<PAGE> 1
FORM 10K
Securities and Exchange Commission
Washington, D.C. 20549
[x] Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 [Fee required]
For the fiscal year ended June 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [No fee required] For the transition period from
______ to ______
Commission file number 0-8555
CFI INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3831068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
935 W. Union Avenue,
Wheaton, Illinois 60187
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 668-2838
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $1.00 par value
(Title of Class)
Indicate 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 ___
At August 31, 1995, 1,997,335 shares of the registrant's common stock were
outstanding, and the aggregate market value of the common stock held by
non-affiliates of the registrant as of such date was $4,142,144 based on the
closing price of such stock.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Document Incorporated by Reference
Portions of registrant's Proxy Statement in connection with its 1995 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS
General
CFI Industries, Inc. (the "Company" or "CFI") , a Delaware corporation, is a
fully integrated custom thermoformer of plastic packaging for the
hospital/medical, consumer products, electronics and cosmetics markets.
The Company designs, markets and manufactures functional and innovative
packaging for its customers through its wholly owned subsidiary, Plastofilm
Industries, Inc. ("Plastofilm"). For a discussion of other operations which
the Company sold in prior years see "Operations Sold in Prior Years" located
elsewhere in this business section.
The Company's and Plastofilm's executive offices are located at 935 W. Union
Avenue, Wheaton, Illinois 60187 and its telephone number is (708) 668-2838.
The Company was organized in 1972.
Operations
Plastofilm produces custom thermoformed packaging, point of purchase displays
and a variety of disposable packaging products for the hospital/medical,
consumer products, electronics and cosmetics industries. Most applications
involve design of custom molds or dies by Plastofilm's design and engineering
departments.
The Company's primary production process includes the extrusion of purchased
plastic resins into roll stock, thermoforming roll stock into finished product
and performing various secondary operations such as punching, assembly, sealing
and packaging. Production equipment includes extruders and thermoforming
machines. A Class 100,000 clean room is maintained for the production of
certain medical and electronic packaging products. Support for production
include a computer aided design equipment based staff, a production tool design
and maintenance shop, and a prototype model shop.
Manufacturing is conducted in two facilities. An owned 120,000 square foot
manufacturing facility in Wheaton, Illinois includes four extrusion lines and
sixteen thermoforming machines, including the Class 100,000 clean room
operation. A leased 40,000 square foot production facility in Sparks, Nevada,
started in June, 1992, includes four thermoforming machines.
Plastofilm has a nation-wide customer base, the majority of which are located
in the Midwest and West. A majority of its customers are in the
hospital/medical, consumer products, electronics and cosmetics markets.
Plastofilm markets its products primarily through its own national sales force
who are supported by the design and product development team and the customer
service organization located in Wheaton, Illinois. The Sparks, Nevada facility
products for the West Coast market and allows Plastofilm to more
effectively compete against other West Coast plastic thermoformers. Expansion
of this Strategy will be evaluated in 1996 to include production facilities in
Texas and Puerto Rico to meet the growing business opportunities in these
regions.
Plastofilm's customers are continuing to become more directed to oversee
product development. To serve this product migration the Company is
pursuing the establishment of production capability in Ireland. This facility
will support sales to the entire European Economic Community.
During fiscal years 1995, 1994 and 1993, sales to Baxter International, Inc.
and its affiliates accounted for approximately 17%, 16% and 12%,
respectively, of the total net sales of the Company.
Plastofilm purchases its raw material in roll stock and pellet form from
several suppliers and an adequate supply of raw material is available.
Plastofilm also recycles most of its scrap plastic by regrinding and
reprocessing it. During fiscal 1995 and 1994, the Company experienced
price increases for its purchased plastic resins. In accordance with its
standard selling terms and conditions, the Company has increased the price of
its products to reflect this increased cost.
1
<PAGE> 3
Operations Sold in Prior Years
From June 1989 to April 1991, the Company also manufactured thermoformed
packaging products for the food service industry through its indirect wholly
owned subsidiary, Form-Fit, Inc. ("Form-Fit"), which was acquired June 8, 1989.
On April 15, 1991, the Company sold 100% of the capital stock of Form-Fit to
Detroit Forming, Inc. ("Detroit Forming") and entered into a noncompetition
agreement with Detroit Forming for an aggregate purchase price of $3.9 million.
Competition
Plastofilm operates in a highly competitive industry. The Company estimates
that there are approximately 750 companies engaged in the production of
thermoformed plastic packaging, the great majority of which are smaller than
Plastofilm. The Company believes its principal competitive strengths include
its design abilities, its manufacturing facilities and equipment, a reputation
for quality thermoforming derived from more than 50 years in the plastic
thermoforming industry and its in-house extrusion capabilities which allow it
to maximize material utilization and provide rapid response time to customer
requirements.
Government Regulation
The Company's plastic thermoforming operations are not subject to any
comprehensive federal laws or regulations which relate specifically to such
activities. However, in the past ten years, certain municipalities have passed
laws which regulate the chemical properties (such as recyclability or
biodegradability) of plastic packaging products. To date, these laws have not
had any adverse affect on the Company's operations.
Backlog
Order backlog for thermoformed plastic products was approximately $7.1 million
at June 30, 1995 and $6.8 million at June 26, 1994.
Employees
As of June 30, 1995, the Company employed approximately 250 persons. The
Company believes that it has good relations with its employees.
2
<PAGE> 4
ITEM 2. PROPERTIES
Plastofilm's administrative headquarters and principal manufacturing operations
are located in an owned facility in Wheaton, Illinois, a leased warehouse
facility in Batavia, Illinois, and a second manufacturing operation, located in
leased facilities in Sparks, Nevada, which services customers located on the
West Coast. Current plans anticipate additional facilities in Ireland, Puerto
Rico and Texas. This expanded operating base will enable the Company to better
serve its present base of multinational customers.
Testing has revealed soil conditions at Plastofilm's Wheaton, Illinois facility
which require remediation. During fiscal 1993 the Illinois Environmental
Protection Agency ("IL-EPA") requested certain additional testing to be
performed before approval of the Company's voluntary clean-up plan. These
tests were conducted in fiscal 1994 and submitted to the IL-EPA in Fiscal 1995
for approval. The approval of the Company's voluntary clean-up plan is
pending. (See Note 10 to the Consolidated Financial Statements.)
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Company and its subsidiaries may from
time to time be involved as plaintiffs or defendants in various legal
proceedings. It is the opinion of the Company, based in part upon the advice of
its counsel, that any lawsuits not provided for in the Consolidated Financial
Statements are either without merit, are covered by insurance, or are otherwise
of such a nature that their ultimate disposition will not be material in
relation to the Company's consolidated results of operations or financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
3
<PAGE> 5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded over-the-counter, listed and quoted on the
NASDAQ National Market System under the symbol CFIB. The following table sets
forth, for the fiscal quarters indicated, the high and low sales prices per
share of the Company's common stock:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1995
4th Quarter $4.125 $3.50
3rd Quarter $4.75 $3.75
2nd Quarter $4.875 $4.125
1st Quarter $3.75 $2.75
1994
4th Quarter $3.25 $2.625
3rd Quarter $2.875 $2.50
2nd Quarter $3.00 $2.25
1st Quarter $2.75 $2.25
</TABLE>
There were approximately 1,900 record holders of the Company's common stock at
August 31, 1995.
The Company has not paid dividends on its common stock since its organization
and has no current intention to pay dividends.
4
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------------------------------------
June 30, June 26, June 27, June 28, June 30,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net Sales $31,287 $28,730 $30,164 $29,737 $38,897
Gross Profit 8,100 6,616 6,596 5,986 9,495
Operating Income (Loss) 1,782 154 (49) (685) 1,436
Net Income (Loss) 1,808 (842) (448) (1,900) (182)
Net Income (Loss)
per Common Share $0.86 ($0.42) ($0.22) ($0.95) ($0.09)
Total Assets $19,023 $19,214 $19,475 $21,413 $20,987
Long-term Liabilities $ 3,072 $ 3,612 $ 3,980 $ 4,419 $ 4,792
</TABLE>
Data for the fiscal year ended June 30, 1995 is not comparable to data for
prior years due to:
1. Operating (Loss) for 1994 excludes non-recurring severance costs of
$370,000.
2. 1992 and 1991 Net (Loss) included a provision for soil remediation of $1.0
million in each year.
3. 1991 results included the operations of Form-Fit until date of sale (April
15, 1991).
5
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Company manufactures and markets thermoformed plastic products.
Sales of thermoformed plastic products were $31.3 million in fiscal 1995,
compared to $28.7 million and $30.2 million in fiscal 1994 and 1993,
respectively. The sales increase in fiscal 1995 was a result of increased
demand in the medical supply market, the Company's principal market. The
sales decrease in fiscal 1994 as compared to fiscal 1993 was a result of
depressed conditions in the medical supply market.
The gross profit percentage was 25.9% in fiscal 1995, compared to 23.0% and
21.9% in fiscal 1994 and 1993, respectively. The increase in gross profit for
fiscal 1995 over 1994 and fiscal 1994 over 1993 was due to reductions in direct
labor costs and continued improvements in operating efficiencies.
Selling expenses were $4.0 million in fiscal 1995, compared to $4.2 million and
$4.1 million in fiscal 1994 and 1993, respectively. The decrease in fiscal
1995 as compared to fiscal 1994 and 1993 was primarily due to labor cost
reductions.
General and administrative expenses were $2.3 million, $2.2 million and $2.5
million in fiscal 1995, 1994 and 1993, respectively. The decreases in fiscal
1995 and 1994 as compared to fiscal 1993 were primarily due to reductions in
personnel and the impact of cost savings programs.
Operating income for fiscal 1995 was $1.8 million as compared to losses of
$216,000 and $49,000 in fiscal 1994 and 1993, respectively. Included in the
operating loss for fiscal 1994 was $370,000 of non-recurring severance costs.
The $1.65 million improvement in operating income, after adjustment for the
non-recurring severance costs, was a result of increased gross margins due to
higher sales volume, increased operating efficiencies and the impact of ongoing
cost reduction programs. The reduction in operating losses of $203,000, after
adjustment for non-recurring severance costs, for fiscal 1994 as compared to
1993 was a result of increased operating efficiencies.
Net interest expense was $0.4 million in fiscal 1995 and 1994 compared to $0.2
million in fiscal 1993. The increase in fiscal 1995 and 1994 over 1993 was
principally due to higher average debt levels, higher interest rates and
reduced cash and marketable securities balances resulting in lower interest
income.
During fiscal 1991 soil conditions at Plastofilm's Wheaton, Illinois facility
were discovered which need remediation. At June 30, 1991 a pre-tax provision
of $1.0 million was recorded for the estimated costs of testing and
remediation. Fiscal 1992 expenditures for testing and remediation were
approximately $535,000. At June 28, 1992, an additional pre-tax provision of
$1.0 million was recorded to reflect the then currently estimated costs to
complete the soil remediation. Expenditures during fiscal 1995, 1994 and 1993
were approximately $78,000, $67,000 and $127,000, respectively. During fiscal
1993, the Illinois Environmental Protection Agency requested certain additional
testing be performed before approval of the Company's voluntary clean-up
plan. These tests were conducted in fiscal 1994 and submitted to the Illinois
Environmental Protection Agency in fiscal 1995 for approval. The approval of
the Company's voluntary clean-up plan is pending.
6
<PAGE> 8
Order backlog for thermoformed plastic products was $7.1 million at June 30,
1995 as compared to $6.8 million at June 26, 1994 and $7.6 million at June 27,
1993. The decrease in backlog at June 26, 1994 as compared to June 27, 1993
was a reflection of shortening lead times between customer's orders and
shipments.
Liquidity and Capital Resources
Working capital and related current ratios are shown in the following table
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, June 26, June 27,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Working Capital $ 2,073 $ 269 $ 1,148
Current Ratio 1.28 1.03 1.15
</TABLE>
Working capital of $2,073,000 at June 30, 1995 was up $1,804,000 from the prior
year end. The increase in net working capital was primarily attributable to a
reduction in short-term debt and an increase in deferred tax benefits. Working
capital of $269,000 at June 26, 1994 was down $879,000 from the prior year as a
result of using short-term debt to finance capital expenditures.
Expenditures for replacement and refurbishment of property and equipment were
$0.9 million in each of the last three fiscal years. Principal expenditures
for fiscal 1995 included the upgrade of manufacturing equipment and management
information systems. The majority of the fiscal 1995 expenditures were
financed through borrowings under Plastofilm's capital expenditure line and
operating cash flow. The 1994 and 1993 capital expenditures were financed
through draws on Plastofilm's short-term credit facility. As of June 30, 1995,
there was $1.7 million available under Plastofilm's short-term credit facility
and $0.5 million under Plastofilm's capital expenditure facility. The Company
was in compliance with the covenants of its credit agreement.
Plastofilm's liquidity and capital needs through fiscal 1996 include the
anticipated establishment of additional production facilities in east central
Texas and Northern Ireland, the upgrade and replacement of existing equipment,
as well as to finance the soil remediation expenditures at its Wheaton,
Illinois facility. The funds required to finance these items are expected to
be provided by operating cash flow, the Company's existing credit facilities
grants which are expected to be made available from the Industrial Development
Board of Northern Ireland and/or from other credit facilities which may become
available to the Company.
The Company has received a demand for payment of withdrawal liability in the
amount of approximately $360,000 from a multi-employer pension plan to which
the Company made contributions in connection with a discontinued business. The
Company disputes that it has any withdrawal liability to the plan and, in
accordance with the applicable provisions of the Employee Retirement Income
Security Act, has demanded that this dispute be resolved through arbitration.
The Company is making quarterly contributions of approximately $10,000 as
required by law pending arbitration. Through June 30, 1995, the Company has
made payments of approximately $95,000. These payments will be returned to the
Company, with interest, if it is ultimately determined that the Company has no
liability.
The Company, in connection with a discontinued business, has been named by the
United States Environmental Protection Agency ("US-EPA") as a potentially
responsible party in a Superfund Proceeding. The US-EPA has determined the
Company to be a de minimus contributor and has offered a settlement agreement
to all de minimus parties. The Company has accepted the settlement agreement
which will require total payments of $80,586, which will be made in two equal
installments on January 16, 1996 and July 16, 1996.
7
<PAGE> 9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
Financial Statements:
CFI INDUSTRIES, INC. AND SUBSIDIARIES
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10
Consolidated Balance Sheets as of June 30, 1995 and June 26, 1994 . . . . . . . . . . . . . . . Page 11
Consolidated Statements of Operations for the Years Ended June 30, 1995,
June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 12
Consolidated Statements of Stockholders' Equity
for the Years Ended June 30, 1995, June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . Page 13
Consolidated Statements of Cash Flows for the Years Ended June 30, 1995,
June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 14
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Page 15 - 22
Financial Statement Schedules:
CFI INDUSTRIES, INC. AND SUBSIDIARIES
I - Condensed Financial Information of Registrant (Parent Company) . . . . . . . . . . . Page 23 - 25
II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
</TABLE>
All other schedules have been omitted because they are inapplicable, not
required or the information is included in the financial statements or notes
thereto.
8
<PAGE> 10
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CFI INDUSTRIES, INC.
WHEATON, ILLINOIS
We have audited the accompanying consolidated balance sheets of CFI Industries,
Inc. and subsidiaries as of June 30, 1995 and June 26, 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended June 30, 1995. Our audits also
included the financial statement schedules listed in the Index at Item 8. These
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of CFI Industries, Inc. and
subsidiaries at June 30, 1995 and June 26, 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Deloitte & Touche LLP
Chicago, Illinois
August 23, 1995
9
<PAGE> 11
CFI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND JUNE 26, 1994
(AMOUNTS IN THOUSANDS, EXCEPT COMMON SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,211 $ 267
Marketable securities - 1,524
Trade receivables, net of allowance for
doubtful accounts of $15 in 1995 and $9 in 1994 3,706 3,432
Inventories 2,818 2,442
Prepayments and other 486 622
Deferred income taxes 1,173 762
------- --------
Total Current Assets 9,394 9,049
Property and equipment, at cost,
less accumulated depreciation 7,043 7,509
Intangible assets, at cost, net of accumulated
amortization of $768 in 1995 and $686 in 1994 2,531 2,614
Other assets 55 42
------- --------
$19,023 $ 19,214
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 800 $ 2,000
Current maturities of long-term debt 742 687
Current portion of other long-term liabilities 55 76
Accounts payable 2,388 2,273
Accrued liabilities:
Salaries and wages 867 932
Insurance 417 634
Provision for soil remediation 1,193 1,271
Other 859 907
------- --------
Total Current Liabilities 7,321 8,780
Long-term debt 2,229 2,618
Other long-term liabilities 200 232
Deferred income taxes 643 762
------- --------
Total Liabilities 10,393 12,392
------- --------
Commitments and Contingent Liabilities (Notes 6 & 10)
Stockholders' Equity:
Common stock, $1.00 par value, 10,000,000
shares authorized, 1,991,407 and 1,991,420 shares
issued and outstanding in 1995 and 1994, respectively 1,991 1,991
Paid-in surplus 16,374 16,374
Deficit (9,735) (11,543)
Total Stockholders' Equity -------- --------
8,630 6,822
------- --------
$19,023 $ 19,214
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<PAGE> 12
CFI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1995, JUNE 26, 1994 AND JUNE 27, 1993
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- ------------
<S> <C> <C> <C>
Net sales $31,287 $28,730 $30,164
Cost of sales 23,187 22,114 23,568
------- ------- -------
Gross profit 8,100 6,616 6,596
Selling expenses 4,048 4,229 4,101
General and administrative expenses 2,270 2,233 2,544
Non-recurring severance costs --- 370 ---
------- ------- -------
Operating income (loss) 1,782 (216) (49)
Interest expense 426 438 376
Interest income (54) --- (132)
Other income (63) (23) (81)
Other expense 165 211 236
------- ------ ------
Income (loss) before income taxes 1,308 (842) (448)
Income tax (benefit) (500) --- ---
------- ------- -------
Net income (loss) $ 1,808 $ (842) $ (448)
======= ======= =======
Per common share:
Net income (loss) $ 0.86 $ (0.42) $ (0.22)
======= ======= =======
Weighted average common shares outstanding 2,104 1,991 2,003
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
11
<PAGE> 13
CFI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1995, JUNE 26, 1994 AND JUNE 27, 1993
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Common
Common Paid-In Stock In
Stock Surplus Deficit Treasury Total
----------- ------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, June 28, 1992 $2,009 $16,426 $(10,253) $ --- $8,182
Net (loss) --- --- (448) --- (448)
Purchase of treasury stock --- --- --- (70) (70)
------ ------- -------- ----- ------
Balance, June 27, 1993 2,009 16,426 (10,701) (70) 7,664
Net (loss) --- --- (842) --- (842)
Cancellation of treasury stock (18) (52) --- 70 ---
------ ------- -------- ----- ------
Balance, June 26, 1994 1,991 16,374 (11,543) --- 6,822
Net income --- --- 1,808 --- 1,808
------ ------- -------- ----- ------
Balance, June 30, 1995 $1,991 $16,374 $ (9,735) $ $8,630
====== ======= ======== ===== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE> 14
CFI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1995, JUNE 26, 1994 AND JUNE 27, 1993
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,808 $ (842) $ (448)
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 1,234 1,200 1,095
Provision for doubtful accounts 4 9 7
Provision for losses, asset write-offs and other 24 47 112
Provision for deferred taxes (530) --- ---
Deferred severance and compensation --- 191 7
(Gain) loss on sale of assets (58) 73 (53)
Changes in assets and liabilities:
Trade receivables (278) (467) 507
Inventories (400) 324 (372)
Prepayments and other current assets 136 (363) (45)
Accounts payable and accrued liabilities (314) 31 (1,152)
Other - net (58) 15 (9)
------ ------ ------
Net cash flows from operating activities 1,568 218 (351)
------ ------ ------
Cash flows from investing activities:
Capital expenditures (912) (883) (872)
Sales of marketable securities 1,524 594 1,453
Proceeds from sale of property and equipment 298 98 53
------ ------ ------
Net cash flows from investing activities 910 (191) 634
------ ------ ------
Cash flows from financing activities:
Net (re-payments) borrowings under line of credit (1,200) 800 400
Purchase of treasury stock --- --- (70)
Proceeds from long-term debt 480 --- ---
Reduction in long-term debt (814) (613) (614)
------ ------ ------
Net cash flows from financing activities (1,534) 187 (284)
------ ------ ------
Net increase (decrease) in cash 944 214 (1)
Beginning cash 267 53 54
------ ------ ------
Ending cash $1,211 $ 267 $ 53
====== ====== ======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 425 $ 467 $ 374
Income taxes $ 20 $ --- $ ---
Supplemental schedule of non-cash investing and financing
activities:
Capital leases $ --- $ 157 $ ---
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE> 15
CFI INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995, JUNE 26, 1994 AND JUNE 27, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR -- The Company's fiscal year ends on the last day in June. Prior
to fiscal 1995 the Company's fiscal year ended the last Sunday in June.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of CFI Industries, Inc. and subsidiaries (the "Company" or "CFI").
All significant intercompany accounts and transactions have been eliminated.
MARKETABLE SECURITIES -- Marketable securities, which were carried at the lower
of cost or market, consisted of a mutual fund invested primarily in 100%
government backed mortgage securities. Unrealized losses on such securities in
fiscal 1994 of $77,000 were offset against interest income.
REVENUE RECOGNITION -- Revenue from product sales is recognized at the time the
product is shipped.
INVENTORIES -- Inventories, which consist of roll stock and pelletized or
thermoformed plastics, are carried at the lower of cost or net realizable value
using the first-in, first-out or weighted average cost methods. Cost includes
raw material, labor and manufacturing overhead.
Inventories at June 30, 1995 and June 26, 1994 consisted of the following
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, June 26,
1995 1994
---- -----
<S> <C> <C>
Raw material $1,018 $ 822
Work in process 158 172
Finished goods 1,642 1,448
----- -----
$2,818 $2,442
====== ======
</TABLE>
DEPRECIATION -- Depreciation for financial reporting purposes is provided by
using the straight-line method based upon the estimated useful lives of the
assets as follows: buildings, 10 to 40 years; equipment, 3 to 20 years; and
furniture and fixtures, 4 to 10 years.
INTANGIBLE ASSETS -- Intangible assets consist of goodwill, the cost in excess
of net asset value of an acquired business, which is being amortized on a
straight-line basis over a period of 40 years. The Company reviews the
recoverability of goodwill based upon anticipated future operating results, on
a nondiscounted basis, of the acquired business compared with the scheduled
goodwill amortization.
14
<PAGE> 16
CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE -- The number of shares used
in the net income (loss) per common share calculation is the weighted average
number of shares of common stock and common stock equivalents outstanding
during each period. Common stock equivalents, in the form of stock options,
have been included in the fiscal 1995 calculation of weighted average shares
outstanding using the treasury stock method. There were no common stock
equivalents included in the calculation of net loss per common share for fiscal
1994 and 1993 as outstanding options were antidilutive during such periods.
STATEMENTS OF CASH FLOWS -- For purposes of the Statements of Cash Flows, the
Company considers all highly liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents.
2. TRANSACTIONS WITH RELATED PARTIES
For fiscal 1995, 1994 and 1993, the Company paid $23,000, $32,000 and $20,000,
respectively, for legal services rendered by Rosenberg & Liebentritt, P.C., a
law firm whose two shareholders are members of the Company's Board of
Directors. The Company believes that these fees are no less favorable than
could be obtained from an outside party.
In addition, individuals and companies affiliated with Equity Group
Investments, Inc. ("EGI"), a related party, provide services to the Company and
its subsidiaries relating to corporate planning, tax advice and other matters.
Amounts paid to EGI or its affiliates for such services in fiscal 1995, 1994
and 1993 were $46,000, $69,000 and $42,000, respectively. The Company believes
that these fees are no less favorable than could be obtained from an outside
party.
3. PROPERTY AND EQUIPMENT
Components of property and equipment at June 30, 1995 and June 26, 1994 were as
follows (amounts in thousands):
<TABLE>
<CAPTION>
June 30, June 26,
1995 1994
------- ------
<S> <C> <C>
Land and improvements $ 544 $ 681
Buildings and improvements 3,527 3,514
Machinery and equipment 8,707 8,014
Furniture, fixtures and other 1,506 1,404
Construction-in-progress 65 99
------- -------
14,349 13,712
Less accumulated depreciation 7,306 6,203
------- -------
$ 7,043 $ 7,509
======= =======
</TABLE>
15
<PAGE> 17
Included in the above amounts are items under capitalized leases as follows
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, June 26,
1995 1994
------- ----------
<S> <C> <C>
Cost $197 $197
Less accumulated depreciation 50 14
---- ----
$147 $183
==== ====
</TABLE>
Maintenance and repair expense during fiscal 1995, 1994 and 1993 was $1.7
million, $1.7 million and $1.6 million, respectively.
4. SHORT-TERM DEBT
Plastofilm Industries, Inc. ("Plastofilm"), a wholly owned subsidiary of the
Company, has a secured loan agreement (the "Agreement") with a financial
institution pursuant to which it has borrowings under a revolving line of
credit, a term loan and a capital expenditure line. The Agreement is secured
by substantially all of Plastofilm's assets. (See Note 5.)
The $2.5 million line of credit bears interest at the prime rate plus 1/4%
(9.25% at June 30, 1995) and is renewable at the option of such financial
institution on November 30, 1995. Plastofilm anticipates that this line of
credit will be renewed. During the fiscal year ended June 30, 1995, maximum
borrowings under this line were $2.0 million and borrowings under this line
at June 30, 1995 were $0.8 million. During the fiscal year ended June 26,
1994, Plastofilm's line of credit was $2.0 million, maximum borrowings under
this line were $2.0 million and $2.0 million was outstanding at June 26, 1994.
Average borrowings were $1,625,000 and $1,643,000 for the fiscal years ended
June 30, 1995 and June 26, 1994, respectively. The weighted average interest
rate was 8.61% in fiscal 1995 and 6.46% in fiscal 1994.
5. LONG-TERM DEBT
Long-term debt consisted of the following as of June 30, 1995 and June 26, 1994
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, June 26,
1995 1994
-------- --------
<S> <C> <C>
Mortgage note, prime rate +1/2%
due 1998 $ 292 $ 455
Term loan, prime rate +1/4%,
due 1996 2,130 2,700
Capital expenditure loan,
prime rate +1/2%, due 2000 480 ---
Lease obligations, 8.65%-16.92%,
due through 1996 69 150
------ ------
2,971 3,305
Less current maturities 742 687
------ ------
$2,229 $2,618
====== ======
</TABLE>
16
<PAGE> 18
The long-term debt matures as follows: $742,000 in 1996, $1,687,000 in 1997,
$326,000 in 1998, $96,000 in 1999, $96,000 in 2000 and $24,000 thereafter.
The Agreement between Plastofilm and its lender restricts the transfer of funds
between Plastofilm and the Company through the imposition of tangible net worth
requirements, debt to equity ratios and cash flow requirements. As a result of
these restrictions, approximately 75% of the consolidated net assets of
Plastofilm were restricted from being transferred to the Company as of June 30,
1995.
6. COMMITMENTS
The Company and its subsidiaries lease certain facilities and equipment under
various lease agreements. Total minimum commitments payable under these leases
at June 30, 1995 were (amounts in thousands):
<TABLE>
<CAPTION>
Fiscal Year Operating Capital
----------- --------- -------
<S> <C> <C>
1996 $ 304 $ 69
1997 278 ---
1998 132 ---
1999 120 ---
2000 60 ---
----- -----
Total minimum lease payments $ 894 69
=====
Less amount representing interest 4
-----
Present value of minimum lease payments $ 65
=====
</TABLE>
Rent expense for operating leases was $364,000, $279,000 and $305,000 for
fiscal 1995, 1994 and 1993, respectively.
17
<PAGE> 19
7. INCOME TAXES
The provision (benefit) for income taxes was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
U.S. Federal $ 30 $--- $---
Deferred (530) $--- $---
----- ---- ----
$(500) $--- $---
===== ==== ====
</TABLE>
The income tax benefit differed from the federal statutory rate as detailed
below (amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal income tax computed at the
statutory rate $ 444 $ (286) $(131)
Additional (benefit) provision from:
Utilization of net operating loss
carryforwards, net (457) --- ---
Recognition of future tax benefits
previously generated (530) --- ---
Tax benefits available in future
years --- 261 106
Goodwill amortization 25 25 25
Other, net 18 --- ---
----- ------ -----
Total income tax (benefit) $(500) $ --- $ ---
===== ====== =====
</TABLE>
At June 30, 1995 and June 26, 1994 the components of deferred income taxes were
as follows (amounts in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Net operating loss and credit
carryforwards $ 2,999 $ --- $ 3,456 $ ---
Depreciation and amortization ---- 643 --- 762
Provision for soil remediation 405 --- 432 ---
Other allowances and accruals 451 --- 589 ---
Valuation reserve (2,682) --- (3,715) ---
------- ----- ------- -----
$ 1,173 $ 643 $ 762 $ 762
======= ===== ======= =====
</TABLE>
18
<PAGE> 20
A valuation reserve is provided to reduce the deferred tax assets to a level
which management expects will be realized in the future. The valuation reserve
for deferred tax assets as of June 26, 1994 was $3,715,000. The net change in
the total valuation reserve for the year ended June 30, 1995 was a decrease of
$1,033,000. Of this amount $457,000, resulted from the utilization of $487,000
of net operating loss carryforwards net of $30,000 of alternative minimum tax
credits generated. The remaining $576,000 decrease resulted primarily from the
Company's reevaluation of the realizability of future income tax benefits based
on the Company's increased future profit expectations and improving business
conditions.
At June 30, 1995, for income tax purposes the Company had net operating loss
carryforwards of $6.7 million and general business credits carryforwards of $.7
million. The net operating loss carryforwards expire in years 2001 to 2009;
the general business credits carryforwards expire in years 1999 and 2000.
8. EMPLOYEE RETIREMENT PLANS
Until December 31, 1991, Plastofilm had a non-contributory profit sharing plan
and a non-contributory pension plan. On November 12, 1991, the Board of
Directors of Plastofilm adopted a resolution to curtail future benefit accruals
in both plans as of December 31, 1991 and effective May 31, 1995 the pension
plan was terminated. The pension plan obligation was not settled as of June
30, 1995. The settlement is not expected to have a material effect on the
fiscal 1996 financial statements. The vested benefits in the profit sharing
plan were placed in a new cash or deferred arrangement pursuant to Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), the
Plastofilm Employee Savings Plan ("Savings Plan"), which became effective on
January 1, 1992.
The Savings Plan is for all employees. Plastofilm's contributions to the
savings plan are at the discretion of Plastofilm's Board of Directors. It is
currently Plastofilm's policy to contribute from 1% to 3% of each participant's
compensation by matching 50% of employee voluntary salary deferrals of the
first 6% of an employee's salary. A participant's contribution may not exceed
15% of annual compensation, or the maximum amount allowable as determined by
the Code, if less than 15% of compensation. The amounts expensed under the
Savings Plan for fiscal 1995, 1994 and 1993 were $238,000, $252,000 and
$208,000, respectively.
Plastofilm's net periodic pension credit included the following components
(amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service costs - benefits earned
during the period $--- $--- $---
Interest cost of projected benefit
obligations 48 54 58
Actual return on assets (82) (17) (33)
Net amortization and deferral 15 (59) (44)
---- ---- ----
Net pension credit $(19) $(22) $(19)
==== ==== ====
</TABLE>
19
<PAGE> 21
The funded status of Plastofilm's retirement plan at June 30, 1995 and June 26,
1994 was as follows (amounts in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accumulated benefit obligations:
Vested $ 730 $ 822
Nonvested --- 11
----- -----
Total accumulated benefit obligations 730 833
Effect of projected future compensation levels --- ---
----- -----
Projected benefit obligation 730 833
Plan assets at fair value 818 844
----- ----
Plan assets in excess of projected benefit obligation 88 11
Unrecognized net loss 236 419
Unrecognized net assets and other (215) (238)
----- -----
Net prepaid pension asset $ 109 $ 192
===== =====
</TABLE>
In determining the net periodic pension credit, the weighted average discount
rate used was 6.5% in fiscal 1995 and 6.0% in fiscal 1994 and 1993. The
weighted average expected long-term rate of return on assets was 7.50% in
fiscal 1995 and 1994 and 6.75% in fiscal 1993.
9. STOCK OPTIONS
The Company had originally reserved 100,000 shares of its common stock for
issuance to Directors, officers, key employees and consultants of the Company
through incentive stock options, non-qualified stock options and stock
appreciation rights to be granted under the Company's 1991 Stock Option Plan
(the "Plan"). In April 1994, the Company's Board of Directors approved a
proposed amendment to the Company's Plan which would increase the number of
common shares issuable upon exercise of stock options by 500,000 common shares.
The proposed amendment was approved by stockholders at the Company's Annual
Meeting of Stockholders held on December 6, 1994. The plan is administered by
the Compensation Committee (the "Committee") consisting of three members of the
Board of Directors. The option price is determined by the Committee, but
cannot be less than the fair market value of the common stock of the Company at
the date of grant. The options generally vest, in equal cumulative
installments, after three years and expire ten years after the date of grant.
Transactions involving the plan are summarized as follows:
<TABLE>
<CAPTION>
Price Range 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Outstanding, beginning of year $2.63 - $4 236,167 37,500
Granted $2.63 - $4.38 146,000 268,000
Canceled $2.63 - $4 (1,667) (69,333)
Exercised --- ---
------- -------
Outstanding, end of year $2.63 - $4.38 380,500 236,167
======= =======
Exercisable, end of year 236,500 118,500
Reserved for future option grants 219,500 363,833
</TABLE>
Included in the fiscal 1994 options outstanding and exercisable were 172,000
shares and 100,000 shares, respectively, which were subject to stockholder
approval.
20
<PAGE> 22
10. CONTINGENT LIABILITIES
During fiscal 1991 soil conditions at Plastofilm's Wheaton, Illinois facility
were discovered which need remediation. At June 30, 1991, a pre-tax provision
of $1.0 million was recorded for the estimated costs of testing and
remediation. Fiscal 1992 expenditures for testing and remediation were
approximately $535,000. At June 28, 1992, an additional pre-tax provision of
$1.0 million was recorded to reflect the then currently estimated costs to
complete the soil remediation. Expenditures during fiscal 1995, 1994 and 1993
for testing and remediation were approximately $78,000, $67,000 and $127,000,
respectively. During fiscal 1993 the Illinois Environmental Protection Agency
requested certain additional testing to be performed before approval of the
Company's voluntary clean-up plan. These tests were conducted in fiscal 1994
and submitted to the Illinois Environmental Protection Agency in fiscal 1995
for approval. The approval of the Company's voluntary clean-up plan is
pending.
The Company has received a demand for payment of withdrawal liability in the
amount of approximately $360,000 from a multi-employer pension plan to which
the Company made contributions in connection with a discontinued business. The
Company disputes that it has any withdrawal liability and, in accordance with
the applicable provisions of the Employee Retirement Income Security Act, has
demanded that this dispute be resolved through arbitration. The Company is
making quarterly contributions of approximately $10,000 as required by law
pending arbitration. Through June 30, 1995 the Company has made payments of
approximately $95,000. These payments will be returned to the Company, with
interest, if it is ultimately determined that the Company has no liability.
The Company, in connection with a discontinued business, has been named by the
United States Environmental Protection Agency ("US-EPA") as a potentially
responsible party in a Superfund Proceeding. The US-EPA has determined the
Company to be a de minimus contributor and has offered a settlement agreement
to all de minimus parties. The Company has accepted the settlement agreement
which will require total payments of $80,586. Payments will be made in two
equal installments on January 16, 1996 and July 16, 1996. The settlement
amount has been provided for in the financial statements.
11. MAJOR CUSTOMERS
During fiscal years 1995, 1994 and 1993, net sales to Baxter International,
Inc. and its affiliates accounted for approximately $5.2 million (17%), $4.6
million (16%) and $3.6 million (12%), respectively, of the total net sales of
the Company.
21
<PAGE> 23
SCHEDULE I
CFI INDUSTRIES, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, June 26,
1995 1994
---- ----
<S> <C> <C>
Current Assets:
Cash $ 909 $ 31
Marketable securities ------- 1,524
Deferred income taxes 506 --------
Other current assets 2 3
------- --------
Total current assets 1,417 1,558
Investment in and advances to subsidiaries, net 7,804 6,020
Other non-current assets 249 257
------- --------
Total assets $ 9,470 $ 7,835
======= ========
Current Liabilities:
Accounts payable and accrued expenses $ 707 $ 879
Income taxes payable 30 10
------- --------
Total current liabilities 737 889
Non-current liabilities 103 124
------- --------
Total liabilities 840 1,013
------- --------
Stockholders' Equity:
Common stock 1,991 1,991
Paid-in surplus 16,374 16,374
Deficit (9,735) (11,543)
------- --------
Total stockholders' equity 8,630 6,822
------- --------
Total liabilities and stockholders' equity $ 9,470 $ 7,835
======= ========
</TABLE>
22
<PAGE> 24
SCHEDULE I
CFI INDUSTRIES, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended
----------------------------------------
June 30, June 26, June 27,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenue:
Interest income $ 55 $ --- $ 125
Other income (expense) (42) (36) ---
-------- -------- --------
Total revenue 13 (36) 125
-------- -------- --------
Costs and Expenses:
General and administrative expenses 121 370 411
Interest expense 18 23 14
Equity in net loss (income) of
subsidiaries (1,395) 419 (54)
Intercompany expense (income) (39) (6) 87
-------- -------- --------
Total costs and expenses (1,295) 806 458
-------- -------- --------
Income (loss) before income taxes 1,308 (842) (333)
Income taxes (benefit) (500) --- 115
-------- -------- --------
Net income (loss) 1,808 (842) (448)
Deficit - beginning of year (11,543) (10,701) (10,253)
-------- -------- --------
Deficit - end of year $ (9,735) $(11,543) $(10,701)
======== ======== ========
</TABLE>
23
<PAGE> 25
SCHEDULE I
CFI INDUSTRIES, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended
------------------------------------------
June 30, June 26, June 27,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,808 $(842) $ (448)
Equity in net loss (income) of subsidiaries (1,395) 419 (54)
Changes in assets and liabilities:
Other current assets (505) --- 4
Current liabilities (152) 10 (20)
Other net (21) (10) (96)
------- --- ------
Net cash flows from operating activities (265) (423) (614)
------- ----- ------
Cash flows from investing activities:
Proceeds from sale of marketable securities 1,524 537 1,510
------- ----- ------
Net cash flows from investing activities 1,524 537 1,510
------- ----- ------
Cash flows from financing activities:
Net intercompany activity (381) (99) (859)
Purchase of treasury stock --- --- (70)
------- ----- ------
Net cash flows from financing activities (381) (99) (929)
------- ----- ------
Net increase (decrease) in cash 878 15 (33)
Beginning cash 31 16 49
------- ----- ------
Ending cash $ 909 $ 31 $ 16
======= ===== ======
</TABLE>
24
<PAGE> 26
SCHEDULE II
CFI INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JUNE 30, 1995, JUNE 26, 1994 AND JUNE 27, 1993
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged to Deductions Balance
Beginning of Costs and Net of at End
Period Expenses Recoveries of Period
<S> <C> <C> <C> <C>
Allowance for Doubtful
Accounts Receivable
1995 $ 9 4 2 $15
1994 36 9 (36) 9
1993 42 7 (13) 36
</TABLE>
25
<PAGE> 27
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT, MANAGEMENT REMUNERATION AND TRANSACTIONS, SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 10, Item 11, Item 12 and Item 13 will be
contained in a definitive proxy statement which the Registrant anticipates will
be filed no later than October 27, 1995 and thus this part has been omitted
in accordance with General Instruction G (3) to Form 10-K.
26
<PAGE> 28
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
<TABLE>
<S><C>
(a)(1) Financial Statements:
CFI INDUSTRIES, INC. AND SUBSIDIARIES
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10
Consolidated Balance Sheets as of June 30, 1995 and June 26, 1994 . . . . . . . . . Page 11
Consolidated Statements of Operations for the Years Ended June 30, 1995,
June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . Page 12
Consolidated Statements of Stockholders' Equity for the Years Ended
June 30, 1995, June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . Page 13
Consolidated Statements of Cash Flows for the Years Ended June 30, 1995,
June 26, 1994 and June 27, 1993 . . . . . . . . . . . . . . . . . . . . . . . . Page 14
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . Page 15 - 22
(a)(2) Financial Statement Schedules:
CFI INDUSTRIES, INC. AND SUBSIDIARIES
I - Condensed Financial Information of Registrant (Parent Company) . . . . . . . . . . . Page 23 - 25
II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
All other schedules have been omitted because they are inapplicable, not required, or the information is
included in the financial statements or notes thereto.
(a) (3) Exhibits:
Exhibits shown parenthetically are incorporated by reference to prior filings.
3 (a) Amendment to Restated Certificate of Incorporation dated January 10, 1987 (Exhibit 3(i) to
Registrant's Annual Report for 1987 on Form 10-K)
3 (b) Bylaws of the Registrant, as amended December 4, 1986 (Exhibit 3 (ii) to Registrant's Annual
Report for 1987 on Form 10-K)
3 (c) Certificate of Amendment of Restated Certificate of Incorporation of Consolidated Fibres Inc.
(Exhibit 3(i) to Registrant's December 27, 1992 Quarterly Report on Form 10-Q)
4 (a) Certificate of stock of CFI Industries, Inc. (Exhibit 4(i) to Registrant's December 27, 1992
Quarterly Report on Form 10-Q)
10 (a)(1) Joint Venture Agreement between Registrant and Friedman & Son, Inc. dated as of April 1, 1988
(Exhibit 2-3 to Registrant's Report on Form 8-K dated May 19, 1988)
10 (a)(2) Asset Contribution Agreement dated as of January 8, 1988 (Exhibit 2-2 to Registrant's Report
on Form 8-K dated May 19, 1988)
</TABLE>
27
<PAGE> 29
<TABLE>
<S> <C>
10 (a)(3) Amendment to Asset Contribution Agreement dated as of March 8, 1988 (Exhibit 2-1
to Registrant's Report on Form 8-K dated May 19, 1988)
10 (b) Settlement Agreement of lawsuit - Tamkin vs. Registrant et al. dated May 1, 1988
(Exhibit 10 (b) to Registrant's Annual Report for 1988 on Form 10-K)
10 (c) First Amendment to Registrant's Retirement Plan dated December 10, 1987 (Exhibit
10 (c) (1) to Registrant's Annual Report for 1988 on Form 10-K)
10 (d) Second Amendment to Registrant's Retirement Plan dated March 10, 1988 (Exhibit
10 (c) (2) to Registrant's Annual Report for 1988 on Form 10-K)
10 (e) Third Amendment to Registrant's Retirement Plan dated July 7, 1988 (Exhibit
10 (c) (3) to Registrant's Annual Report for 1988 on Form 10-K)
10 (f) First Amendment to Joint Venture Agreement dated as of September 15, 1989 (Exhibit
10 (f) to Registrant's Annual Report for 1989 on Form 10-K)
10 (g) Stock Purchase Agreement between Plastofilm Industries, Inc. and the shareholders of
Form-Fit, Inc. dated May 13, 1989 (Exhibit to the Registrant's March 31, 1989 Quarterly
Report on Form 10-Q)
10 (h) Agreement to Purchase Stock of Newco Recycling, Inc. between U.S. Recycling Industries and
Waste Management of North America, Inc. dated July 12, 1990 (Exhibit 2.1 to Registrant's
Report on Form 8-K dated July 26, 1990).
10 (i) Agreement to Purchase Stock of Form-Fit, Inc. between Plastofilm Industries, Inc. and Detroit
Forming, Inc. dated February 28, 1991 and amended April 15, 1991 (Exhibit 2.1 to Registrant's
Report on Form 8-K dated April 26, 1991)
10 (j) Information Statement to Shareholders dated August 8, 1991, regarding the proposed sale of
Plastofilm Industries, Inc.
11 Statement Re: Computation of Per Share Earnings
16 (a) Former Accountants Letter (Exhibit 16.1 to Registrant's Report on Form 8-K dated June 4, 1992).
22 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K: None
28
<PAGE> 30
Pursuant to the requirements of Section 13 or 15(d) 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.
CFI Industries, Inc.
(Registrant)
Date: 9/28/95 By: /s/ Robert W. George
Robert W. George
Principal Executive Officer
Date: 9/28/95 By: /s/ Robert W. Zimmer
Robert W. Zimmer, Treasurer
Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ C. Clifford Brake Director 9/28/95
- ---------------------
C. Clifford Brake
/s/ Marshall Burman Director 9/28/95
- -------------------
Marshall Burman
/s/ Philip C. Calian Director 9/28/95
- --------------------
Philip C. Calian
/s/ Robert W. George Director 9/28/95
- --------------------
Robert W. George
/s/ Richard M. Harris Director 9/28/95
- ---------------------
Richard M. Harris
/s/ Donald J. Liebentritt Director 9/28/95
- -------------------------
Donald J. Liebentritt
/s/ Sheli Z. Rosenberg Director 9/28/95
- ----------------------
Sheli Z. Rosenberg
</TABLE>
29
<PAGE> 1
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Presented below is the calculation of the Registrant's primary and fully
diluted earnings per share required by Item 601(b)(11) of Regulation S-K.
<TABLE>
<CAPTION>
YEAR-ENDED
-----------------------------------------------------------
June 30, 1995 June 26, 1994 June 27, 1993
<S> <C> <C> <C>
PRIMARY
Net income $1,808 $ (842) $ (448)
====== ======= =======
Average common share outstanding 1,991 1,991 2,003
Common stock equivalents - net effect of the
assummed exercise of stock options --based
on the treasury stock method using average
market price 110 --- ---
------ ------ ------
Average primary share outstanding 2,101 1,991 2,003
====== ====== ======
Primary earnings per share $ .86 $ (.42) $ (.22)
====== ====== ======
FULLY DILUTED
Net income $1,808 $ (842) $ (448)
====== ====== ======
Average common shares outstanding 1,991 1,991 1,991
Common stock equivalents - net effect of the
assumed exercise of stock options -- based
on the treasury stock method using average
market price or year-end market price,
whichever was higher 118 --- ---
------ ------ ------
Average fully diluted shares outstanding 2,109 1,991 1,991
====== ====== ======
Fully diluted earnings per share $ .86 $ (.42) $ (.22)
====== ====== ======
</TABLE>
30
<PAGE> 1
Exhibit 22 - Subsidiaries of the Registrant
<TABLE>
<CAPTION>
State or Other Name Business
Name Jurisdiction of Incorporation Conducted Under
---- ----------------------------- --------------
<S> <C> <C>
CFI Recycling, Inc. Delaware CFI Recycling
Confibres AG Switzerland Inactive
Plastofilm Industries, Inc. Delaware Plastofilm
</TABLE>
31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CFI
INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND RELATED
NOTES AND SCHEDULES THERETO INCLUDED IN THIS ANNUAL REPORT ON FORM 10-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,211
<SECURITIES> 0
<RECEIVABLES> 3,706
<ALLOWANCES> 15
<INVENTORY> 2,818
<CURRENT-ASSETS> 9,394
<PP&E> 14,349
<DEPRECIATION> 7,306
<TOTAL-ASSETS> 19,023
<CURRENT-LIABILITIES> 7,321
<BONDS> 2,229
<COMMON> 1,991
0
0
<OTHER-SE> 6,639
<TOTAL-LIABILITY-AND-EQUITY> 19,023
<SALES> 31,287
<TOTAL-REVENUES> 31,287
<CGS> 0
<TOTAL-COSTS> 23,187
<OTHER-EXPENSES> 6,405
<LOSS-PROVISION> 15
<INTEREST-EXPENSE> 372
<INCOME-PRETAX> 1,308
<INCOME-TAX> (500)
<INCOME-CONTINUING> 1,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,808
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.86
</TABLE>
