Cfc (NASDAQ:CFCI)
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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