CFCI Cfc

CFC International, Inc. Reports Restated Fourth Quarter and Year End 2004 Results -- Record annual sales of $82.6 million, up 32% over $62.8 million in 2003. CHICAGO HEIGHTS, Ill., March 1 /PRNewswire-FirstCall/ -- Worldwide holographic and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI) today reported results for the fourth quarter and year end of 2004. Sales in the fourth quarter of 2004 increased 35 percent to $20.7 million compared to $15.3 million in the fourth quarter of 2003. The fourth quarter 2004 increase in sales was primarily due to an increase in printed pattern products sales, solid holographic sales and a favorable foreign currency exchange gain of $370,000. Fourth quarter 2004 net income increased to $858,000, or $0.19 cents per share on a fully diluted basis, compared to a net loss for the fourth quarter of 2003 of ($72,000) or ($0.02) cents per share on a fully diluted basis, as restated. This increase in net income was primarily due to higher sales and improved productivity. As previously announced, the Company is restating its financial statements to correct errors in determining and recording foreign currency transaction gains and losses related to its intercompany transactions. Net income was favorably affected for the fourth quarter of 2004 by $295,000, and for the fourth quarter of 2003 by $130,000, as a result of the restatement. Net income was also favorably affected for the calendar year 2004 by $500,000, for the calendar year 2003 by $423,000 and for the calendar year 2002 by $463,000, as a result of the restatement. "Once again I would like to reiterate our pleasure in reporting a very solid performance in 2004," said Greg Jehlik, CFC's President and Chief Executive Officer. "Through our focused and coordinated efforts around the world, CFC was able to deliver favorable results to its shareholders. Our goal in 2005 is to effectively execute our Annual Operating Plan and continue to grow in a profitable manner." Sales for the year of 2004 totaled $82.6 million, an increase of 32 percent from $62.8 million for the same period last year. The 2004 sales increase was a result of higher sales volume in all of the Company's product groups. In particular, the Company had strong sales in its printed patterned products, security products and holographics, in packaging, security and authenticity. The Company also benefited from a strong Euro which positively affected sales by $2.0 million for the full year of 2004. Net income for the year increased to $4.0 million, or $0.90 per share on a fully diluted basis in 2004, from a net income of $261,000 or $0.06 per share on a fully diluted basis for the same period last year, as restated. Net income for the year was favorably affected by higher sales, and the Company leveraged its manufacturing infrastructure. Net income was also affected by foreign currency exchange gains in 2004 and 2003 totaling $500,000 and $423,000, respectively, as a result of the restatement. "Our 2004 performance was the best ever for CFC," said Roger Hruby, CFC's Chairman. "We are now reaping the benefits of our investments in people, processes and equipment. We are pleased to report that we exceeded our previous guidance of $0.72 - $0.76, coming in at $0.90 per share on a fully diluted basis for 2004, including $0.11 related to the foreign currency exchange gain. Hruby further added, "Based upon the Company's 2004 results and the economic outlook for 2005, CFC anticipates earning net income of $1.10 - $1.15 per share on a fully diluted basis, utilizing a 35.4% tax rate." Recent Developments The Company reports that it has secured three additional embossers, two of which will be located at the Chicago Heights, Illinois facility, and one at the Goppingen, Germany location. The Company expects to have one embosser on line by the end of the first quarter in Chicago Heights, the second embosser in Germany on line by the end of the second quarter in 2005 and the third embosser on line during the third quarter. This capital investment will allow the Company to further increase its manufacturing capacity both domestically and internationally. The Company will be exhibiting at the upcoming CardTech/SecurTech (CTST) 2005 show at the Mandalay Bay Convention Center in Las Vegas, Nevada, April 11-14, 2005 in Booth #333, where it will feature its card products, such as HoloLam Plus(TM) (patent pending), magnetic stripe, signature panel, security holograms, scratch-off foils and tipping foils for transaction cards. The Company will be exhibiting at the upcoming Interpack 2005 show at Messe Dusseldorf GmbH in Dusseldorf, Germany, April 21-27, 2005 in the North American Pavilion, Hall 12, Booth #12C09-3. CFC will feature its holographic solutions for packaging, security and authentication, as well as its specialty films and foils. The Company invites all interested parties to listen to its year end conference call at 9:00 a.m. EST (8:00 a.m. CST) on Wednesday, March 2, 2005. The dial-in numbers for the call are 800-599-9816 (U.S.) and 617-847-8705 (International). The participant passcode for this call is 51262710. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. For those unable to listen to the live call, a replay will be available from approximately 11:00 a.m. EST on March 2, 2005 until March 9, 2005. This replay can be accessed by dialing 888-286-8010 (U.S.); and 617-801-6888 (International). The passcode for the replay is 54426347. The call also will be available as a webcast, both live and for replay, via the Internet on the CFC International, Inc. website at http://www.cfcintl.com/ on the Investor Relations press releases and webcasts page. Headquartered in Chicago Heights, Illinois, CFC International is a market leader in the design, manufacture and marketing of holographics and specialty functional coatings that add value to a wide variety of industrial and consumer products. The Company operates facilities in Chicago Heights and Countryside, Illinois; London, England; and Goppingen, Germany. A condensed consolidated balance sheet and statement of operations is attached. Statements made in this press release, including those relating to expectations of future sales, net income and operating costs reductions, estimated availability of additional equipment, estimations of the market size for certain of the company's products or the company's share of those markets and expectations of increased sales attributable to various product lines, are forward looking and are made pursuant to the safe harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in those statements. Among other things, continued unfavorable economic conditions may impact market growth trends or otherwise impact the demand for the company's products and services; competition from existing and new competitors and producers of alternative products will impact the company's ability to penetrate or expand its presence in new or growing markets; uncertainties relating to the company's ability to develop and distribute new proprietary products to respond to market needs in a timely manner may impact the company's ability to exploit new or growing markets; the company's ability to successfully identify and implement productivity improvements and cost reduction initiatives may impact profitability; and risks inherent in international operations, including possible economic, political or monetary instability, may impact the level and profitability of the company's foreign sales. In addition to the factors set forth in this release, the economic, competitive, governmental, technological and other factors identified in the company's filings with the Securities and Exchange Commission, could affect the forward looking statements contained in this press release. We have no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this press release or to reflect the occurrence of anticipated events. You may access additional information, including our filings with the Securities and Exchange Commission and previous press releases by visiting CFC International's Internet homepage at http://www.cfcintl.com/ . CFC INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Earnings Per Share and Operating Income Three Months Ended Year Ended Percentage) December 31, December 31, 2004 2003 2004 2003 2002 Restated Restated Restated (Note 1) (Note 1) (Note 1) Net Sales $20,659 $15,314 $82,557 $62,788 $61,878 Cost of Goods (Excluding Depreciation and Amortization Shown Below) 14,075 10,841 54,004 42,455 38,492 Operating Expenses 4,792 4,133 18,157 15,801 15,102 Depreciation and Amortization 984 936 4,577 4,193 3,956 Operating Income (Loss) 808 (596) 5,819 339 4,328 Operating Income (Loss) % 3.9% (3.9%) 7.0% 0.5% 7.0% Interest Expense 228 288 1,132 1,119 1,241 Interest Income (25) (1) (35) (9) (29) (Gain) Loss on Interest Rate Swap 7 (59) (40) 48 0 Rental Income (37) (5) (155) (26) 0 Other Income 0 0 0 0 (219) Foreign Currency Exchange (Gain) (650) (511) (940) (1,015) (688) Income (Loss) Before Income Taxes 1,285 (308) 5,857 222 4,023 Provision (Benefit) for Income Taxes 427 (236) 1,847 (39) 1,282 Net Income (Loss) (Note 1) $858 ($72) $4,010 $261 $2,741 Diluted Weighted Average Number of Shares Outstanding 4,537 4,488 4,509 4,491 4,536 Diluted Earnings (Loss) Per Share $0.19 ($0.02) $0.90 $0.06 $0.62 Earnings Before Interest, Taxes, Depreciation and Amortization (Note 2) $1,792 $340 $10,396 $4,532 $8,284 SUMMARY OF INTERNATIONAL SALES (In Thousands, Except International Sales Three Months Ended Year Ended Percentage) December 31, December 31, 2004 2003 2004 2003 2002 International Sales ($) $9,159 $7,061 $38,453 $32,560 $26,301 International Sales (%) 44.3% 46.1% 46.6% 51.9% 42.5% NOTE 1: The Company will restate its financial statements to reflect the recognition of foreign currency exchange gains and losses related to intercompany transactions in the Consolidated Statement of Operations in accordance with Financial Accounting Standards Board Statement No. 52, "Foreign Currency Translation." Previously, the Company had incorrectly included such gains and losses in accumulated other comprehensive income in its consolidated stockholder's equity. The correction of this error effected net income, earnings per share, accumulated other comprehensive income and deferred taxes currently payable. These changes had no effect on total cash flow. NOTE 2: The Company believes earnings before interest, taxes, other income and expense, and depreciation and amortization (adjusted EBITDA) is an appropriate measurement for its business because its enterprise value is more closely aligned with this measurement and because of the continual investment the Company makes in long-lived assets. Adjusted EBITDA should not necessarily be considered as an alternative to net income or cash flows from operating activities which are determined in accordance with Generally Accepted Accounting Principles as an indicator of operating performance or as a measure of liquidity. The table that follows reconciles net income to adjusted EBITDA as defined: (In Thousands) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 2002 Restated Restated Restated (Note 1) (Note 1) (Note 1) Net income (loss) $858 ($72) $4,010 $261 $2,741 Add back (subtract): Income taxes 427 (236) 1,847 (39) 1,282 Interest expense 228 288 1,132 1,119 1,241 (Gain) loss on interest rate swap 7 (59) (40) 48 0 Rental income (37) (5) (155) (26) 0 Interest income (25) (1) (35) (9) (29) Depreciation and amortization 984 936 4,577 4,193 3,956 Foreign Currency Exchange (Gain) (650) (511) (940) (1,015) (688) Other Income - - - - (219) Adjusted EBITDA $1,792 $340 $10,396 $4,532 $8,284 CFC INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2004 AND DECEMBER 31, 2003 December 31, December 31, 2004 2003 Restated (Note 1) ASSETS Cash and cash equivalents $4,554,699 $5,555,025 Restricted cash 306,271 117,622 Accounts receivable, less allowance for doubtful accounts 12,547,380 9,821,047 Inventories 17,709,138 13,050,711 Other current assets 1,389,790 1,771,646 Total current assets 36,507,278 30,316,051 Property, plant and equipment, net 28,602,311 28,116,892 Deferred income taxes 3,528,686 3,280,891 Intangible assets, net 3,422,928 3,695,899 Other assets 266,806 105,078 Fair value of interest rate swap 39,553 - Total assets $72,367,562 $65,514,811 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $5,625,085 $9,716,066 Accounts payable and accrued expenses 15,314,782 10,452,966 Total current liabilities 20,939,867 20,169,032 Deferred income taxes 3,229,584 2,680,247 Fair value of interest rate swap - 47,783 Long-term debt 15,698,791 15,066,109 Total liabilities 39,868,242 37,963,171 Stockholders' equity 32,499,320 27,551,640 Total liabilities and stockholders' equity $72,367,562 $65,514,811 DATASOURCE: CFC International, Inc. CONTACT: Dennis Lakomy, Chief Financial Officer of CFC International, Inc., +1-708-757-2803 Web site: http://www.cfcintl.com/ Company News On-Call: http://www.prnewswire.com/comp/110663.html

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