UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition from to
------------ ------------
Commission File No. 027222
CFC INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3434526
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 State Street, Chicago Heights, Illinois 60411
Registrant's telephone number, including
area code: (708) 891-3456
Indicated 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 ( )
As of May 01, 2002, the Registrant had issued and outstanding 4,183,639 shares
of Common Stock, par value $.01 per share, and 512,989 shares of Class B Common
Stock, par value $.01 per share.
CFC INTERNATIONAL, INC.
INDEX TO FORM 10-Q
Page
----
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets - March 31, 2002
and December 31, 2001..................................... 5
Consolidated Statements of Income for the
three (3) months ended March 31, 2002 and
March 31, 2001............................................ 6
Consolidated Statements of Cash Flows for the
three (3) months ended March 31, 2002 and
March 31, 2001............................................ 7
Notes to Consolidated Financial Statements.................. 8-9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 10-13
Item 3. - Quantitative and Qualitative Disclosures About
Market Risk.................................................... 13
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K....................... 14
Signatures...................................................... 15
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
The Company believes that certain statements contained in this report and in the
future filings by the Company with the Securities and Exchange Commission and in
the Company's written and oral statements made by or with the approval of an
authorized executive officer that are not historical facts constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby.
The words and phrases "looking ahead," "is confident," "should be," "will,"
"predicted," "believe," "plan," "intend," "estimates," "likely," "expect" and
"anticipate" and similar expressions identify forward-looking statements.
These forward-looking statements reflect the Company's current views with
respect to future events and financial performance, but are subject to many
uncertainties and factors relating to the Company's operations and business
environment which may affect the accuracy of forward-looking statements and
cause the actual results of the Company to be materially different from any
future results expressed or implied by such forward-looking statements. As a
result, in some future quarter the Company's operating results may fall below
the expectations of securities analysts and investors. In such an event, the
trading price of the Company's common stock would likely be materially and
adversely affected. Many of the factors that will determine results of
operations are beyond the Company's ability to control or predict.
Some of the factors that could cause or contribute to such differences include:
o The effect of continuing unfavorable economic conditions on market growth
trends in general and on the Company's customers and the demand for the
Company's products and services in particular;
o Risks inherent in international operations, including possible economic,
political or monetary instability and its impact on the level and
profitability of foreign sales;
o Uncertainties relating to the Company's ability to consummate its business
strategy, including the unavailability of suitable acquisition candidates,
or the Company's inability to finance future acquisitions or successfully
realize synergies and cost savings from the integration of acquired
businesses;
o Changes in raw material costs and the Company's ability to adjust selling
prices;
o The Company's reliance on existing senior management and the impact of the
loss of any of those persons or its inability to continue to identify, hire
and retain qualified management personnel;
o Uncertainties relating to the Company's ability to develop and distribute
new proprietary products to respond to market needs in a timely manner and
the Company's ability to continue to protect its proprietary product
information and technology;
o The Company's ability to continue to successfully identify and implement
productivity improvements and cost reduction initiatives;
o The Company's reliance on a small number of significant customers;
o Uncertainties relating to the Company's ability to continue to compete
effectively with other producers of specialty transferable coatings and
producers of alternative products with greater financial and management
resources; and
o Control of the Company by a principal stockholder.
The risks included here are not exhaustive. We operate in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and it
is not possible for us to predict all such risk factors, nor can we assess the
impacts of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking
statements as a prediction of actual results. We have no obligation to revise or
update these forward-looking statements to reflect events or circumstances that
arise after May 01, 2002 or to reflect the occurrence of anticipated events.
Investors should also be aware that while we do, from time to time, communicate
with securities analysts, it is against our policy to disclose to them any
material non-public information or other confidential commercial information.
Accordingly, investors should not assume that we agree with any statement or
report issued by any analyst irrespective of the content of the statement or
report. Thus, to the extent that reports issued by securities analysts contain
any projections, forecasts or opinions, such reports are not our responsibility.
Part I
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2002 AND DECEMBER 31, 2001
March 31, December 31,
2002 2001
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................... $ 3,586,865 $ 2,492,595
Accounts receivable, less allowance
for doubtful accounts of $635,000
and $583,000 at March 31, 2002
and December 31, 2001, respectively ........ 8,423,925 9,205,561
Inventories:
Raw materials .............................. 2,255,985 2,638,602
Work in process ............................ 1,996,681 1,858,677
Finished goods ............................. 5,942,718 5,877,489
----------- -----------
10,195,384 10,374,768
Prepaid expenses and
other current assets
969,890 760,081
Deferred income tax assets.................... 2,987,413 2,987,413
----------- -----------
Total current assets ....................... 26,163,477 25,820,418
----------- -----------
Property, plant and
equipment, net ............................. 23,767,530 24,792,724
Other assets ................................. 4,576,922 4,584,264
----------- -----------
Total assets................................ $54,507,929 $55,197,406
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt............. $ 2,666,037 $ 2,762,909
Accounts payable.............................. 3,038,879 3,285,526
Accrued compensation and benefits............. 1,272,423 1,165,878
Accrued expenses and other
current liabilities......................... 3,709,828 3,783,842
----------- -----------
Total current liabilities................... 10,687,167 10,998,155
----------- -----------
Deferred income tax liabilities............... 2,185,717 2,185,717
Long-term debt, net of current portion........ 18,942,842 19,371,422
----------- -----------
Total liabilities........................... 31,815,726 32,555,294
----------- -----------
STOCKHOLDERS' EQUITY:
Voting Preferred Stock, par value
$.01 per share, 750 shares authorized,
No shares issued and outstanding............ - -
Common stock, $.01 par value,
10,000,000 shares authorized;
4,424,717 and 4,421,529 shares issued
at March 31, 2002 and December 31, 2001,
respectively................................ 44,248 44,216
Class B common stock, $.01 par value,
750,000 shares authorized; 512,989
shares issued and outstanding .............. 5,130 5,130
Additional paid-in capital.................... 12,009,083 11,968,980
Retained earnings............................. 14,937,748 14,472,467
Accumulated other comprehensive
income (loss)............................... (1,875,325) (1,557,100)
----------- -----------
25,120,884 24,933,693
Less 514,867 and 482,867 treasury shares
of common stock, at cost, at
March 31, 2002 and December 31, 2001,
respectively................................ (2,428,681) (2,291,581)
----------- -----------
22,692,203 22,642,112
----------- -----------
Total liabilities and stockholders' equity... $54,507,929 $55,197,406
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
Three Months Ended March 31,
2002 2001
---- ----
(Unaudited)
Net sales .................................... $14,841,680 $16,309,842
----------- -----------
Cost of goods sold ........................... 9,469,565 10,548,981
Selling, general and
administrative expenses .................... 3,207,243 3,375,827
Research and development expenses ............ 513,361 629,605
Depreciation and amortization expense ........ 831,834 1,090,000
----------- -----------
Total operating expenses ..................... 14,022,003 15,644,413
----------- -----------
Operating income ............................. 819,677 665,429
Interest.................................... 329,815 402,046
Other expense............................... - 15,600
Other income (loss)......................... (200,419) (7,320)
----------- -----------
129,396 410,326
----------- -----------
Income before income taxes ................... 690,281 255,103
Provision for income taxes.................... 225,000 97,404
----------- -----------
Net income ................................... $465,281 $157,699
=========== ===========
Basic earnings per share...................... $ 0.10 $ 0.03
Diluted earnings per share.................... $ 0.10 $ 0.03
The accompanying notes are an integral part of the consolidated
financial statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
Three Months Ended March 31,
----------------------------
2002 2001
---- ----
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net income ................................... $ 465,281 $ 157,699
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization ........... 831,834 1,090,000
Deferred income taxes ................... (31,993) (169,872)
Gain on sale of land and building ....... (191,158) --
Changes in assets and liabilities:
Accounts receivable ................... 692,896 (1,096,341)
Inventories ........................... 30,873 551,202
Other current assets .................. (198,611) 6,082
Accounts payable ...................... (217,774) 995,644
Accrued compensation and benefits ..... 117,903 (52,697)
Accrued expenses and other
current liabilities .................. (75,837) 1,008,569
----------- -----------
Net cash provided by
operating activities ......................... $ 1,423,414 $ 2,490,286
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment ... (264,168) (557,896)
Proceeds from sale of land and building ...... 455,334 --
----------- -----------
Net cash provided by (used in)
investing activities ......................... 191,166 (557,896)
----------- -----------
Cash flows from financing activities:
Proceeds from revolving loan ................. 693,007 420,055
Repayments of revolving loan ................. (628,745) (653,063)
Repayments of term loans ..................... (419,834) (1,306,804)
Repayment of capital lease ................... -- (6,950)
Issuance of common stock ..................... 17,138 19,082
Repurchase of common stock for
treasury stock ............................. (137,100) (27,078)
----------- -----------
Net cash used in financing activities .......... (475,534) (1,554,758)
----------- -----------
Effect of exchange rate changes on
cash and cash equivalents .................... (44,776) (60,616)
----------- -----------
Increase in cash and cash equivalents .......... 1,094,270 317,016
Cash and cash equivalents:
Beginning of period ............................ 2,492,595 298,871
End of Period .................................. $ 3,586,865 $ 615,887
The accompanying notes are an integral part of the consolidated
financial statements.
CFC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002 AND 2001
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited interim consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the consolidated financial
position of CFC International, Inc. (the Company), and its wholly-owned
subsidiaries, as of March 31, 2002 and December 31, 2001 (audited), the
consolidated results of operations for the three (3) months ended March 31, 2002
and 2001, and consolidated statements of cash flows for the three (3) months
ended March 31, 2002 and 2001.
The unaudited interim consolidated financial statements included herein have
been prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnote disclosures normally accompanying
the annual consolidated financial statements have been omitted. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest annual report on Form 10-K.
Results for an interim period are not necessarily indicative of results for the
entire year and such results are subject to year-end adjustments and an annual
independent audit.
Certain prior period amounts in the statements of operations have been
reclassified to conform to current period presentation. These reclassifications
had no effect on the previously reported amounts of income before income taxes
or net income.
Note 2. Comprehensive Income
The Company's total comprehensive income (loss) was as follows:
Three Months Ended March 31,
2002 2001
---- ----
Net income........................................... $465,281 $ 157,699
Less: foreign currency translation adjustment....... 318,225 1,021,886
-------- ----------
Total comprehensive income (loss).................... $147,056 ($ 864,187)
======== ============
Note 3. Earnings Per Share
March 31, 2002 March 31, 2001
-------------------------- ---------------------------
Per Per
Income Shares Share Income Shares Share
------ ------ ----- ------ ------ -----
Basic Earnings Per Share:
Income available to
Common Stockholders....$465,281 4,459,313 $.10 $157,699 4,564,693 $.03
Effect of Dilutive
Securities:
Options exercisable.... 1,335 1,058
Convertible debt....... 15,000 119,047
Diluted Earnings
per Share..............$480,281 4,579,695 $.10 $157,699 4,565,751 $.03
Note 4. Business Segments and International Operations
The Company and its subsidiaries operate in a single business segment, which is
the formulating and manufacturing of chemically complex, multi-layered
functional coatings. The Company produces five primary types of coating
products. Net sales (in millions) for each of these products for the three
months ended March 31, 2002 and 2001 were as follows:
2002 2001
---- ----
Printed Products ................................... $ 4.9 $ 4.7
Pharmaceutical Products ............................ 2.8 2.8
Security Products .................................. 2.0 1.7
Holographic Products ............................... 2.4 2.8
Specialty Pigmented and
Other Simulated Metal Products ................... 2.7 4.3
----- -----
Total .............................................. $14.8 $16.3
The following is sales by geographic area for the three months ended March 31,
2002 and 2001 and long-lived asset information as of March 31, 2002 and December
31, 2001:
Sales (In Thousands) 2002 2001
- -------------------- ---- ----
United States .......................... $ 8,093 $ 7,410
Europe ................................. 4,812 6,131
Other Foreign .......................... 1,937 2,769
------- -------
Total .................................. $14,842 $16,310
======= =======
Net Fixed Assets (In Thousands) 2002 2001
- ------------------------------- ---- ----
(In Thousands)
United States .......................... $14,988 $15,389
Europe ................................. 8,780 9,404
------- -------
Total .................................. $23,768 $24,793
======= =======
Europe and other foreign revenue are based on the country in which the customer
is domiciled.
Note 5. Contingencies
From time to time, the Company is subject to legal proceedings and claims which
arise in the normal course of its business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not have a
material adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
Note 6. Recent Accounting Pronouncements
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets" and SFAS No. 144
("SFAS 144"), "Impairment or Disposal of Long-Lived Assets."
SFAS No. 142 addresses accounting and reporting for (i) in tangible assets at
acquisition and (ii) for intangible assets and goodwill subsequent to their
acquisition. The Company's goodwill and intangible assets are classified in the
balance sheets as "Other assets" and relate to the acquisition of businesses and
exclusive worldwide rights to holographic technology. Management has reassessed
the previously assigned lives for those assets and has determined them to be
indefinite lived. As such, amortization of the indefinite lived goodwill and
intangible assets has ceased and annual impairment tests will be performed.
The adoption of SFAS No. 144 had no impact of the financial statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
The Company formulates, manufactures and sells chemically-complex, transferable,
multi-layer coatings for use in many diversified markets, such as holographic
packaging and authentication seals, furniture and building products,
pharmaceutical products and transaction cards (including credit cards, debit
cards, ATM cards and access cards), and intaglio printing.
The Company's cost of goods sold reflects all direct product costs and direct
labor, quality control, shipping and receiving, maintenance, process engineering
and plant management. Selling, general and administrative expenses are primarily
composed of sales representatives' salaries and related expenses, commissions to
sales representatives, advertising costs, management compensation, and corporate
audit and legal expense. Research and development expenses include salaries of
technical personnel and experimental materials.
Results of Operations
- ---------------------
The following table sets forth, certain items from the Company's consolidated
financial statements as a percentage of net sales for the periods presented:
Three Months Ended
March 31,
--------------------------
2002 2001
---- ----
(Unaudited)
Net sales........................................ 100.0% 100.0%
Cost of goods sold............................... 63.8 64.7
Selling, general and administrative.............. 21.6 20.7
Research and development......................... 3.5 3.9
Depreciation and amortization.................... 5.6 6.7
Operating income ................................ 5.5 4.0
Interest expense ................................ 2.2 2.5
Other expense ................................... - -
Other income (loss) ............................. (1.3) (0.1)
Income before taxes.............................. 4.6 1.6
Provision for income taxes....................... 1.5 0.6
Net income ...................................... 3.1 % 1.0%
Quarter Ended March 31, 2002 Compared to Quarter Ended March 31, 2001
- ---------------------------------------------------------------------
Net sales for the quarter ended March 31, 2002 decreased 9.0% to $14.8 million,
from $16.3 million for the quarter ended March 31, 2001. Holographic product
sales decreased 15.7% to $2.4 million for the quarter ended March 31, 2002,
compared to $2.8 million for the quarter ended March 31, 2000. This decrease was
due primarily to an arts and craft product launch that was not successful, and
sales to a foreign government in 2001 that did not repeat in 2002. Printed
product sales increased 5.7% to $4.9 million, from $4.7 million primarily due to
increased market penetration. Pharmaceutical product sales decreased slightly
1.5% to $2.80 million, from $2.84 million. Pharmaceutical product sales
decreased primarily due to a competitor in Mexico having a favorable duty
position in sales to South America. Security product (mag stripe, signature
panels, and tipping products for credit cards, intaglio-printed products and
gift cards) sales increased 18.0% to $2.0 million, from $1.7 million. This
increase was primarily a result of sales of gift card products to a major
retailer. Sales of specialty pigmented and other simulated metal products
decreased 36.2% to $2.7 million, from $4.3 million, primarily due to the
Company's strategic plan to eliminate lower margin, high-service products.
Cost of goods sold for the quarter ended March 31, 2002 decreased 10.2% to $9.5
million, from $10.5 million for the quarter ended March 31, 2001. This decrease
was primarily due to the decrease in sales volume offset in part by sales of
higher margin products and the business interruption insurance proceeds. The
cost of goods sold as a percentage of net sales for the quarter ended March 31,
2002 decreased to 63.8% from 64.7% for the quarter ended March 31, 2001 due to
decreases in material costs, partly offset by fixed cost being a higher
percentage of lower sales.
Selling, general, and administrative expenses for the quarter ended March 31,
2002 decreased 5.0% to $3.2 million from $3.4 million for the quarter ended
March 31, 2001. These decreases are due primarily to realizing the benefits of
the Company's efforts to reduce the worldwide workforce, consolidate facilities
and control expenses. As a percent of net sales these costs were 21.6% for the
quarter ended March 31, 2002, and 20.7% for the quarter ended March 31, 2001.
The increase in percentage is due to the lower sales volume.
Research and development expenses for the quarter ended March 31, 2002 decreased
18.5% to $513,000 from $630,000 for the quarter ended March 31, 2001 due
primarily to the consolidation of the Ventura, California Optical Lab into
Countryside, Illinois. Research and development expenses for the quarter ended
March 31, 2002 decreased as a percentage of net sales, to 3.5% from 3.9% for the
quarter ended March 31, 2001. This decrease in percentage was due primarily to
the reasons noted above.
Depreciation and amortization expenses for the quarter ended March 31, 2002
decreased 23.7% to $0.8 million from $1.1 million for the quarter ended March
31, 2001. This decrease was primarily due to the Company no longer amortizing
intangible assets related to holographic products as a result of FASB 142.
Depreciation and amortization expense as a percentage of net sales for the
quarter ended March 31, 2002 decreased to 5.6% from 6.7% for the quarter ended
March 31, 2001 for the same reasons.
Total operating expenses for the quarter ended March 31, 2002 decreased 10.4% to
$14.0 million from $15.6 million for the quarter ended March 31, 2001. The
decrease in total operating expenses is primarily due to lower cost of sales
caused by lower sales and reductions in the worldwide workforce. Total operating
expenses for the quarter ended March 31, 2002 decreased as a percentage of net
sales to 94.5% from 96.0% for the quarter ended March 31, 2001. This decrease is
due to the reasons noted above.
Operating income for the quarter ended March 31, 2002 increased 23.2% to
$820,000, from $665,000 for the quarter ended March 31, 2001. The increase in
operating income is due primarily due to the decreases in costs and expenses for
the reasons noted above. Operating income for the quarter ended March 31, 2002
increased as a percentage of net sales to 5.5% from 4.0% for the quarter ended
March 31, 2001. This increase is due primarily to the reasons noted above.
Interest expense for the quarter ended March 31, 2002 decreased 18.0% to
$330,000, from $402,000 for the quarter ended March 31, 2001. This decrease was
due primarily to the repayment of debt and lower rates of interest on the
Company's floating interest rate debt.
Other income for the quarter ended March 31, 2002 increased to $200,000 from
$7,000 for the quarter ended March 31, 2001. This increase is a result of the
sale of an older manufacturing site in Goppingen, Germany.
The effective income tax rate for the quarter ended March 31, 2002 is 32.6%
versus 38.2% for the same period in 2001. The primary reasons for the
differences are due to the effects of income tax rates on foreign income and
certain tax credits and permanent differences in the United States.
Net income for the quarter ended March 31, 2002 increased 195.0% to $465,000,
from $158,000 for the quarter ended March 31, 2001. This increase in net income
was due primarily to the factors as discussed above.
Liquidity and Capital Resources
- -------------------------------
The Company's working capital increased by $0.7 million during the quarter. The
primary reasons were an increase of $1.1 million in cash and an increase of $0.2
million in prepaid and other current assets, and a decrease in current
liabilities of $0.3 million (resulting from amortization of debt and a reduction
in payables), offset by a decrease of $0.8 million in customer receivables
(resulting in large part from the lower sales during the first quarter 2002
compared to the fourth quarter 2001), and by a decrease of $0.2 million in
inventories.
At March 31, 2002, the Company had available $9.1 million under the revolving
credit agreement maintained with the Company's primary bank. This agreement,
which expires April 1, 2003, is collateralized by the Company's trade accounts
receivables and inventories. The Company believes that the net cash provided by
operating activities and amounts available under the revolving credit agreement
are sufficient to finance the Company's growth and future capital requirements.
The Company does not have any material commitments to purchase capital assets as
of March 31, 2002.
Recent Accounting Pronouncements
- --------------------------------
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets" and SFAS No. 144
("SFAS 144"), "Impairment or Disposal of Long-Lived Assets."
SFAS No. 142 addresses accounting and reporting for (i) in tangible assets at
acquisition and (ii) for intangible assets and goodwill subsequent to their
acquisition. The Company's goodwill and intangible assets are classified in the
balance sheets as "Other assets" and relate to the acquisition of businesses and
exclusive worldwide rights to holographic technology. Management has reassessed
the previously assigned lives for those assets and has determined them to be
indefinite lived. As such, amortization of the indefinite lived goodwill and
intangible assets has ceased and annual impairment tests will be performed.
The adoption of SFAS No. 144 had no impact of the financial statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments held by the Company for which it is
practicable to estimate that value. The carrying amount of cash equivalents
approximates fair value because of the short maturity of those instruments. The
estimated fair value of the Company's long-term debt approximated its carrying
value at March 31, 2002 and 2001 based upon market prices for the same or
similar type of financial instrument.
The Company does not use derivative financial instruments to address interest
rate, currency, or commodity pricing risks.
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
a. Reports on Form 8-K. No reports on Form 8-K were filed in the three
month period ended March 31, 2002.
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, on May 01, 2002.
CFC INTERNATIONAL, INC.
Dennis W. Lakomy
Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)