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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