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 June 30, 1997
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
Registrants 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 July 31, 1997, the Registrant had issued and
outstanding 3,996,206 shares of Common Stock, par value $.01
per share, and 523,404 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 - September 30, 1997 and
December 31, 1996 3
Consolidated and Statements of Income for the three (3)
months and
nine (9) months ended September 30, 1997 and September
30, 1996 4
Consolidated and Statements of Cash Flows for the nine
(9) months
ended September 30, 1997 and September 30, 1996 5
Notes to Consolidated Financial Statements 6
Item 2 - Managements Discussion and Analysis of Financial
Condition and
Results of Operations 7-10
Part II - Other Information:
Item 2 - Changes in Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders
11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
Part I
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET AT
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
September
30, December 31,
1997
1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,240,452 $927,703
Accounts receivable, less allowance for doubtful accounts of
$581,000 and
$565,000 respectively 7,448,842 5,996,657
Employee receivable 251,213 220,833
Inventories:
Raw materials 1,184,973 837,307
Work in process 2,337,395 1,086,308
Finished goods 5,456,414 5,142,558
8,978,782 7,066,173
Prepaid expenses and other current assets 909,699
392,593
Deferred income taxes 651,141 663,520
Total current assets 20,480,129 15,267,479
PROPERTY, PLANT AND
EQUIPMENT, NET 15,089,555 10,866,717
Restricted cash 0 1,510,827
Other assets 1,694,526 5
61,085
Total assets $37,264,210 $28,206
,108
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and line of credit
borrowings..................... $2,775,243
$368,124
Accounts payable 2,910,890
2,558,486
Accrued environmental liability 244,937 244,937
Accrued vacation 283,817
236,422
Accrued bonus 429,361 200,290
Accrued corporate income taxes 401,127
263,251
Other accrued expenses and current liabilities 1,197
,870 761,256
Total current liabilities 8,243,245
4,632,766
DEFERRED INCOME TAXES 1,784,341
1,785,740
LONG-TERM DEBT 8,126,351
5,564,027
MINORITY INTEREST IN CFC APPLIED HOLOGRAPHICS 1,335,076
1,145,240
Total liabilities 19,489,013 13,127,773
STOCKHOLDERS EQUITY:
Voting Preferred Stock, par value $.01 per share, 750 shares
authorized,
no shares issued and outstanding 0 0
Common stock, $.01 par value, 10,000,000 shares authorized;
4,172,660 and
4,132,605 shares issued at September 30, 1997 and December 31,
1996
respectively 41,726 41,326
Class B common stock, $.01 par value, 750,000 shares
authorized; 523,404
and 534,030 shares issued and outstanding at September 30,
1997 and
December 31, 1996 respectively 5,234 5,340
Additional paid-in capital 10,436,822
10,139,248
Retained earnings 7,639,522
5,110,647
Cumulative translation adjustment (157,772) (27,891)
17,965,532
15,268,670
Less 156,142 treasury shares of common stock, at cost at
September 30, 1997
and December 31, 1996 (190,335)
(190,335)
17,775,197
15,078,335
CONTINGENCIES
Total liabilities and stockholders equity $37,264
,210 $ 28,206,108
The accompanying notes are an integral part of the financial
statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Three Months Ended Sept. 30,
Nine Months Ended Sept. 30,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Net sales $10,926,765$ 8,281,736$30,735,310
$
27,707,867
Cost of goods sold 6,766,936 5,554,619
18,794,389 16,891,577
Gross profit 4,159,829 2,727,117
11,940,921 10,816,290
Marketing and selling expenses 1,152,144 1,391,310
3,423,951 3,216,831
General and administrative expenses 1,006,631 787,108
2,852,540 2,691,417
Research and development expenses 332,886 337,556 1,002,086
970,567
Patent litigation expenses 0 127,701 0
164,590
2,491,661 2,643,675
7,278,577 7,043,405
Operating income 1,668,168 83,442 4,662,344
3,772,885
Other expenses (income):
Interest 125,389 59,180 289,737 181,637
Miscellaneous 8,380 367 (29,104) 16,894
133,769 59,547 260,633 198,531
Income before income taxes and minority interest 1,534,399
23,895 4,401,711 3,574,354
Provision for income taxes 601,308 17,644 1,682,999
1,369,378
933,091 6,251 2,718,712
2,204,976
Minority interest in loss (income) of CFC Applied Holographics
102,530 (55,731) 189,837 13,378
Net income $830,561 $61,982 $2,528,875
$
2,191,598
Net income per share $ 0.18 $ 0.01 $ 0.56$
0.48
Weighted average number of common stock and common stock
equivalents 4,544,532
4,524,471 4,533,532 4,513,998
The accompanying notes are an integral part of the financial
statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
For the Nine
Months Ended September 30,
1997
1996
(Unaudited)
Cash flow from operating activities:
Net income $2,528,875
$
2,191,598
Adjustments to reconcile net income to net cash
provided
by operating activities:
Depreciation and amortization 1,516,105
1,146,685
Minority interest in CFC Applied
Holographics 189,837
13,378
Changes in assets and liabilities:
Accounts receivable
(1,140,654)
375,608
Inventories
(1,477,942)
(1,111,627)
Employee receivable (30,380)
(57,988)
Prepaid expenses and other current
assets (251,964)
(37,169)
Accounts payable 195,149
414,347
Accrued income taxes 113,876
0
Accrued vacation 47,395
0
Accrued bonus 229,071
(281,865)
Accrued expenses and other current liabilities
339,465 (1,164,081)
Net cash provided by operating activities
2,258,833
1,148,886
Cash flows from investing activities:
Additions to property, plant and equipment (2,792
,870) (1,494,487)
Decrease in restricted cash 1,510,827
(3,189,911)
Cash paid for acquired business (1,758,327)
0
Net cash used in investing activities (3,040,370)
(4,684,398)
Cash flows from financing activities:
Proceeds from revolving credit agreements 2,540,719
3,775,157
Repayments of revolving credit agreements 0
(3,686,496)
Proceeds from term loans (437,676) 0
Repayment of term loans (58,487)
(83,628)
Repayment of capital lease (66,491)
(49,827)
Borrowing under IRB 0
3,686,810
Minority interest payments 0
(142,036)
Proceeds from issuance of stock 119,367 61,991
Distributions to stockholders 0 (800
,000)
Net cash provided by financing activities
2,097,432
2,761,971
Effect of exchange rate changes on cash and cash equivalents
(3,146) (35,680)
Increase (decrease) in cash and cash eqivalents
1,312,749
(469,221)
Cash and cash equivalents:
Beginning of period 927,703 916,480
End of Period $2,240,452 $
447,259
The accompanying notes are an integral part of the
financial statements.
CFC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS SEPTEMBER 30, 1997
AND 1996
(Unaudited)
1. 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 financial position of
CFC
International, Inc. (the Company) as of September 30, 1997, the
results of operations for the three months and nine months
ended September 30, 1997 and 1996, and cash flows for the nine
months ended September 30, 1997 and 1996.
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 Companys 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 independent audit.
2. On September 3, 1997, the Company acquired substantially
all of the assets and assumed substantially all of the
liabilities of Northern Bank Note Company
(NBNC), for a total cost of
approximately $5 million. NBNC is a security printer
which
produces certificates for stocks, bonds, vital records and
gift certificates. The assets of NBNC consisted
principally of
machinery and equipment valued at approximately $2.9 million
and trade accounts receivable and inventory valued at $0.9
million. The acquisition was financed through a $3.0 million
subordinated note of the Company, collateralized by the assets
of NBNC, $1.8 million of cash, and 17,000 shares of CFC
International, Inc. stock. The results of operations of NBNC
since the acquisition
have been included in the accompanying consolidated
financial
statements since September 3, 1997.
3. In February, 1997 the Financial Accounting Standards Board
(FASB) issued Statement No. 128, Earnings Per Share, which is
effective for periods ending after December 15, 1997.
Adoption of FASB No. 128 is not expected to have a material
impact on the Companys results of operations.
4. In June, 1997 the FASB issued Statement No. 130,
Reporting Comprehensive Income, which is effective for periods
beginning after December 15, 1997. Adoption of FASB No. 130
is not expected to have a significant impact on the Companys
consolidated financial statements.
5. In June, 1997 the FASB issued Statement No. 131,
Disclosures about Segments of an Enterprise and Related
Information, which is effective for periods beginning after
December 15, 1997. The Company is currently evaluating the
impact that this statement will have on their consolidated
financial statements.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview
The Company formulates, manufactures, and sells
chemically-
complex, transferable multi-layer coatings for use in
many
diversified markets such as furniture and building
products,
pharmaceutical products, transaction cards (including
credit
cards, debit cards, ATM cards, and access cards),
and on
holographic authentication seals. The Companys net
sales
increased 66.1% from $22.4 million in 1992 to $37.2 million in
1996. During that period, the Company realized sales
dollar
growth in all of its major product lines. The
Companys
operating income more than doubled over this four-year
period,
increasing from $1.8 million, or 8.0% of net sales in 1992 to
$5.1 million, or 13.6% of net sales in 1996.
The Company has experienced, and expects to
continue
experiencing, shifts in the relative sales and growth
of its
various products over time. The Company believes that
such
shifts are in the ordinary course of business and are
indicative of its focus on specific niche markets.
During the period from
1992 to 1996, printed products sales rose from 19.6% to 39.3%
of net sales. Pharmaceutical products sales declined from
26.2% in
1992 to 21.2% of net sales in 1996 due to the growth of
other
product lines. Actual pharmaceutical product sales
increased
from $5.9 million in 1992 to $7.9 million in 1996, or an
increase of 33.9% over that four-year period. Security
products sales
increased from 6.9% in 1992 to 10.3% of net sales in
1996.
Holographic products grew from 3.5% in 1992 to 11.6% of net
sales
in 1996.
The Companys gross profit reflects all direct product costs
and
direct labor, quality control, shipping and
receiving,
maintenance, process engineering, plant management,
and a
substantial portion of the Companys depreciation
expense.
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, related depreciation, and experimental materials.
On September 3, 1997, the Company acquired substantially all of
the assets and assumed substantially all of the liabilities of
NBNC. NBNC is a financial security printer of stock
certificates and other intaglio printed documents. The Company
intends to
operate NBNC substantially in its present form. In
consideration
of this acquisition, the Company issued 17,000 shares
of its
common stock, par value $.01 per share (the Common
Stock);
delivered a nine-year, 6% subordinated note in the
principal
amount of $3,000,000 (the Note), convertible, in whole or in
part, at the option of the holder beginning after the
first
anniversary of the Note, into Common Stock at a conversion
price of $14.00 per share; delivered a short-term note in the
principal amount of $1,500,000 which was paid in full on
September 4, 1997; and paid $258,300 in cash. The Company
has agreed to register
for resale under the Securities Act of 1933, as amended
(the
Securities Act), all shares of Common Stock to be issued upon
conversion of the Note. The Company also agreed to pay
the
seller $25,000 for consulting services during the next year.
The acquisition was accounted for using the purchase
method of accounting. Approximately $1,500,000 of the cash
purchase price was obtained by the Company
through borrowings under the
Companys revolving credit facility.
Results of Operations
The following table sets forth, for the periods
indicated,
certain items from the Companys consolidated and
combined
financial statements as a percentage of net sales for
such
period.
Three Months Ended
Nine Months Ended
9/30/97 9/30/96 9/30/97 9/30/96
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 61.9 67.1 61.1 61.0
Gross Profit 38.1 32.9 38.9 39.0
Selling, General and Administrative 19.8 27.8 20.4
21.9
Research and Development 3.0 4.1 3.3 3.5
Operating Income 15.3 1.0 15.2 13.6
Interest Expense and Other 1.3 .7 .9 .8
Income Before Taxes and Minority Interest 14.0 .3 14.3 12.8
Provisions for Income Taxes 5.5 .2 5.5 4.9
Minority Interest .9 (.6) 0.6
.0
Net Income 7.6% 0.7% 8.2% 7.9%
Three Month and Nine Month Periods Ended September 30, 1997
Compared to Three Month and Nine Month Periods Ended
September 30, 1996
Net sales for the three month and nine month periods
ended September 30, 1997 increased 31.9% and 10.9% to $10.9
million and $30.7 million respectively, from $8.3 million and
$27.7 million for the three month and nine month periods
ended September 30, 1996. Printed product sales
increased 13.5% and 11.6%
respectively, to $4.0 million and $12.0 million, from
$3.5 million and $10.7 million primarily due to increased
demand in the underlying markets. Pharmaceutical product
sales increased 13.5% and 6.3% to $2.1 million and $6.3
million respectively, from $1.8 million and $5.9 million.
The increase in the third quarter of 1997 was primarily
due to an one time negative inventory adjustment by a major
customer in the third quarter of 1996. Security products
(security printing, magstripe, signature panels, and tipping
products for credit cards) sales increased 98.2% and 35.1%
to $1.8 million and $3.9 million respectively, from $927,000
and $2.9 million. This product line growth reflects an
increase in sales of the Companys magstripe products, as
the market continues to move towards the Companys higher
oersted (magnetic resistance) products. The acquisition of
NBNC, which the Company has included in its security products
category, increased sales by $469,000 or 50.6% for the
three months ended September 30, 1997 and 16.1% for the
nine months
ended September 30, 1997. Without the NBNC acquisition,
security products would have increased 48.3% and 19.0% for the
three month and nine month periods ended September 30, 1997 to
$1.4 million and $3.5 million respectively, from $927,000 and
$2.9 million for the three month and nine month periods ended
September 30, 1996. Sales of simulated metal and other
pigmented products decreased 5.3% and 16.8% to $1.4 million
and $4.3 million respectively, from $1.5 million and $5.1
million. The decrease in these sales
is due to the Companys exit from markets in which it could
not attain acceptable margins. Holographic product sales
increased 153.8% and 42.6% to
$1.7 million and $4.2 million respectively,
compared to $627,000 and $3.0 million. The substantial
increase in sales for the three months ended September 30,
1997 reflect the initial sales to a major personal care
products manufacturer for the roll-out of a holographically-
packaged product.
Gross profit for the three month and nine month periods
ended September 30, 1997 increased 52.5% and 10.4% to $4.2
million and $11.9 million respectively, from $2.7 million and
$10.8 million for the three month and nine month periods
ended September 30, 1996. The gross profit margin for
the three months ended September 30, 1997 increased to
38.1% from 32.9% for the three months ended September 30,
1996, primarily due to the increase in sales and the absence
in 1997 of one-time product start-up costs which were incurred
during the third quarter of 1996 due to a new technology
introduced to the manufactured housing industry.
The gross profit margin for the nine months ended September
30, 1997 decreased to 38.9% from 39.0% for the nine months
ended September 30, 1996. This decrease in the gross profit
margin was primarily caused by start-up costs in the second
quarter of 1997 and the fixed costs related to the expansion
to house and operate the Companys new roto gravure printing
press. The Company believes the start up costs associated
with this project are substantially complete. Although the
Company does not fully allocate all costs on a product line
basis, the Company believes that its gross profit margin
typically is not substantially different for any of its
major product categories.
Selling, general, and administrative expenses for the three
month period ended September 30, 1997 decreased 6.4% to $2.2
million from $2.3 million for the three month period ended
September 30, 1996. Selling, general and administrative
expenses for the nine month period ended September 30, 1997
increased 3.4% to $6.3 million from $6.1 million for the
nine month period ended September 30, 1996. Selling,
general, and administrative expenses for the three month
and nine month periods ended September 30, 1997 decreased
as a percentage of net sales to 19.8% and 20.4% from 27.8%
and 21.9% for the three month and nine month periods ended
September 30, 1996, respectively. The decrease in expenses
during the three months ended September 30, 1997 was the
result of a one-time investment whereby the Company engaged
the services of a consulting firm to develop a marketing
strategy for the Pacific Rim during the three months
ended September 30, 1996.
Research and development expenses for the three months
ended September 30, 1997 remained essentially level,
decreasing to $333,000 from $338,000 for the three month
period ended September 30, 1996. Research and development
expenses for the nine months ended September 30, 1997 increased
to $1.0 million from $971,000 for the nine months ended
September 30, 1996. Research
and
development expenses for the three month and nine month
periods ended September 30, 1997 decreased as a percentage of
net sales, to 3.0% and 3.3% from 4.1% and 3.5% for the three
month and nine month periods ended September 30, 1996
respectively.
Operating income for the three month and nine month periods
ended September 30, 1997 increased 19 times and 23.6% to %1.7
million and $4.7 million respectively, from $83,000 and $3.8
million for the three month and nine month periods ended
September 30, 1996. Operating income for the three month and
nine month periods ended September 30, 1997 increased as a
percentage of net sales to 15.3% and 15.2% respectively,
from 1.0% and 13.6% for the three month and nine month
periods ending September 30, 1996. The
increase in operating income as a percentage of net sales
was primarily due to the increase in net sales, and gross
profit, and the decrease in marketing consulting fees incurred
in 1996, as noted above.
Interest expense for the three month and nine month periods
ended September 30, 1997 increased 111.9% and 59.5% to
$125,000 and $290,000 respectively, from $59,000 and $182,000
for the three month and nine month periods ended September
30, 1996. The
increases in interest expense were primarily the result of
the Company financing the acquisition of the new eight station
roto gravure printing press to service the printed products
market.
Income taxes for the three months and nine months ended
September 30, 1997 increased to $601,000 and $1,683,000
respectively, from $18,000 and $1,369,000 for the three month
and nine month periods ended September 30, 1996. The
increases were primarily the result of the Companys increase
in operating income.
Net income for the three months and nine months ended
September 30, 1997 increased to $831,000 and $2,529,000
respectively, from $62,000 and $2,192,000 for the three month
and nine month periods ended September 30, 1996. The
increases in net income are a result of the changes in
operating income components discussed above.
Liquidity and Capital Resources
Working capital, consisting primarily of inventories,
customer receivables and current liabilities, increased from
$10.6 million at December 31, 1996 to $12.2 million at
September 30, 1997. The following are the major factors which
contributed to this $1.6 million increase. Customer
receivables increased by $1.1 million due to higher sales
levels, the acquisition of NBNC, and the increased
proportion of export sales where longer payment terms are
usual. Higher levels of inventory to support the printed
products industry and the addition of NBNCs inventories
combined to increase inventories by $1.9 million. In
addition, cash increased by $1.3 million primarily due to
cash flow from operating activities. Substantially
offsetting these working capital increases was a $2.4
million increase in the current portion of the Companys long-
term debt, primarily to finance the acquisition of NBNC.
During the three months ended September 30, 1997, the
Company borrowed $2.1 million against the revolving credit
agreement maintained with the Companys primary bank. The
funds were mostly used to finance the acquisition of NBNC.
The revolving
credit agreement expires on April 1, 1998. There were
$2.1 million in borrowings under that facility as of
September 30, 1997.
The Company also issued to the seller of NBNC the nine-year,
6% Subordinated Note in the principal amount of $3.0 million,
which is convertible in whole or in part, at the option of the
holder beginning after the first anniversary of the Note,
into the Companys Common Stock at a conversion price of $14.00
per share.
The Company believes that it has sufficient capital
resources from funds generated from operations as well
as available borrowing facilities to support its future
capital needs.
The forward-looking statements included in this 10-Q,
which reflect managements best judgment based upon factors
currently known, involve risks and uncertainties detailed from
time to time in the Companys filings with the Securities
and Exchange Commission, including its Report on Form 10-K
and its annual report to shareholders. Actual results may
vary materially.
PART II
Item 2. CHANGES IN SECURITIES
(c) Recent Sales of Unregistered Securities
In connection with the Companys acquisition of NBNC,
the Company issued 17,000 shares of its Common
Stock and delivered a nine-year, 6% Subordinated Note in
the principal amount of $3,000,000, which is convertible
in whole or in part, at the option of the holder
beginning after the first anniversary of the Note, into
Common Stock at a conversion price of $14.00 per
share. The Company has agreed to register for resale
under the Securities Act, all shares of Common Stock to
be issued upon conversion of the Note. The
securities of the Company issued in that transaction
were issued without registration under the Securities
Act in reliance upon the exemption contained in Section
4(2) of the Securities Act.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Companys annual meeting was held on July 21, 1997. The
only matter presented to the Companys stockholders at that
meeting was the election of the Companys directors.
Each of the
Companys then current directors was re-elected. A total
of 3,996,206 shares of Common Stock were outstanding and
entitled to vote at the meeting. The following summarizes the
votes of the Companys stockholders at that meeting:
Matter For Agains Abstain Non- Shares
t Vote Voted
Election of
Directors:
Roger F. Hruby 3,826,4 --- 1,875 167,861 3,828,345
70
Robert J. 3,826,4 --- 1,875 167,861 3,828,345
DuPriest 70
Dennis W. 3,826,4 --- 1,875 167,861 3,828,345
Lakomy 70
William G. 3,826,4 --- 1,875 167,861 3,828,345
Brown 70
Richard Pierce 3,826,4 --- 1,875 167,861 3,828,345
70
David D. 3,826,4 --- 1,875 167,861 3,828,345
Wesselink 70
Item 5. OTHER INFORMATION
On August 1, 1997, the Board of Directors of the Company
acted unanimously to increase the number of directors of the
Company from six to seven and appointed Robert B. Covalt to
fill the vacancy until the next annual meeting of the
Companys stockholders. Mr. Covalt is the Chief Executive
Officer of Sovereign Specialty Chemicals, L.P., which he co-
founded in 1995 and which is a manufacturer of adhesives,
polymers, and coatings for a variety of end markets. Prior to
founding Sovereign, Mr.
Covalt was Executive Vice President of Morton International
and previously had been President of Mortons Specialty
Chemical Group. Mr. Covalt received a bachelors and a
doctorate degree in chemical engineering from Purdue
University and an MBA from the University of Chicago.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
11.1 Statement re: Computation of Earnings Per
Share
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated September 3,
1997, announcing the acquisition of NBNC.
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 November 13, 1997.
CFC INTERNATIONAL, INC.
Dennis W. Lakomy
Vice President, Chief
Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)
/s/
Jeffrey E. Norby
Controller
(Principal Accounting Officer)
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<NAME> CFC INTERNATIONAL, INC.
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