CFCI Cfc

-- Net income decreased to $1.2 million for the first quarter of 2006, down 23.2% from $1.5 million as compared to the same period last year. CHICAGO HEIGHTS, Ill., May 4 /PRNewswire-FirstCall/ -- Worldwide holographic and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI) reported results for the first quarter of 2006. Net sales for the first quarter 2006 decreased 2.5% to $22.4 million, compared to $23.0 million in the first quarter of 2005. This decrease in sales is primarily due to lower volumes of printed products as a result of customers ordering higher volumes in the fourth quarter of 2005 to obtain product before the Company's November 15, 2005 price increase. Lower sales were also the result of a decrease in security products, primarily due to weaker gift card volumes. In addition, a weakened Euro adversely affected net sales by $600,000 in the first quarter of 2006. Net income decreased 23.2% to $1.2 million, or $0.25 cents per share on a fully diluted basis for the first quarter of 2006, compared to $1.5 million, or $0.33 cents per share on a fully diluted basis, in the first quarter of 2005. The Company incurred transaction expenses of $292,000 (after income taxes) associated with the terminated merger with Quad-C Management during the first quarter of 2006. Excluding the effects of these costs, the first quarter of 2006 net income would have decreased 3.8% to $1.4 million, or $0.31 cents per share on a fully diluted basis, compared to net income of $1.5 million, or $0.33 cents per share on a fully diluted basis, in the first quarter of 2005. "In the first quarter of 2006, operating results continued to be affected by transaction expenses incurred as a result of the terminated merger with Quad-C Management, as well as lower sales volumes in our printed and security products," said Greg Jehlik, CFC's President and Chief Executive Officer. "However, we are confident that by continuing to focus on the fundamentals of our business and on executing our strategic initiatives, along with driving further improvements in our operations, that CFC will continue to deliver profitable results and increased sales growth in 2006." Based upon the Company's results and factoring in the current economic outlook, the Company anticipates earning net income of $0.90 to $1.00 cents per share on a fully diluted basis for 2006 utilizing a 35.5% tax rate. 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 Income (In Thousands, Except Earnings Per Share and 1st Quarter 1st Quarter Operating Income Percentage) 2006 2005 Net Sales $22,419 $22,989 Cost of Goods (Excluding Depreciation and Amortization Shown Below) 14,652 14,403 Operating Expenses 4,255 4,627 Depreciation and Amortization 1,193 1,174 Transaction Expenses 453 - Operating Income 1,866 2,785 Operating Income % 8.3% 12.1% Interest Expense 272 279 Interest Income (39) (5) Interest Rate Swap Valuation Benefit (9) (33) Rental Income / Other Expense (5) (65) Foreign Currency Exchange (Gain)/Loss (138) 277 Income Before Income Taxes 1,785 2,332 Provision for Income Taxes 634 832 Net Income $1,151 $1,500 Diluted Weighted Average Number of Shares Outstanding 4,633 4,613 Diluted Earnings Per Share $0.25 $0.33 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Note 1) $3,512 $3,959 (In Thousands) 1st Quarter 1st Quarter 2006 2005 International Net Sales $10,105 $10,629 International Net Sales 45.1% 46.2% NOTE 1: The Company believes earnings before interest, taxes, depreciation and amortization, rental income, foreign currency exchange (gain)/loss and transaction expenses (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: 1st Quarter (In Thousands) 2006 2005 Net income $1,151 $1,500 Add back (subtract): Income taxes 634 832 Interest expense 272 279 Interest rate swap valuation (benefit) (9) (33) Rental income (5) (65) Interest income (39) (5) Depreciation and amortization 1,193 1,174 Foreign currency exchange (gain)/loss (138) 277 Transaction expenses 453 - Adjusted EBITDA $3,512 $3,959 CFC INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 31, 2006 AND DECEMBER 31, 2005 March 31, December 31, 2006 2005 ASSETS Cash and cash equivalents $4,379,782 $5,013,772 Restricted cash 417,859 365,683 Accounts receivable, less allowance for doubtful accounts 15,042,399 14,188,067 Inventories 16,863,975 17,319,347 Other current assets 2,057,475 2,014,790 Total current assets 38,761,490 38,901,659 Property, plant and equipment, net 25,781,382 26,300,422 Deferred income taxes 2,135,029 2,129,417 Intangible assets, net 2,097,924 2,157,032 Other assets 214,194 214,194 Fair value of interest rate swap 119,593 110,950 Goodwill 1,029,462 1,029,462 Total assets $70,139,074 $70,843,136 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $6,412,224 $6,412,224 Accounts payable and accrued expenses 11,236,374 13,695,493 Total current liabilities 17,648,598 20,107,717 Deferred income taxes 2,532,675 2,558,294 Long-term debt 12,739,576 12,824,896 Total liabilities 32,920,849 35,490,907 Stockholders' equity 37,218,225 35,352,229 Total liabilities and stockholders' equity $70,139,074 $70,843,136 DATASOURCE: CFC International, Inc. CONTACT: Dennis Lakomy, Chief Financial Officer, of CFC International, +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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