Contact: Dennis Lakomy Release Date: Immediate
Chief Financial Officer
(708) 757-2803
CFC INTERNATIONAL, INC. ANNOUNCES THAT IT HAS SIGNED
A LETTER OF INTENT TO BE ACQUIRED
AND REPORTS 2005 FIRST QUARTER RESULTS
|X| Net income increased to $1.5 million for the first quarter of 2005, up
30.0% from $1.2 million as compared to the same period last year.
|X| Fully diluted earnings per share increased 26.9% to $0.33 for the first
quarter of 2005, versus $0.26 for the first quarter in 2004.
|X| Record first quarter sales of $23.0 million, up 10.4% over $20.8
million in 2004.
Chicago Heights, Illinois, May 3, 2005 - Worldwide holographic and
specialty coated film manufacturer, CFC International, Inc. (Nasdaq: CFCI)
announced today that it has entered into a letter of intent to merge the Company
with an affiliate of Audax Group, a private equity firm, for an enterprise value
of $109.4 million, which equates to an expected share price range for this
transaction between $19.50 and $20.00 per share. The proposed transaction is
subject to a number of conditions, including completion of due diligence and the
negotiation and execution of a definitive agreement, and there can be no
assurance that a transaction will be completed. The Company expects the
transaction, if completed, to close during the third quarter of 2005.
The Company further reports that net income and diluted earnings per share
for the first quarter of 2005 increased 30.0 percent to $1.5 million, or $0.33
cents per share on a fully diluted basis compared to $1.2 million or $0.26 cents
per share on a fully diluted based for the first quarter of 2004. This increase
in net income was primarily due to higher sales and improved productivity.
First quarter sales increased 10.4 percent to $23.0 million compared to
$20.8 million in the first quarter of 2004. The increase in first quarter sales
of 2005 was primarily due to strong printed products sales, which increased 12.1
percent, and robust pharmaceutical and security product sales, which increased
24.2 percent and 21.4 percent respectively, over the same period sales in 2004.
In addition, sales were favorably affected by the continued strength of the Euro
by approximately $332,000.
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"This was another solid quarter for CFC, and we are excited with the number
of opportunities that are in front of us in the next several quarters," said
Greg Jehlik, CFC's President and Chief Executive Officer. "Our financial results
for the quarter reflect the strengths of our worldwide employees being aligned
with our business objectives, and our ability to serve a diversified marketplace
with solutions." Jehlik further stated that, "We continue to invest in
generating cost-effective and value-added solutions for our customers that will
position CFC for long-term growth."
Based upon the Company's results and the current economic outlook, the
Company anticipates meeting its previously stated net income of $1.10 - $1.15
per share on a fully diluted basis for calendar year 2005, utilizing a 35.4% tax
rate.
Recent Developments
The company reports that the first embosser in the Chicago Heights,
Illinois facility has been successfully installed and had its first production
run the week of February 21, 2005.
The embosser for Europe arrived in Europe on April 15, 2005 and the Company
expects this embosser to be on schedule and on line during the second quarter of
2005.
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.
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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 www.cfcintl.com.
CFC INTERNATIONAL, INC.
Consolidated Statements of Income
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1st 1st
(In Thousands, Except Earnings Per Share and Quarter Quarter
Operating Income Percentage) 2005 2004
- -------------------------------------------------------------------------------
Net sales $22,989 $20,824
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Cost of goods sold (excluding
depreciation and amortization shown below) 14,403 13,024
Operating expenses 4,627 4,434
Depreciation and amortization 1,174 1,339
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Operating income 2,785 2,027
Operating income % 12.1% 9.7%
Interest expense 279 299
Interest income (5) (1)
(Gain) loss on interest rate swap (65) 67
Other income (rental income) (33) (28)
Foreign currency exchange loss 277 25
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Income before income taxes 2,332 1,665
Provision for income taxes 832 511
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Net income $1,500 $1,154
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Diluted Weighted Average Number of Shares Outstanding 4,613 4,493
Diluted Earnings Per Share $0.33 $0.26
Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (Note 1) $3,959 $3,366
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1st 1st
(In Thousands) Quarter Quarter
2005 2004
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International Net Sales $10,629 $9,969
International Net Sales 46.2% 47.9%
NOTE 1: The Company believes earnings before interest expense, income taxes,
depreciation and amortization (adjusted EBITDA) is an useful measurement for its
business because management understands that such information is considered by
certain investors as an additional basis on which to evaluate the Company's
ability to pay interest, repay debt and make capital expenditures. 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 following reconciles net
income to adjusted EBITDA as defined:
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1st 1st
(In Thousands) Quarter Quarter
2005 2004
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Net income $1,500 $1,154
Add back (subtract):
Income taxes 832 511
Interest expense 279 299
Interest income (5) (1)
Depreciation and amortization 1,174 1,339
(Gain) loss on interest rate swap (65) 67
Other income (rental income) (33) (28)
Foreign currency exchange loss 277 25
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Adjusted EBITDA $3,959 $3,366
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CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2005 AND DECEMBER 31, 2004
March 31, December 31,
2005 2004
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ASSETS
Cash and cash equivalents ........................ $ 3,084,131 $ 4,554,699
Restricted cash .................................. 306,380 306,271
Accounts receivable, less allowance
for doubtful accounts .......................... 13,211,049 12,547,380
Inventories ...................................... 17,815,114 17,709,138
Other current assets ............................. 1,540,710 1,389,790
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Total current assets ......................... 35,957,384 36,507,278
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Property, plant and equipment, net ............... 27,730,315 28,602,311
Deferred income taxes ............................ 3,517,612 3,528,686
Intangible assets, net ........................... 2,322,578 2,393,466
Other assets ..................................... 269,817 266,806
Goodwill ......................................... 1,029,462 1,029,462
Fair value of interest rate swap ................. 104,874 39,553
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Total assets ..................................... $70,932,042 $72,367,562
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt ................ $ 5,398,488 $ 5,625,085
Accounts payable and accrued expenses ............ 12,863,263 15,314,782
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Total current liabilities .................... 18,261,751 20,939,867
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Deferred income taxes ............................ 3,221,756 3,229,584
Fair value of interest rate swap ................. -- --
Long-term debt ................................... 15,012,665 15,698,791
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Total liabilities ............................ 36,496,172 39,868,242
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Stockholders' equity ............................. 34,435,870 32,499,320
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Total liabilities and stockholders' equity ... $70,932,042 $72,367,562
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