment with the Employer is terminated by the Employer on account of any reason or noreason or by the Grantee for any reason or no reason, all of the Restricted Stock Units subject to this Grant shall be immediatelyforfeited as of the date of the Grantee’s termination of employment with the Employer and the Grantee shall not have any rights withrespect to the redemption of any portion of the Restricted Stock Units.

(d) If at any time prior to the date the vested Restricted Stock Units, if any, are redeemed in accordance withParagraph 5 the Grantee ceases to be Employed by the Employer on account of a termination for Cause by the Employer, all of theRestricted Stock Units subject to this Grant shall be immediately forfeited and the Grantee shall not have any rights with respect tothe redemption of any portion of the Restricted Stock Units, irrespective of the level of achievement of the average level ofattainment of the Performance Measure for each Annual Measurement Period in the Performance Period. In addition, if the Granteeengages in conduct that constitutes Cause after the Grantee’s employment terminates, and prior to the date on which the vestedRestricted Stock Units, if any, are redeemed in accordance with Paragraph 5, such vested Restricted Stock Units shall beimmediately forfeited and the Grantee shall not have any rights with respect to the redemption of any portion of such RestrictedStock Units.

5. Redemption . The Restricted Stock Units that become earned and vested pursuant to Paragraphs 3 and 4 above shall beredeemed by the Company on the earlier to occur of (i) the June 1 that immediately follows the last day of the Performance Period,which redemption will occur within thirty (30) days of such June 1 or (ii) the date of the Change of Control. The date on which theRestricted Stock Units are redeemed pursuant to the preceding sentence is referred to as the “ Redemption Date ”. On theRedemption Date, all Restricted Stock Units that have become earned and vested pursuant to Paragraphs 3 and 4 will be redeemedand converted to an equivalent number of shares of Company Stock, and the Grantee shall receive a single sum distribution of suchshares of Company Stock, which shall be issued under the Plan.6. Change of Control . Except as set forth above, the provisions set forth in the Plan applicable to a Change of Control shallapply to the Restricted Stock Units, and, in the event of a Change of Control, the Committee may take such actions as it deemsappropriate pursuant to the Plan and is consistent with the requirements of section 409A of the Code.7. Acknowledgment by Grantee . By accepting this Grant, the Grantee acknowledges that with respect to any right toredemption pursuant to this Grant, the Grantee is and shall be an unsecured general creditor of the Company without any preferenceas against other unsecured general creditors of the Company, and the Grantee hereby covenants for himself or herself, and anyone atany time claiming through or under the Grantee not to claim any such preference, and hereby disclaims and waives any suchpreference which may at any time be at issue, to the fullest extent permitted by applicable law. The Grantee also herebyacknowledges and agrees that the Grantee will indemnify the Employer and hold the Employer free and harmless of, from andagainst any and all losses, damage, obligation or liability, and all costs and expenses (including reasonable attorneys’ fees) incurredin connection therewith, which may be suffered or incurred on account or by reason of any act or omission of the Grantee or theGrantee’s heirs, executors, administrators, personal representatives, successors and assigns in breach or violation of the provisions ofthe Plan or the agreements of the Grantee set forth herein. The Grantee also acknowledges receipt of a copy of the Plan and agrees tobe bound by the terms of the Plan and this Grant. The Grantee further agrees to be bound by the determinations and decisions of theCommittee with respect to this Grant and the Plan and the Grantee’s rights to benefits under this Grant and the Plan, and agrees thatall such determinations and decisions of the Committee shall be binding on the Grantee, his or her beneficiaries and any other personhaving or claiming an interest under this Grant and the Plan on behalf of the Grantee.8. Restrictions on Issuance or Transfer of Shares of Company Stock .

(a) The obligation of the Company to deliver shares of Company Stock upon the redemption of the Restricted StockUnits shall be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registrationor qualification of the shares of Company Stock upon any securities exchange or under any state or federal law, or the consent orapproval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance ofshares of Company Stock, the shares of Company Stock may not be issued in whole or in part unless such listing, registration,qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Theissuance of shares of Company Stock pursuant to this Grant is subject to any applicable taxes and other laws or regulations of theUnited States or of any state having jurisdiction thereof.

(b) As a condition to receive any shares of Company Stock on the Redemption Date, the Grantee agrees to be boundby the Company’s policies regarding the transfer of the shares of Company Stock and understands that there may be certain timesduring the year in which the Grantee will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging,hypothecating or otherwise encumbering the shares of Company Stock.

(c) As soon as administratively practicable following the Redemption Date, a certificate representing the shares ofCompany Stock that are redeemed shall be issued to the Grantee.

9. Grant Subject to Plan Provisions . This Grant is made pursuant to the Plan, the terms of which are incorporated herein byreference, and in all respects shall be interpreted in accordance with the Plan. In the event of any contradiction, distinction ordifference between this Grant and the terms of the Plan, the terms of the Plan will control. Except as otherwise defined in this Grant,capitalized terms used in this Grant shall have the meanings set forth in the Plan. This Grant is subject to the interpretations,regulations and determinations concerning the Plan established from time to time by the Committee in accordance with theprovisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholdingtaxes, (b) the registration, qualification or listing of the shares of Company Stock, (c) changes in capitalization of the Company, and(d) other requirements of applicable law. The Committee shall have the authority to interpret and construe this Grant pursuant to theterms of the Plan, its decisions shall be conclusive as to any questions arising hereunder and the Grantee’s acceptance of this Grant isthe Grantee’s agreement to be bound by the interpretations and decisions of the Committee with respect to this Grant and the Plan.10. No Rights as Stockholder . The Grantee shall not have any rights as a stockholder of the Company, including the right toany cash dividends, or the right to vote, with respect to any Restricted Stock Units.11. No Rights to Continued Employment or Service . This Grant shall not confer upon the Grantee any right to be retained inthe employment or service of the Employer and shall not interfere in any way with the right of the Employer to terminate theGrantee’s employment or service at any time. The right of the Employer to terminate at will the Grantee’s employment or service atany time for any reason is specifically reserved.12. Assignment and Transfers . No Restricted Stock Units awarded to the Grantee under this Grant may be transferred,assigned, pledged, or encumbered by the Grantee and a Restricted Stock Unit shall be redeemed during the lifetime of the Granteeonly for the benefit of the Grantee. Any attempt to transfer, assign, pledge, or encumber the Restricted Stock Unit by the Granteeshall be null, void and without effect. The rights and protections of the Company hereunder shall extend to any successors or assignsof the Company. This Grant may be assigned by the Company without the Grantee’s consent.13. Withholding . The Grantee shall be required to pay to the Employer, or make other arrangements satisfactory to theEmployer to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold with respectto the grant, vesting and redemption of the Restricted Stock Units. Any tax withholding obligation of the Employer with respect tothe redemption of the Restricted Stock Units shall be satisfied by having shares of Company Stock withheld up to an amount thatdoes not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.14. Effect on Other Benefits . The value of shares of Company Stock distributed with respect to the Restricted Stock Unitsshall not be considered eligible earnings for purposes of any other plans maintained by the Company or the Employer. Neither shallsuch value be considered part of the Grantee’s compensation for purposes of determining or calculating other benefits that are basedon compensation, such as life insurance.15. Applicable Law; Entire Agreement . The validity, construction, interpretation and effect of this Grant shall be governed byand construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of lawsprovisions thereof. This Grant, together with the Non-Disclosure and Non-Competition Agreement (or, if applicable, the Non-Disclosure Agreement) provided to the Grantee herewith, the provisions of which are incorporated herein by reference, sets forth theentire agreement of the parties with respect to the subject matter hereof and may not be changed or terminated except by a writingsigned by the Grantee and the Company. This Grant and any undertakings and indemnities delivered hereunder shall be bindingupon and shall inure to the benefit of the Grantee and the Grantee’s heirs, distributees and personal representatives and to theCompany, its successors and assigns.

16. Notice . Any notice to the Company provided for in this instrument shall be addressed to the Company in care of theSecretary at the Company’s corporate headquarters, and any notice to the Grantee shall be addressed to such Grantee at the currentaddress shown on the payroll records of the Employer, or to such other address as the Grantee may designate to the Employer inwriting. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above,registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.17. Section 409A of the Code . As applicable, this Grant is intended to comply with the requirements of section 409A of theCode and shall be interpreted and administered in accordance with section 409A of the Code. In such case, redemptions made underthis Grant may only be made in a manner and upon an event permitted by section 409A of the Code. To the extent that any provisionof this Grant would cause a conflict with the requirements of section 409A of the Code, or would cause the administration of thisGrant to fail to satisfy the requirements of section 409A of the Code, such provision shall be deemed null and void to the extentpermitted by applicable law. In no event shall the Grantee, directly or indirectly, designate the calendar year of redemption.Notwithstanding anything in the Plan or the Grant to the contrary, the Grantee shall be solely responsible for the tax consequences ofthis Grant, and in no event shall the Company nor the Employer have any responsibility or liability if this Grant does not meet anyapplicable requirements of section 409A of the Code.

[ SIGNATUREPAGEFOLLOWS]

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant effective as of the Dateof Grant.

ATTEST CSS INDUSTRIES, INC.

(Corporate Seal)

____________________ By: _________________________

I hereby accept the grant of Restricted Stock Units described in this Restricted Stock Unit Grant. I have read the terms of the Planand this Restricted Stock Unit Grant, and agree to be bound by the terms of the Plan and this Restricted Stock Unit Grant and theinterpretations of the Committee with respect thereto.

ACCEPTED:

By: _________________________«FirstName» «LastName» (Grantee)

Exhibit 10.5

Performance-BasedForm(“NetSales”PerformanceGrant)

CSS INDUSTRIES, INC.

2013 EQUITY COMPENSATION PLAN

RESTRICTED STOCK UNIT GRANT

This RESTRICTED STOCK UNIT GRANT, dated as of ___________ __, 20__ (the “ Date of Grant ”), is delivered by CSSIndustries, Inc. (the “ Company ”) to «FirstName» «LastName» (the “ Grantee ”).

RECITALS

WHEREAS, the Human Resources Committee of the Board of Directors of the Company (the “ Committee ”) hasdetermined to grant the Grantee stock units that will be converted to shares of common stock of the Company, par value $0.10 pershare, (the “ Company Stock ”); and

WHEREAS, the Committee has determined that the stock units granted to the Grantee shall be issued under the CSSIndustries, Inc. 2013 Equity Compensation Plan (the “ Plan ”) and the terms and conditions of such stock units shall be memorializedin this Stock Unit Grant (the “ Grant ”).

NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby, agree as follows:

1. Grant of Stock Units . Subject to the terms and conditions set forth in this Grant and the Plan, the Company hereby grantsto the Grantee _____ stock units (collectively, the “ Restricted Stock Units ”). The Restricted Stock Units are contingently awardedand will be earned and distributable if and only to the extent that the performance goal and other conditions set forth in this Grant aremet. Each Restricted Stock Unit shall be a phantom right and shall be equivalent to one share of Company Stock on the applicableRedemption Date (as defined below). The number of Restricted Stock Units set forth above is equal to the target number of shares ofCompany Stock that the Grantee will earn for 100% achievement of the performance goal described in Paragraph 3 below (the “Target Award ”).2. Restricted Stock Unit Account . The Company shall establish and maintain a Restricted Stock Unit account as abookkeeping account on its records (the “ Restricted Stock Unit Account ”) for the Grantee and shall record in such Restricted StockUnit Account the number of Restricted Stock Units granted to the Grantee. The Grantee shall not have any interest in any fund orspecific assets of the Company by reason of this Grant or the Restricted Stock Unit Account established for the Grantee.3. Performance Goal .

(a) Unless a Change of Control (as defined below) occurs prior to the end of the Performance Period (as definedbelow), the distribution of shares of Company Stock attributable to the Restricted Stock Units is contingent based on the averagelevel of attainment of the Performance Measure (as defined below) for each Annual Measurement Period (as defined below) in thePerformance Period, in accordance with the schedule determined by the Committee at the time the Performance Measures andapplicable Performance Goals are established by the Committee and the Grantee satisfying the continuation of employment with theEmployer (as defined in the Plan) requirement described in Paragraph 3(a)(iii) and 4 below.

(i) The Committee shall establish, within ninety (90) days following the beginning of each AnnualMeasurement Period, the Performance Measure and the Performance Goals with respect to each Performance Measure thatmust be attained for threshold, target and maximum performance for each Annual Measurement Period. The PerformanceMeasure and Performance Goals for each Annual Measurement Period will be provided to the Grantee in a separatenotification.

(ii) As soon as administratively practicable following the end of each Annual Measurement Period in thePerformance Period, the Committee will determine whether and to what extent the Performance Goal has been met for suchAnnual Measurement Period, based on the attainment of the Performance Goal for the Performance Measure established bythe Committee for that Annual Measurement Period. Unless otherwise specified by the Committee at the time thePerformance Goal is determined for an Annual Measurement Period, the percentage of achievement of the Performance Goalfor such Annual Measurement Period shall be interpolated, on a mathematical straight-line basis, to reflect attainedperformance between the ends of the applicable spectrum.

(iii) As soon as administratively practicable following the end of the Performance Period, but not later thanwithin seventy-five (75) days following the end of the Performance Period, the percentage of achievement of thePerformance Goal for each Annual Measurement Period in the Performance Period will be averaged by the Committee todetermine the actual percentage of Restricted Stock Units that are distributable under this Grant, subject to the other termsand conditions of this Grant, including that, except as described in Paragraph 4 below, the Grantee must be Employed by theEmployer (as defined in the Plan) on the Redemption Date in order to earn the Restricted Stock Units. In no event will thecalculation of a positive distribution percentage for any Annual Measurement Period be construed to guarantee that anyshares of Company Stock will be distributed to the Grantee on the Redemption Date. The distribution percentages for eachAnnual Measurement Period are determined solely for purposes of determining the average Annual Measurement Periodpercentage for the Performance Period. The date following the end of the Performance Period on which the Committeecertifies the level of achievement of the actual percentage of Restricted Units that may be distributed based on the averagepercentages for the Performance Period is referred to as the “ Certification Date ”.

(iv) Definitions . For purposes of this Grant, the following terms shall have the following meanings:(1) “ Performance Goal ” means the level of performance that must be attained with respect to a

Performance Measure for an Annual Measurement Period for attainment of the threshold, target, maximum and any other specifieddistribution percentages for such Annual Measurement Period.

(2) “ Performance Measure ” means for any Annual Measurement Period a financial measure based onNet Sales (as such term is defined by the Committee for the Annual Measurement Period), as determined by the Committee.

(3) “ Performance Period ” means the period beginning on [ _____________] and ending[___________]. The Performance Period consists of [_________] “ Annual Measurement Periods. ” The Annual MeasurementPeriods shall begin and end as follows: [_________________].

(b) If a Change of Control occurs prior to the end of the Performance Period, then the Performance Period will end onthe date of the Change of Control, the Performance Goal will be deemed achieved at the Target Level as of the date of the Change ofControl, and the Restricted Stock Units at the Target Level will be earned as of the date of the Change of Control, provided that theGrantee is Employed by the Employer on the date of the Change of Control. For purposes of this Grant, the term “ Change ofControl ” shall mean as such term is defined in the Plan, except that a Change of Control shall not be deemed to have occurred forpurposes of this Grant unless the event constituting the Change of Control constitutes a change in ownership or effective control ofthe Company, or in the ownership of a

substantial portion of the assets of the Company, within the meaning of section 409A of the Internal Revenue Code of 1986, asamended (the “ Code ”) and its corresponding regulations.

(c) Any Restricted Stock Units that may not be distributable as of the end of the Performance Period will beimmediately forfeited, unless forfeited earlier as provided in this Grant.4. Termination of Employment .

(a) If, at least one year after the beginning of the Performance Period, but prior to the Redemption Date, the Granteeceases to be Employed by the Employer on account of termination by the Employer on account of Disability (as defined in theEmployer’s long-term disability plan) or Retirement (as defined in the Plan), the Grantee will earn, if any, a pro-rata portion of theRestricted Stock Units, based on the level of achievement of the average level of attainment of the Performance Measure for eachAnnual Measurement Period in the Performance Period and if the requirements of this Grant are met as of the last day of thePerformance Period. The prorated portion will be determined as the number of Restricted Stock Units that would have been earned ifthe Participant had remained employed through the Redemption Date, multiplied by a fraction, the numerator of which is the numberof days that the Grantee was employed by the Employer during the Performance Period and the denominator of which is the numberof days in the Performance Period. If the Grantee ceases to be Employed by the Employer on account of termination by theEmployer on account of Disability or Retirement as provided in this subparagraph, the prorated number of Restricted Stock Units, ifany, will be distributed in accordance with Paragraph 5.

(b) If, prior to the Redemption Date, the Grantee ceases to be Employed by the Employer on account of death, theGrantee will earn, if any, a pro-rata portion of the Restricted Stock Units, based on the level of achievement of the average level ofattainment of the Performance Measure for each Annual Measurement Period in the Performance Period and if the requirements ofthis Grant are met as of the last day of the Performance Period. The prorated portion will be determined as the number of RestrictedStock Units that would have been earned if the Participant had remained employed through the Redemption Date, multiplied by afraction, the numerator of which is the number of days that the Grantee was employed by the Employer during the PerformancePeriod and the denominator of which is the number of days in the Performance Period. If the Grantee ceases to be Employed by theEmployer on account of death the prorated number of Restricted Stock Units, if any, will be distributed in accordance withParagraph 5.

(c) Except as provided in subparagraphs (a) or (b) above or subparagraph (d) below, if at any time prior to theRedemption Date, the Grantee’s employment with the Employer is terminated by the Employer on account of any reason or noreason or by the Grantee for any reason or no reason, all of the Restricted Stock Units subject to this Grant shall be immediatelyforfeited as of the date of the Grantee’s termination of employment with the Employer and the Grantee shall not have any rights withrespect to the redemption of any portion of the Restricted Stock Units.

(d) If at any time prior to the date the vested Restricted Stock Units, if any, are redeemed in accordance withParagraph 5 the Grantee ceases to be Employed by the Employer on account of a termination for Cause by the Employer, all of theRestricted Stock Units subject to this Grant shall be immediately forfeited and the Grantee shall not have any rights with respect tothe redemption of any portion of the Restricted Stock Units, irrespective of the level of achievement of the average level ofattainment of the Performance Measure for each Annual Measurement Period in the Performance Period. In addition, if the Granteeengages in conduct that constitutes Cause after the Grantee’s employment terminates, and prior to the date on which the vestedRestricted Stock Units, if any, are redeemed in accordance with Paragraph 5, such vested Restricted Stock Units shall beimmediately forfeited and the Grantee shall not have any rights with respect to the redemption of any portion of such RestrictedStock Units.5. Redemption . The Restricted Stock Units that become earned and vested pursuant to Paragraphs 3 and 4 above shall beredeemed by the Company on the earlier to occur of (i) the June 1 that immediately

follows the last day of the Performance Period, which redemption will occur within thirty (30) days of such June 1 or (ii) the date ofthe Change of Control. The date on which the Restricted Stock Units are redeemed pursuant to the preceding sentence is referred toas the “ Redemption Date ”. On the Redemption Date, all Restricted Stock Units that have become earned and vested pursuant toParagraphs 3 and 4 will be redeemed and converted to an equivalent number of shares of Company Stock, and the Grantee shallreceive a single sum distribution of such shares of Company Stock, which shall be issued under the Plan.6. Change of Control . Except as set forth above, the provisions set forth in the Plan applicable to a Change of Control shallapply to the Restricted Stock Units, and, in the event of a Change of Control, the Committee may take such actions as it deemsappropriate pursuant to the Plan and is consistent with the requirements of section 409A of the Code.7. Acknowledgment by Grantee . By accepting this Grant, the Grantee acknowledges that with respect to any right toredemption pursuant to this Grant, the Grantee is and shall be an unsecured general creditor of the Company without any preferenceas against other unsecured general creditors of the Company, and the Grantee hereby covenants for himself or herself, and anyone atany time claiming through or under the Grantee not to claim any such preference, and hereby disclaims and waives any suchpreference which may at any time be at issue, to the fullest extent permitted by applicable law. The Grantee also herebyacknowledges and agrees that the Grantee will indemnify the Employer and hold the Employer free and harmless of, from andagainst any and all losses, damage, obligation or liability, and all costs and expenses (including reasonable attorneys’ fees) incurredin connection therewith, which may be suffered or incurred on account or by reason of any act or omission of the Grantee or theGrantee’s heirs, executors, administrators, personal representatives, successors and assigns in breach or violation of the provisions ofthe Plan or the agreements of the Grantee set forth herein. The Grantee also acknowledges receipt of a copy of the Plan and agrees tobe bound by the terms of the Plan and this Grant. The Grantee further agrees to be bound by the determinations and decisions of theCommittee with respect to this Grant and the Plan and the Grantee’s rights to benefits under this Grant and the Plan, and agrees thatall such determinations and decisions of the Committee shall be binding on the Grantee, his or her beneficiaries and any other personhaving or claiming an interest under this Grant and the Plan on behalf of the Grantee.8. Restrictions on Issuance or Transfer of Shares of Company Stock .

(a) The obligation of the Company to deliver shares of Company Stock upon the redemption of the Restricted StockUnits shall be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registrationor qualification of the shares of Company Stock upon any securities exchange or under any state or federal law, or the consent orapproval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance ofshares of Company Stock, the shares of Company Stock may not be issued in whole or in part unless such listing, registration,qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Theissuance of shares of Company Stock pursuant to this Grant is subject to any applicable taxes and other laws or regulations of theUnited States or of any state having jurisdiction thereof.

(b) As a condition to receive any shares of Company Stock on the Redemption Date, the Grantee agrees to be boundby the Company’s policies regarding the transfer of the shares of Company Stock and understands that there may be certain timesduring the year in which the Grantee will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging,hypothecating or otherwise encumbering the shares of Company Stock.

(c) As soon as administratively practicable following the Redemption Date, a certificate representing the shares ofCompany Stock that are redeemed shall be issued to the Grantee.9. Grant Subject to Plan Provisions . This Grant is made pursuant to the Plan, the terms of which are incorporated herein byreference, and in all respects shall be interpreted in accordance with the Plan. In the event of any contradiction, distinction ordifference between this Grant and the terms of the Plan, the

terms of the Plan will control. Except as otherwise defined in this Grant, capitalized terms used in this Grant shall have the meaningsset forth in the Plan. This Grant is subject to the interpretations, regulations and determinations concerning the Plan established fromtime to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to(a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the shares of CompanyStock, (c) changes in capitalization of the Company, and (d) other requirements of applicable law. The Committee shall have theauthority to interpret and construe this Grant pursuant to the terms of the Plan, its decisions shall be conclusive as to any questionsarising hereunder and the Grantee’s acceptance of this Grant is the Grantee’s agreement to be bound by the interpretations anddecisions of the Committee with respect to this Grant and the Plan.10. No Rights as Stockholder . The Grantee shall not have any rights as a stockholder of the Company, including the right toany cash dividends, or the right to vote, with respect to any Restricted Stock Units.11. No Rights to Continued Employment or Service . This Grant shall not confer upon the Grantee any right to be retained inthe employment or service of the Employer and shall not interfere in any way with the right of the Employer to terminate theGrantee’s employment or service at any time. The right of the Employer to terminate at will the Grantee’s employment or service atany time for any reason is specifically reserved.12. Assignment and Transfers . No Restricted Stock Units awarded to the Grantee under this Grant may be transferred,assigned, pledged, or encumbered by the Grantee and a Restricted Stock Unit shall be redeemed during the lifetime of the Granteeonly for the benefit of the Grantee. Any attempt to transfer, assign, pledge, or encumber the Restricted Stock Unit by the Granteeshall be null, void and without effect. The rights and protections of the Company hereunder shall extend to any successors or assignsof the Company. This Grant may be assigned by the Company without the Grantee’s consent.13. Withholding . The Grantee shall be required to pay to the Employer, or make other arrangements satisfactory to theEmployer to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold with respectto the grant, vesting and redemption of the Restricted Stock Units. Any tax withholding obligation of the Employer with respect tothe redemption of the Restricted Stock Units shall be satisfied by having shares of Company Stock withheld up to an amount thatdoes not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.14. Effect on Other Benefits . The value of shares of Company Stock distributed with respect to the Restricted Stock Unitsshall not be considered eligible earnings for purposes of any other plans maintained by the Company or the Employer. Neither shallsuch value be considered part of the Grantee’s compensation for purposes of determining or calculating other benefits that are basedon compensation, such as life insurance.15. Applicable Law; Entire Agreement . The validity, construction, interpretation and effect of this Grant shall be governed byand construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of lawsprovisions thereof. This Grant, together with the Non-Disclosure and Non-Competition Agreement (or, if applicable, the Non-Disclosure Agreement) provided to the Grantee herewith, the provisions of which are incorporated herein by reference, sets forth theentire agreement of the parties with respect to the subject matter hereof and may not be changed or terminated except by a writingsigned by the Grantee and the Company. This Grant and any undertakings and indemnities delivered hereunder shall be bindingupon and shall inure to the benefit of the Grantee and the Grantee’s heirs, distributees and personal representatives and to theCompany, its successors and assigns.16. Notice . Any notice to the Company provided for in this instrument shall be addressed to the Company in care of theSecretary at the Company’s corporate headquarters, and any notice to the Grantee shall be addressed to such Grantee at the currentaddress shown on the payroll records of the Employer, or to such other address as the Grantee may designate to the Employer inwriting. Any notice shall be

delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited,postage prepaid, in a post office regularly maintained by the United States Postal Service.17. Section 409A of the Code . As applicable, this Grant is intended to comply with the requirements of section 409A of theCode and shall be interpreted and administered in accordance with section 409A of the Code. In such case, redemptions made underthis Grant may only be made in a manner and upon an event permitted by section 409A of the Code. To the extent that any provisionof this Grant would cause a conflict with the requirements of section 409A of the Code, or would cause the administration of thisGrant to fail to satisfy the requirements of section 409A of the Code, such provision shall be deemed null and void to the extentpermitted by applicable law. In no event shall the Grantee, directly or indirectly, designate the calendar year of redemption.Notwithstanding anything in the Plan or the Grant to the contrary, the Grantee shall be solely responsible for the tax consequences ofthis Grant, and in no event shall the Company nor the Employer have any responsibility or liability if this Grant does not meet anyapplicable requirements of section 409A of the Code.

[ SIGNATUREPAGEFOLLOWS]

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Grant effective as of the Dateof Grant.

ATTEST CSS INDUSTRIES, INC.

(Corporate Seal)

____________________ By: _________________________

I hereby accept the grant of Restricted Stock Units described in this Restricted Stock Unit Grant. I have read the terms of the Planand this Restricted Stock Unit Grant, and agree to be bound by the terms of the Plan and this Restricted Stock Unit Grant and theinterpretations of the Committee with respect thereto.

ACCEPTED:

By: _________________________«FirstName» «LastName» (Grantee)

Exhibit 31.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher J. Munyan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSS Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontrol over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financialreporting.

Date: August 2, 2019

/s/ Christopher J. MunyanChristopher J. Munyan,President and Chief Executive Officer(principal executive officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith W. Pfeil, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CSS Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontrol over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financialreporting.

Date: August 2, 2019

/s/ Keith W. PfeilKeith W. PfeilExecutive Vice President – Finance and Chief Financial Officer(principal financial officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Christopher J. Munyan, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350,as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Christopher J. MunyanChristopher J. MunyanPresident and Chief Executive Officer(principal executive officer)

August 2, 2019

Exhibit 32.2

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CSS Industries, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Keith W. Pfeil, Executive Vice President – Finance and Chief Financial Officer, certify, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Keith W. PfeilKeith W. PfeilExecutive Vice President – Finance and Chief Financial Officer(principal financial officer)

August 2, 2019