<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D. C.
                                      20549


                                    FORM 10-Q
                                    ---------



For the Quarter Ended                              Commission file number 1-2661
    June 30, 2005
---------------------


                              CSS INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its Charter)


               Delaware                                        13-1920657
-------------------------------                           ----------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification number)



1845 Walnut Street, Philadelphia, PA                               19103
----------------------------------------                  ----------------------
(Address of principal executive offices)                        (Zip Code)



                                  (215) 569-9900
              ----------------------------------------------------
              (Registrant's telephone number, including area code)



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 the preceding 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 the past 90 days.


              Yes  x                                        No
                  ---                                          ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).


              Yes  x                                        No
                  ---                                          ---

As of July 20, 2005, there were 10,458,565 shares of common stock outstanding
which excludes shares which may still be issued upon exercise of stock options.

                                  Page 1 of 23

<PAGE>




                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

                                      INDEX
                                      -----



PART I - FINANCIAL INFORMATION
------------------------------


                                                                       PAGE NO.
                                                                       --------

Item 1.  Financial Statements (Unaudited)

Consolidated  Statements of Operations  and  Comprehensive  Loss -
Three months ended June 30, 2005 and 2004                                 3

Condensed Consolidated Balance Sheets - June 30, 2005 and
March 31, 2005                                                            4

Consolidated  Statements  of Cash Flows - Three  months ended
June 30, 2005 and 2004                                                    5

Notes to Consolidated Financial Statements                               6-12

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations                                               13-16

Item 3. Quantitive and Qualitative Disclosures About Market Risk         16

Item 4. Controls and Procedures                                          16


PART II - OTHER INFORMATION
---------------------------
Item 1.  Legal Proceedings                                               17

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     17

Item 6.  Exhibits                                                        18

Signatures                                                               19




                                  Page 2 of 23

<PAGE>



                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
          ------------------------------------------------------------
                                   (Unaudited)


<TABLE>
<CAPTION>
(In thousands, except
 per share data)

                                                                                                 Three Months Ended
                                                                                                      June 30,
                                                                                           ------------------------------
                                                                                             2005                   2004
                                                                                             ----                   ----

<S>                                                                                        <C>                    <C>
SALES                                                                                      $57,494                $49,555
                                                                                           -------                -------

COSTS AND EXPENSES
   Cost of sales                                                                            42,765                 36,061
   Selling, general and administrative expenses                                             19,985                 20,175
   Interest expense, net                                                                       442                    417
   Other income, net                                                                            (5)                  (235)
                                                                                           -------                -------

                                                                                            63,187                 56,418
                                                                                           -------                -------

LOSS BEFORE INCOME TAXES                                                                    (5,693)                (6,863)

INCOME TAX BENEFIT                                                                          (2,038)                (2,456)
                                                                                           -------                -------

NET LOSS                                                                                   $(3,655)               $(4,407)
                                                                                           =======                =======

BASIC AND DILUTED NET LOSS PER COMMON SHARE                                                $  (.35)               $  (.37)
                                                                                           =======                =======

WEIGHTED AVERAGE BASIC AND DILUTED SHARES
    OUTSTANDING                                                                             10,415                 11,894
                                                                                           =======                =======

CASH DIVIDENDS PER SHARE OF COMMON STOCK                                                   $   .12                $   .10
                                                                                           =======                =======

------------------------------------------------------------------------------------------------------------------------------

COMPREHENSIVE LOSS
    Net loss                                                                               $(3,655)               $(4,407)
    Foreign currency translation adjustment                                                     (3)                     2
                                                                                           -------                -------
    Comprehensive loss                                                                     $(3,658)               $(4,405)
                                                                                           =======                =======
</TABLE>

                 See notes to consolidated financial statements.

                                  Page 3 of 23

<PAGE>


                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------
                                   (Unaudited)

(In thousands)
<TABLE>
<CAPTION>
                                                                                June 30,               March 31,
                                                                                  2005                   2005
                                                                               ---------               ---------
         ASSETS
         ------

CURRENT ASSETS
<S>                                                                            <C>                     <C>
    Cash and cash equivalents                                                  $   4,916               $  57,333
    Accounts receivable, net                                                      45,404                  37,273
    Inventories                                                                  147,932                 101,867
    Deferred income taxes                                                          7,834                   8,199
    Other current assets                                                          15,540                  13,945
                                                                               ---------               ---------

        Total current assets                                                     221,626                 218,617
                                                                               ---------               ---------

PROPERTY, PLANT AND EQUIPMENT, NET                                                74,704                  75,402
                                                                               ---------               ---------

OTHER ASSETS
    Goodwill                                                                      30,952                  30,952
    Intangible assets, net                                                         4,493                   4,516
    Other                                                                          4,203                   4,419
                                                                               ---------               ---------

        Total other assets                                                        39,648                  39,887
                                                                               ---------               ---------

        Total assets                                                           $ 335,978               $ 333,906
                                                                               =========               =========

   LIABILITIES AND STOCKHOLDERS' EQUITY
   ------------------------------------

CURRENT LIABILITIES
    Notes payable                                                              $   4,400               $       -
    Current portion of long-term debt                                             10,187                  10,442
    Accrued customer programs                                                     11,695                  13,628
    Other current liabilities                                                     47,797                  42,669
                                                                               ---------               ---------

        Total current liabilities                                                 74,079                  66,739
                                                                               ---------               ---------

LONG-TERM DEBT, NET OF CURRENT PORTION                                            40,000                  40,000
                                                                               ---------               ---------

LONG-TERM OBLIGATIONS                                                              3,648                   3,607
                                                                               ---------               ---------

DEFERRED INCOME TAXES                                                              7,141                   7,071
                                                                               ---------               ---------

STOCKHOLDERS' EQUITY                                                             211,110                 216,489
                                                                               ---------               ---------

        Total liabilities and stockholders' equity                             $ 335,978               $ 333,906
                                                                               =========               =========
</TABLE>

                 See notes to consolidated financial statements.

                                  Page 4 of 23

<PAGE>

                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                   (Unaudited)

(In thousands)
<TABLE>
<CAPTION>
                                                                                             Three Months Ended
                                                                                                  June 30,
                                                                                        -------------------------------
                                                                                          2005                   2004
                                                                                        --------               --------
 Cash flows from operating activities:
<S>                                                                                     <C>                    <C>
    Net loss                                                                            $ (3,655)              $ (4,407)
                                                                                        --------               --------
    Adjustments to reconcile net loss to net cash used for
         operating activities:
         Depreciation and amortization                                                     3,467                  3,447
         Provision for doubtful accounts                                                    (166)                   114
         Deferred tax provision                                                              435                    252
         Loss on sale of assets                                                                1                      6
         Compensation expense related to stock options                                         -                    165
         Changes in assets and liabilities:
             (Increase) decrease in accounts receivable                                   (7,965)                 2,729
             Increase in inventory                                                       (46,065)               (51,812)
             Increase in other assets                                                     (1,414)                (2,076)
             Increase in other current liabilities                                         6,363                  6,542
             Decrease in accrued taxes                                                    (2,666)                (2,774)
                                                                                        --------               --------

                Total adjustments                                                        (48,010)               (44,804)
                                                                                        --------               --------

             Net cash (used for) operating activities                                    (51,665)               (49,211)
                                                                                        --------               --------

Cash flows from investing activities:
    Purchase of property, plant and equipment                                             (2,865)                (1,889)
    Proceeds from sale of assets                                                             155                      2
                                                                                        --------               --------

             Net cash (used for) investing activities                                     (2,710)                (1,887)
                                                                                        --------               --------

Cash flows from financing activities:
     Payments on long-term obligations                                                      (256)                  (111)
     Borrowings on notes payable                                                          10,335                      -
     Repayments on notes payable                                                          (5,935)                     -
     Dividends paid                                                                       (1,255)                (1,190)
     Purchase of treasury stock                                                           (2,452)                (2,466)
     Proceeds from exercise of stock options                                               1,524                  3,390
                                                                                        --------               --------

             Net cash provided by (used for) financing activities                          1,961                   (377)
                                                                                        --------               --------

Effect of exchange rate changes on cash                                                       (3)                     2
                                                                                        --------               --------
Net (decrease) in cash and cash equivalents                                              (52,417)               (51,473)

Cash and cash equivalents at beginning of period                                          57,333                 93,191
                                                                                        --------               --------
Cash and cash equivalents at end of period                                              $  4,916               $ 41,718
                                                                                        ========               ========
</TABLE>

                 See notes to consolidated financial statements.

                                  Page 5 of 23

<PAGE>


                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                                  June 30, 2005
                                  -------------
                                   (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
     herein pursuant to the rules and regulations of the Securities and Exchange
     Commission. The Company has condensed or omitted certain information and
     footnote disclosures normally included in consolidated financial statements
     prepared in accordance with accounting principles generally accepted in the
     United States pursuant 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 financial statements should be read in conjunction with
     the financial statements and notes thereto included in the latest Annual
     Report on Form 10-K. The results of operations for the interim periods are
     not necessarily indicative of the results for the full year.

     Principles of Consolidation -
     ---------------------------

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

     Nature of Business -
     ------------------

     CSS is a consumer products company primarily engaged in the design,
     manufacture and sale to mass market retailers of seasonal, social
     expression products, including gift wrap, gift bags, boxed greeting cards,
     gift tags, tissue paper, paper and vinyl decorations, classroom exchange
     Valentines, decorative ribbons and bows, Halloween masks, costumes,
     make-ups and novelties, Easter egg dyes and novelties and educational
     products. The seasonal nature of CSS' business results in low sales and
     operating losses in the first and fourth quarters and high shipment levels
     and operating profits in the second and third quarters of the Company's
     fiscal year which ends March 31, thereby causing significant fluctuations
     in the quarterly results of operations of the Company.

     Reclassification -
     ----------------

     Certain prior period amounts have been reclassified to conform with the
     current period presentation.

     Foreign Currency Translation and Transactions -
     ---------------------------------------------

     Translation adjustments are charged or credited to a separate component of
     stockholders' equity. Gains and losses on foreign currency transactions are
     not material and are included in other income, net in the consolidated
     statements of operations.

                                  Page 6 of 23

<PAGE>


     Use of Estimates -
     ----------------

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States requires management to
     make estimates and assumptions that affect the reported amounts of assets
     and liabilities and disclosure of contingent assets and liabilities at the
     date of the financial statements and the reported amounts of revenues and
     expenses during the reporting period. Judgments and assessments of
     uncertainties are required in applying the Company's accounting policies in
     many areas. Such estimates pertain to the valuation of inventory and
     accounts receivable, the assessment of the recoverability of goodwill and
     other intangible assets, income tax accounting and resolution of litigation
     and other proceedings. Actual results could differ from those estimates.

     Inventories -
     -----------

     The Company records inventory at the date of taking title which generally
     occurs upon receipt or prior to receipt with regard to in-transit inventory
     of overseas product. The Company adjusts unsaleable and slow-moving
     inventory to its net realizable value. Substantially all of the Company's
     inventories are stated at the lower of first-in, first-out (FIFO) cost or
     market. The remaining portion of the inventory is valued at the lower of
     last-in, first-out (LIFO) cost or market. Inventories consisted of the
     following (in thousands):

                                                      June 30,     March 31,
                                                        2005         2005
                                                     ---------     ---------

         Raw material............................    $  32,077     $  27,089
         Work-in-process.........................       34,964        29,357
         Finished goods..........................       80,891        45,421
                                                     ---------     ---------
                                                     $ 147,932     $ 101,867
                                                     =========     =========

     Revenue Recognition -
     -------------------

     The Company recognizes revenue from product sales when the goods are
     shipped and title and risk of loss passes to the customer. Provisions for
     returns, allowances, rebates to customers and other adjustments are
     provided in the same period that the related sales are recorded.

     Stock-Based Compensation -
     ------------------------

     The Company applies Accounting Principles Board ("APB") Opinion No. 25,
     "Accounting for Stock Issued to Employees," and related interpretations in
     accounting for its stock option plans. Accordingly, compensation expense is
     generally not recognized for its stock-based compensation plans. Had
     compensation expense for the Company's stock option plans been determined
     based upon the fair value at the grant date for awards under these plans
     consistent with the methodology prescribed under Statement of Financial
     Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
     Compensation," the Company's net loss and net loss per share would have
     been increased as follows:

                                  Page 7 of 23

<PAGE>


<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                       June 30,
                                                                              -------------------------
       (in thousands, except per share data)                                    2005              2004
                                                                                ----              ----

<S>                                                                           <C>               <C>
       Net loss, as reported....................................              $(3,655)          $(4,407)
       Add: Total stock-based employee compensation
           expense included in the determination of net
           loss, as reported....................................                    -               165
       Deduct: Total stock-based employee
          compensation expense determined under fair
          value based method for all awards, net of related
          tax effects...........................................                 (671)             (755)
                                                                              -------           -------
       Pro forma net loss.......................................              $(4,326)          $(4,997)
                                                                              =======           =======

       Loss per share:
       Basic and diluted - as reported..........................                $(.35)            $(.37)
       Basic and diluted - pro forma............................                $(.42)            $(.42)
</TABLE>

     Net Loss Per Common Share -
     -------------------------

     The following table sets forth the computation of basic and diluted net
     loss per common share for the three months ended June 30, 2005 and 2004 (in
     thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                       June 30,
                                                                                ------------------------
                                                                                 2005             2004
                                                                                 ----             ----
      Numerator:
<S>                                                                             <C>              <C>
        Net loss......................................................          $(3,655)         $(4,407)
                                                                                =======          =======

      Denominator:
        Weighted average shares outstanding for basic
          loss per common share.......................................           10,415           11,894
        Effect of dilutive stock options..............................                -                -
                                                                                -------          -------
        Adjusted weighted average shares outstanding for
         diluted loss per common share................................           10,415           11,894
                                                                                =======          =======

      Basic and diluted loss per common share.........................            $(.35)           $(.37)
</TABLE>

     The effect of dilutive stock options is not reflected as they are
     anti-dilutive.

     Statements of Cash Flows -
     ------------------------

     For purposes of the consolidated statements of cash flows, the Company
     considers all holdings of highly liquid debt instruments with a purchased
     maturity of less than three months to be cash equivalents.

                                  Page 8 of 23

<PAGE>


(2)  DERIVATIVE FINANCIAL INSTRUMENTS:
     --------------------------------

     The Company enters into foreign currency forward contracts in order to
     reduce the impact of certain foreign currency fluctuations. Firmly
     committed transactions and the related receivables and payables may be
     hedged with foreign currency forward contracts. Gains and losses arising
     from foreign currency forward contracts are recognized in income or expense
     as offsets of gains and losses resulting from the underlying hedged
     transactions. As of June 30, 2005, the notional amount of open foreign
     currency forward contracts was $10,234,000 and the related loss was
     $188,000.

(3)  BUSINESS RESTRUCTURING:
     ----------------------

     On May 5, 2004, a subsidiary of the Company announced a restructuring of
     its business and established a restructuring reserve related to its
     administrative office located in Minneapolis, Minnesota. This restructuring
     was established in order to gain efficiencies within the business unit and
     was substantially completed by December 2004. As part of this restructuring
     plan, the Company accrued $377,000 for termination costs and costs related
     to the restructuring of the administrative office. In fiscal 2005, the
     Company increased the restructuring reserve related to the ratable
     recognition of retention bonuses for employees providing service until
     their termination date in the amount of $255,000. Additionally, during
     fiscal 2005, there was an increase in the restructuring reserve related to
     unutilized office space in the amount of $177,000. As of the end of fiscal
     2005, the Company communicated termination of employment to 33 employees.
     Payments for termination costs of $83,000 and payments for facility exit
     costs of $111,000 were made in the quarter ended June 30, 2005. As of June
     30, 2005, the remaining liability of $111,000 was classified as a current
     liability in the accompanying condensed consolidated balance sheet and will
     be paid during the remainder of fiscal 2006.

     Selected information relating to the Minneapolis restructuring reserve
     follows (in thousands):
<TABLE>
<CAPTION>
                                                                              Contractual
                                                           Termination      Obligations and
                                                             Costs         Facility Exit Costs     Total
                                                           -----------     -------------------     -----

<S>                                                          <C>               <C>               <C>
       Restructuring reserve as of March 31, 2005...........   $ 83              $ 222             $ 305
       Cash paid - fiscal 2006..............................    (83)              (111)             (194)
                                                               ----              -----             -----
       Restructuring reserve as of June 30, 2005............   $  -              $ 111             $ 111
                                                               ====              =====             =====
</TABLE>

     On November 1, 2004, a subsidiary of the Company announced the anticipated
     closure of its plant located in Anniston, Alabama. As of the end of fiscal
     2005, the Company communicated termination of employment to 89 employees.
     Manufacturing operations will be moved to other locations of the Company
     and this project was substantially completed by March 2005. As part of this
     restructuring plan, the Company accrued $206,000 for severance costs.
     During the fourth quarter of fiscal 2005, the Company increased the
     restructuring reserve related to medical benefits for employees providing
     service until their termination date in the amount of $23,000.
     Additionally, during the fourth quarter of fiscal 2005, there was an
     increase in the restructuring reserve related to facility exit costs in the
     amount of $1,101,000 of which $669,000 was paid as of March 31, 2005 and of
     which $367,000 related to the write-down of a building in the fourth
     quarter of fiscal 2005. Payments of $163,000, primarily for severance, were
     made during the first quarter of fiscal 2006. As of June 30, 2005, the
     remaining liability of $131,000 was classified as a current liability in
     the accompanying condensed consolidated balance sheet and will be paid
     during the remainder of fiscal 2006.

                                  Page 9 of 23

<PAGE>



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

<TABLE>
<CAPTION>
                                                                 Termination
                                                                    Costs          Facility Exit Costs      Total
                                                                 -----------       -------------------      -----
<S>                                                             <C>                 <C>                 <C>
     Restructuring reserve as of March 31, 2005..............        $ 229                $ 65               $ 294
     Cash paid - fiscal 2006   ..............................          (98)                (65)               (163)
                                                                     -----                ----               -----
     Restructuring reserve as of June 30, 2005...............        $ 131                $  -               $ 131
                                                                     =====                ====               =====
</TABLE>

(4)  GOODWILL AND INTANGIBLES:
     ------------------------

     Effective April 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
     Other Intangible Assets." Upon adoption of SFAS No. 142, amortization of
     goodwill and indefinite-lived intangible assets ceased. The Company
     determined that its tradenames are indefinite-lived assets.

     The Company performs the required annual impairment test of the carrying
     amount of goodwill and indefinite-lived intangible assets in the fourth
     quarter of its fiscal year.

     Included in intangibles assets, net in the accompanying condensed
     consolidated balance sheets are the following acquired intangible assets
     (in thousands):
<TABLE>
<CAPTION>
                                                                   June 30,      March 31,
                                                                     2005          2005
                                                                   -------       --------
<S>                                                                 <C>          <C>
             Tradenames.......................................      $4,290         $4,290
             Non-compete and other............................         203            226
                                                                    ------         ------
                                                                    $4,493         $4,516
                                                                    ======         ======
</TABLE>

     Amortization expense related to intangible assets was $23,000 and $37,000
     for the three months ended June 30, 2005 and 2004, respectively. The
     aggregate estimated amortization expense for intangible assets remaining as
     of June 30, 2005 is as follows:

                     Fiscal 2006                   $ 71,000
                     Fiscal 2007                     94,000
                     Fiscal 2008                     38,000
                     Fiscal 2009                          -
                     Fiscal 2010                          -
                                                   --------
                     Total                         $203,000
                                                   ========

                                  Page 10 of 23

<PAGE>


(5)  COMMITMENTS AND CONTINGENCIES:
     -----------------------------

     On May 25, 2005, the Company's Cleo subsidiary filed a complaint in United
     States Court of International Trade appealing the U.S. International Trade
     Commission's ("ITC") final determination that, in part, resulted in the
     imposition of duties on certain tissue paper products imported from China
     on or after September 21, 2004. (The proceedings that led to the imposition
     of these duties are further described in Item 3 of Part I of the Company's
     Annual Report on Form 10-K for the fiscal year ended March 31, 2005.) In
     the fiscal year ended March 31, 2005, the Company recognized an expense of
     approximately $2,300,000 for these duties, reflecting Cleo's estimated
     liability for duties relating to subject tissue paper products that Cleo
     imported from China during the 2005 fiscal year, based on the applicable
     deposit rates established by the U.S. Commerce Department.

     The amount of Cleo's actual liability for duties pertaining to the fiscal
     year ended March 31, 2005, which liability is capped at the deposit rates
     in effect with respect to the period of time that the subject products were
     imported by Cleo, will be determined at the time of "liquidation" of the
     applicable entries by the United States Bureau of Customs & Border
     Protection. Liquidation of the applicable entries has been enjoined pending
     the decision of the United States Court of International Trade in Cleo's
     appeal of the ITC's final determination.

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

(6)  PENSION AND OTHER POSTRETIREMENT OBLIGATIONS:
     --------------------------------------------

     The Company's Cleo subsidiary administers a defined benefit pension plan
     covering substantially all salaried employees of Crystal Creative Products,
     Inc. ("Crystal") at the time of Cleo's acquisition of Crystal in October
     2002. The plan was frozen on November 2, 2002 and terminated September 30,
     2003. After the plan was frozen, benefits were provided to eligible
     employees by participation in an existing defined contribution profit
     sharing and 401(k) plan. In the first quarter of fiscal 2006, the Company
     received the Internal Revenue Service approval letter on termination of the
     plan. The Company is currently assessing its investment options. The
     Company's Cleo subsidiary also administers a postretirement medical plan
     covering certain persons who were former employees of Crystal at the time
     of Cleo's acquisition of Crystal. The plan was frozen to new participants
     prior to Crystal's acquisition by the Company.

     The components of net pension and other post-retirement benefit cost are as
follows (in thousands):
<TABLE>
<CAPTION>
                                                                             Three Months Ended June 30,
                                                                    ------------------------------------------
                                                                    2005          2004         2005       2004
                                                                    ----          ----         ----       ----
                                                                     Pension Benefits          Other Benefits
                                                                    ------------------         ---------------
<S>                                                                  <C>          <C>           <C>        <C>
           Interest cost...........................................  $16          $ 16          $14        $15
           Expected return on plan assets..........................  (16)          (37)           -          -
                                                                     ---          ----          ---        ---
           Benefit cost (credit)...................................  $ -          $(21)         $14        $15
                                                                     ===          ====          ===        ===
</TABLE>

                                  Page 11 of 23

<PAGE>



(7)  ACCOUNTING PRONOUNCEMENTS:
     -------------------------

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs," which
     amends the guidance in Accounting Research Bulletin ("ARB") No. 43, Chapter
     4, "Inventory Pricing" to clarify the accounting for abnormal amounts of
     idle facility expense, freight, handling costs and spoilage. SFAS No. 151
     now requires that these costs be expensed as current period charges. In
     addition, this statement requires that the allocation of fixed production
     overhead to the costs of conversion be based on the normal capacity of the
     production facilities. The provisions of this statement are effective for
     inventory costs incurred during fiscal years beginning after June 15, 2005.
     The Company has not yet completed its assessment of the impact of this
     statement on its financial position or results of operations.

     In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment," a
     revision to SFAS 123. SFAS No. 123R supercedes APB Opinion No. 25. SFAS No.
     123R establishes standards for the accounting for transactions in which an
     entity exchanges its equity instruments for goods or services. This
     statement requires that the cost of share-based payment transactions be
     recorded as an expense at their fair value determined by applying a fair
     value measurement method. The Company had expected to adopt this standard
     as required in the second quarter of fiscal 2006 (quarter ending September
     2005), however the Securities and Exchange Commission in April 2005 issued
     a rule that allows companies to delay adoption, and as a result, the
     Company expects to adopt this standard in the first quarter of fiscal 2007
     (quarter ending June 2006). The statement applies to all awards granted
     after the effective date and to awards modified, repurchased, or canceled
     after that date. As the amount of expense to be recognized in future
     periods will depend on the levels of future grants, the effect of adoption
     of this statement cannot be predicted with certainty. However, had the
     Company adopted this statement in prior periods, the effect of adoption on
     net loss and loss per share would have approximated the amounts shown in
     the pro forma information included in Note 1, Summary of Significant
     Accounting Policies.

     In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
     Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No.
     3." SFAS No. 154 requires retrospective application to prior periods'
     financial statements for changes in accounting principle, unless it is
     impracticable to determine either the period-specific effects or the
     cumulative effect of the change. This statement also requires that
     retrospective application of a change in accounting principle be limited to
     the direct effects of the change. Indirect effects of a change in
     accounting principle, such as a change in non-discretionary profit-sharing
     payments resulting from an accounting change, should be recognized in the
     period of the accounting change. SFAS No. 154 also requires that a change
     in depreciation, amortization, or depletion method for long-lived
     non-financial assets be accounted for as a change in accounting estimate
     affected by a change in accounting principle. This statement is effective
     for accounting changes and corrections of errors made in fiscal years
     beginning after December 15, 2005. Early adoption is permitted for
     accounting changes and corrections of errors made in fiscal years beginning
     after the date this statement was issued. The Company is required to adopt
     the provision of this statement, as applicable, beginning in fiscal 2007.

     In June 2005, the FASB's Emerging Issues Task Force reached a consensus on
     Issue No. 05-6, "Determining the Amortization Period for Leasehold
     Improvements" ("EITF 05-6"). The guidance requires that leasehold
     improvements acquired in a business combination or purchased subsequent to
     the inception of a lease be amortized over the lesser of the useful life of
     the assets or a term that includes renewals that are reasonably assured at
     the date of the business combination or purchase. The guidance is effective
     for periods beginning after June 29, 2005. The Company does not believe
     that the adoption of EITF 05-6 will have a significant effect on its
     financial position or results of operations.

                                  Page 12 of 23

<PAGE>


                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            ---------------------------------------------------------

                       CONDITION AND RESULTS OF OPERATIONS
                       -----------------------------------


STRATEGIC OVERVIEW
------------------

The Company's business is roughly 75% seasonal (Christmas, Valentines, Easter
and Halloween products), with the remainder being everyday product sales.
Seasonal products are sold primarily to mass market retailers and the Company
typically has relatively high market shares in many of these categories. Most of
these markets have shown little or no growth in recent years and there continues
to be significant cost pressure in this area as our competitors source certain
products overseas and our customers increase direct sourcing from overseas
factories. Increasing customer concentration and bargaining power also
contribute to price pressure.

The Company is responding to these pressures in a number of ways. First, we have
increased our investment in product and packaging design and product knowledge
to assure we can continue to provide unique added value to our customers.
Secondly, we substantially expanded an office and showroom in the Far East to
better meet our customers' buying needs and to be able to provide alternatively
sourced products at competitive prices. Lastly, we increased our focus on
efficiency and productivity in our North American production and distribution
facilities to assure our competitiveness domestically.

Our everyday product lines, principally craft, floral and packaging products,
have high inherent growth potential due to higher market growth rates,
particularly in craft, and to our relatively low current market shares. We have
established project teams to pursue top line sales growth in these and other
areas.

Historically, significant growth at CSS has come through carefully chosen and
executed acquisitions. Management anticipates that it will continue this pursuit
in the future, as well.

LITIGATION
----------

On May 25, 2005, the Company's Cleo subsidiary filed a complaint in United
States Court of International Trade appealing the U.S. International Trade
Commission's ("ITC") final determination that, in part, resulted in the
imposition of duties on certain tissue paper products imported from China on or
after September 21, 2004. (The proceedings that led to the imposition of these
duties are further described in Item 3 of Part I of the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 2005.) In the fiscal year ended
March 31, 2005, the Company recognized an expense of approximately $2,300,000
for these duties, reflecting Cleo's estimated liability for duties relating to
subject tissue paper products that Cleo imported from China during the 2005
fiscal year, based on the applicable deposit rates established by the U.S.
Commerce Department.

The amount of Cleo's actual liability for duties pertaining to the fiscal year
ended March 31, 2005, which liability is capped at the deposit rates in effect
with respect to the period of time that the subject products were imported by
Cleo, will be determined at the time of "liquidation" of the applicable entries
by United States Bureau of Customs & Border Protection. Liquidation of the
applicable entries has been enjoined pending the decision of the United States
Court of International Trade in Cleo's appeal of the ITC's final determination.

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

                                  Page 13 of 23

<PAGE>

CRITICAL ACCOUNTING POLICIES
----------------------------

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

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-K. Judgments and estimates of uncertainties are required in applying the
Company's accounting policies in many areas. Following are some of the areas
requiring significant judgments and estimates: useful lives of plant and
equipment; cash flow and valuation assumptions in performing asset impairment
tests of long-lived assets and goodwill; valuation reserves for inventory and
accounts receivable; income tax accounting and resolution of litigation and
proceedings regarding the duties on tissue products.

RESULTS OF OPERATIONS
---------------------

Seasonality
-----------

The seasonal nature of CSS' business results in low sales and operating losses
in the first and fourth quarters and high shipment levels and operating profits
in the second and third quarters of the Company's fiscal year which ends March
31, thereby causing significant fluctuations in the quarterly results of
operations of the Company.

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
-----------------------------------------------------------------------------

Sales for the three months ended June 30, 2005 increased 16% to $57,494,000 from
$49,555,000 in 2004 primarily due to the earlier timing of shipments of ribbons
and bows and Halloween products compared to the prior year.

Cost of sales, as a percentage of sales, was 74% in 2005 and 73% in 2004. The
increase in cost of sales is primarily due to the mix of tissue, ribbon and bow
products shipped, partially offset by improved margins on Halloween and everyday
products.

Selling, general and administrative ("SG&A") expenses, as a percentage of sales,
were 35% in 2005 and 41% in 2004. The decrease in SG&A expenses, as a percentage
of sales, is largely the result of the increase in sales compared to the prior
year quarter. On an absolute basis, SG&A declined 1% due to the absence of costs
related to the Minneapolis restructuring plan established in the prior year.

Interest expense, net was $442,000 in 2005 and $417,000 in 2004. The increase in
interest expense was primarily due to higher borrowing levels as a result of the
repurchase of $60,892,000 of the Company's stock in March 2005 and higher
interest rates compared to the prior year.

Income taxes, as a percentage of income before taxes, were 36% in 2005 and 2004.

The net loss for the three months ended June 30, 2005 was $3,655,000, or $.35
per diluted share compared to $4,407,000, or $.37 per diluted share in 2004. The
decrease in net loss is primarily attributable to the impact of higher sales
volume. The disproportionate percentage decrease in loss per share compared to
the percentage decrease in net loss is attributable to the impact of the
repurchase of 1,739,760 shares of the Company's stock in March 2005 and an
additional 73,700 shares in the three months ended June 30, 2005.

                                  Page 14 of 23

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At June 30, 2005, the Company had working capital of $147,547,000 and
stockholders' equity of $211,110,000. The increase in inventories and other
current liabilities and the decrease in cash from March 31, 2005 reflected the
normal seasonal inventory build necessary for the fiscal 2006 shipping season.
The decrease in stockholders' equity was primarily attributable to the first
quarter net loss, treasury share repurchases and payment of the quarterly
dividend, partially offset by capital contributed upon exercise of employee
stock options.

The Company relies primarily on cash generated from operations and seasonal
borrowings to meet its liquidity requirements. Historically, most revenues are
seasonal with approximately 80% of sales generated in the second and third
quarters. Payment for Christmas related products is usually not received until
after the holiday selling season in accordance with general industry practice.
As a result, short-term borrowing needs increase through December and peak prior
to Christmas. Seasonal borrowings are made under a $50,000,000 revolving credit
facility with five banks and a receivable purchase agreement in an amount up to
$100,000,000 with an issuer of receivables-backed commercial paper. In addition,
the Company has outstanding $50,000,000 of 4.48% senior notes due ratably in
annual installments over five years beginning in December 2005. These financing
facilities are available to fund the Company's seasonal borrowing needs and to
provide the Company with sources of capital for general corporate purposes,
including acquisitions as permitted under the revolving credit facility. At June
30, 2005, there was $50,000,000 of long-term borrowings outstanding related to
the senior notes and $4,400,000 outstanding under the Company's short-term
credit facilities. 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 12 months.

As of June 30, 2005, the Company's contractual obligations and commitments are
as follows (in thousands):
<TABLE>
<CAPTION>

                                            Less than 1          1-3            4-5         After 5
                                               Year             Years          Years         Years            Total
                                            -----------        -------        -------       -------          -------
<S>                                           <C>              <C>            <C>            <C>               <C>
   Short-term debt....................        $ 4,400          $     -        $     -        $    -          $ 4,400
   Capital lease obligations..........            140                -              -             -              140
   Operating leases...................          7,193           11,206          8,069         2,148           28,616
   Long-term debt.....................         10,000           20,000         20,000             -           50,000
   Other long-term obligations........             47              653            140         2,855            3,695
                                              -------          -------        -------        ------          -------
                                              $21,780          $31,859        $28,209        $5,003          $86,851
                                              =======          =======        =======        ======          =======
</TABLE>

Other long-term obligations consist primarily of medical postretirement
liabilities and deferred compensation arrangements. Future timing of payments
for other long-term obligations represent management's best estimate.

As of June 30, 2005, the Company's other commitments are as follows (in
thousands):
<TABLE>
<CAPTION>
                                             Less than 1     1-3          4-5        After 5
                                                Year        Years        Years        Years         Total
                                             -----------    -----        -----       -------       ------
<S>                                            <C>          <C>          <C>         <C>           <C>
   Letters of credit..................         $8,982       $   -        $   -       $     -       $8,982
</TABLE>

The Company has letters of credit that guarantee funding of workers compensation
claims as well as obligations to certain vendors. The Company has no financial
guarantees or other arrangements with any third parties or related parties other
than its subsidiaries.

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

                                  Page 15 of 23

<PAGE>

LABOR RELATIONS
---------------

With the exception of the bargaining units at the gift wrap facility in Memphis,
Tennessee and the ribbon manufacturing facility in Hagerstown, Maryland, which
totaled approximately 900 employees as of June 30, 2005, CSS employees are not
represented by labor unions. Because of the seasonal nature of certain of its
businesses, the number of production employees fluctuates during the year.

On July 22, 2005, the Company announced that its Cleo subsidiary had entered
into a new collective bargaining agreement with the labor union representing
Cleo's production and maintenance employees at the Cleo gift wrap plant and
warehouses in Memphis, TN. The new labor agreement will remain in effect until
December 31, 2007. The collective bargaining agreement with the employees in the
Company's Hagerstown ribbon manufacturing facility will expire in December 2005.
However, an agreement has been reached to extend the term of the agreement with
the labor union representing the Hagerstown-based employees until December 31,
2006.

ACCOUNTING PRONOUNCEMENTS
-------------------------

In November 2004, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 151, "Inventory Costs." In December 2004, the FASB issued SFAS No.
123R, "Share-Based Payment." In May 2005, the FASB issued SFAS No. 154,
"Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20
and FASB Statement No. 3." In June 2005, the FASB's Emerging Issues Task Force
reached a consensus on Issue No. 05-6, "Determining the Amortization Period for
Leasehold Improvements." See the notes to the consolidated financial statements
for information concerning the Company's implementation and impact of these
standards.

ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-----------------------------------------------------------------

The Company is exposed to the impact of interest rate changes and manages this
exposure through the use of variable-rate and fixed-rate debt. The Company does
not enter into contracts for trading purposes and does not use leveraged
instruments. The market risks associated with debt obligations and other
significant instruments as of June 30, 2005 has not materially changed from
March 31, 2005 (See Item 7A of the Annual Report on Form 10-K).

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------

(a)  Evaluation of Disclosure Controls and Procedures. As of the end of the
     period covered by this report, the Company's management, with the
     participation of the Company's President and Chief Executive Officer and
     Vice President - Finance and Chief Financial Officer, evaluated the
     effectiveness of the Company's disclosure controls and procedures in
     accordance with Rule 13a-15 of the Securities Exchange Act of 1934 (the
     "Exchange Act"). Based upon that evaluation, the President and Chief
     Executive Officer and Vice President - Finance and Chief Financial Officer
     concluded that the Company's disclosure controls and procedures are
     effective in providing reasonable assurance that information required to be
     disclosed by the Company in reports that it files under the Exchange Act is
     recorded, processed, summarized and reported within the time periods
     specified in the Securities and Exchange Commission's rules and procedures.

(b)  Changes in Internal Controls. There was no change in the Company's internal
     control over financial reporting (as defined in Rules 13a-15(f) and
     15d-15(f) as promulgated by the Securities Exchange Commission under the
     Exchange Act) during the first quarter of fiscal year 2006 that has
     materially affected, or is reasonably likely to materially affect, the
     Company's internal control over financial reporting.

                                  Page 16 of 23

<PAGE>

                      CSS INDUSTRIES, INC. AND SUBSIDIARIES
                      -------------------------------------

                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.  Legal Proceedings
         -----------------

On May 25, 2005, the Company's Cleo subsidiary filed a complaint in United
States Court of International Trade appealing the U.S. International Trade
Commission's ("ITC") final determination that, in part, resulted in the
imposition of duties on certain tissue paper products imported from China on or
after September 21, 2004. (The proceedings that led to the imposition of these
duties are further described in Item 3 of Part I of the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 2005.) In the fiscal year ended
March 31, 2005, the Company recognized an expense of approximately $2,300,000
for these duties, reflecting Cleo's estimated liability for duties relating to
subject tissue paper products that Cleo imported from China during the 2005
fiscal year, based on the applicable deposit rates established by the U.S.
Commerce Department.

The amount of Cleo's actual liability for duties pertaining to the fiscal year
ended March 31, 2005, which liability is capped at the deposit rates in effect
with respect to the period of time that the subject products were imported by
Cleo, will be determined at the time of "liquidation" of the applicable entries
by the United States Bureau of Customs & Border Protection. Liquidation of the
applicable entries has been enjoined pending the decision of the United States
Court of International Trade in Cleo's appeal of the ITC's final determination.

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

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------

Unregistered Sales of Equity Securities
---------------------------------------

On May 9, 2005, the Company issued 39,000 shares of its common stock ($.10 par
value) to a member of the Board of Directors of CSS, upon such director's
exercise of stock options previously granted to such director pursuant to the
Company's 1995 Stock Option Plan for Non-Employee Directors (the "1995 Plan")
and the Company's 2000 Stock Option Plan for Non-Employee Directors (the "2000
Plan"). The aggregate purchase price for these 39,000 shares of CSS common stock
was $707,745, which was paid in cash.

The options granted pursuant to the 1995 Plan and 2000 Plan were not registered
under the Securities Act of 1933, as amended (the "Securities Act"), and the
shares of CSS common stock issued upon exercise of such options were not
registered under the Securities Act. The Company believes that the issuance of
the options, and the issuance of the aforementioned shares of CSS common stock
in connection with the exercise of said options, was exempt from registration
under (a) Section 4(2) of the Securities Act as transactions not involving any
public offering and such securities having been acquired for investment and not
with a view to distribution, or (b) Rule 701 under the Securities Act as
transactions made pursuant to a written compensatory benefit plan or pursuant to
a written contract relating to compensation. The recipient had adequate access
to information about the Company. The Company did not engage an underwriter in
connection with the foregoing stock option grants and stock issuances.

                                  Page 17 of 23

<PAGE>


Share Repurchase Program
------------------------

A total of 73,700 shares were repurchased at an average price of $33.21 in the
first quarter of fiscal 2006. As of June 30, 2005, there remained an outstanding
authorization to repurchase 401,624 shares of outstanding CSS common stock as
represented in the table below.
<TABLE>
<CAPTION>
                                                                                                                 Maximum
                                                                                    Total Number of          Number of Shares
                                             Total Number                         Shares Purchased as        that May Yet Be
                                              of Shares        Average Price        Part of Publicly         Purchased Under
                                             Purchased (1)    Paid per Share     Announced Program (2)       the Program (2)
                                             -------------    --------------     ---------------------       -----------------
<S>                                                <C>              <C>                  <C>                      <C>
April 1 through April 30, 2005                     46,900           $34.47               46,900                   428,424
May 1 through May 31, 2005                         13,300            30.64               13,300                   415,124
June 1 through June 30, 2005                       13,500            31.51               13,500                   401,624
                                                   ------           ------               ------                   -------
Total First Quarter                                73,700           $33.21               73,700                   401,624
                                                   ======           ======               ======                   =======
</TABLE>

(1)      All share repurchases were effected in open-market transactions and in
         accordance with the safe harbor provisions of Rule 10b-18 of the
         Securities Exchange Act.

(2)      The Company announced that its Board of Directors had authorized on
         February 18, 1998 the repurchase of up to 1,000,000 shares of the
         Company's common stock (the "Repurchase Program"). Thereafter, the
         Company announced that its Board of Directors had increased the number
         of shares authorized to be repurchased by the Company pursuant to the
         Repurchase Program as follows: November 9, 1998 (500,000 additional
         shares); May 4, 1999 (500,000 additional shares); September 28, 1999
         (500,000 additional shares); September 26, 2000 (500,000 additional
         shares); and February 27, 2003 (400,000 additional shares). As a result
         of the Company's three-for-two stock split distributed on July 10,
         2003, the number of shares authorized for repurchase pursuant to the
         Repurchase Program was automatically increased to 5,100,000 shares. The
         aggregate number of shares repurchased by the Company pursuant to the
         Repurchase Program as of June 30, 2005 was 4,698,376 on a
         split-adjusted basis. An expiration date has not been established for
         the Repurchase Program.


Item 6.  Exhibits
         --------

         Exhibit 31.1 Certification of the Chief Executive Officer of CSS
         Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

         Exhibit 31.2 Certification of the Chief Financial Officer of CSS
         Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

         Exhibit 32.1 Certification of the Chief Executive Officer of CSS
         Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

         Exhibit 32.2 Certification of the Chief Financial Officer of CSS
         Industries, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted
         Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

                                  Page 18 of 23

<PAGE>


                                   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
undersigned thereunto duly authorized.






                                               CSS INDUSTRIES, INC.
                                               --------------------
                                               (Registrant)





Date:   August 1, 2005                         By: /s/David J. M. Erskine
                                                   -----------------------------
                                                   David J. M. Erskine
                                                   President and Chief
                                                   Executive Officer



Date:   August 1, 2005                         By: /s/Clifford E. Pietrafitta
                                                   -----------------------------
                                                   Clifford E. Pietrafitta
                                                   Vice President - Finance,
                                                   Chief Financial Officer and
                                                   Principal Accounting Officer



                                  Page 19 of 23