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, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition from to
Commission File No. 027222
CFC INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3434526
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 State Street, Chicago Heights, Illinois 60411
Registrant's telephone number, including
area code: (708) 891-3456
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 ( )
As of July 31, 1999, the Registrant had issued and outstanding 4,052,330
shares of Common Stock, par value $.01 per share, and 518,169 shares of
Class B Common Stock, par value $.01 per share.
<PAGE>
CFC INTERNATIONAL, INC.
INDEX TO FORM 10-Q
Page
----
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets - June 30, 1999 and
December 31, 1998.................................... 3
Consolidated Statements of Income for the
three (3) months and for the six (6)
months ended June 30, 1999 and June 30, 1998......... 4
Consolidated Statements of Cash Flows for
the six (6) months ended June 30, 1999
and June 30, 1998.................................... 5
Notes to Consolidated Financial Statements........... 6- 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations... 8-11
Item 3.- Quantitative and Qualitative Disclosures
About Market Risks.............................. 11
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K and Form 11-K.... 12
Signatures................................................. 13
<PAGE>
Part I
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET AT
JUNE 30, 1999 AND DECEMBER 31, 1998
June 30, December 31,
1999 1998
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 2,096,816 $ 5,434,595
Accounts receivable, less allowance
for doubtful accounts of $1,044,263 and
$625,000 respectively............................ 11,457,922 7,767,135
Employee receivable................................ 88,169 35,653
Inventories:
Raw materials.................................. 2,577,684 1,281,868
Work in process................................ 1,936,190 1,233,287
Finished goods................................. 6,516,437 4,919,531
----------- -----------
11,030,311 7,434,686
Prepaid expenses and other
current assets................................... 863,661 687,506
Deferred income taxes.............................. 868,976 868,976
----------- -----------
Total current assets........................... 26,405,855 22,228,551
----------- -----------
Property, plant and
equipment, net................................... 26,983,907 15,323,705
Other assets....................................... 1,941,392 1,727,440
----------- -----------
Total assets................................... $55,331,154 $39,279,676
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ................. $ 4,937,835 $ 1,347,693
Accounts payable................................... 3,883,637 2,187,784
Accrued environmental liability ................... 244,937 244,937
Accrued bonus...................................... 140,056 550,944
Accrued vacation................................... 574,612 559,357
Other accrued expenses and
current liabilities.............................. 1,426,140 2,031,484
----------- -----------
Total current liabilities....................... 11,207,217 6,922,199
----------- -----------
Deferred income taxes.............................. 1,443,607 2,110,274
Long-term debt .................................... 19,210,384 9,276,587
----------- -----------
Total liabilities............................... 31,861,208 18,309,060
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
10,000,000 shares authorized;
4,381,048 and 4,226,469 shares
issued at June 30, 1999 and
December 31, 1998, respectively.................. 43,327 42,281
Class B common stock, $.01 par
value, 750,000 shares authorized;
518,169 shares issued and
outstanding at June 30, 1999
and December 31, 1998 ........................... 5,182 5,182
Additional paid-in capital......................... 11,509,174 10,551,354
Retained earnings.................................. 13,515,086 11,979,842
Cumulative translation adjustment.................. (211,652) (216,852)
----------- -----------
24,861,117 22,361,807
Less 331,346 treasury shares
of common stock, at cost at
June 30, 1999 and December 31, 1998 ............. (1,391,171) (1,391,171)
----------- -----------
23,469,946 20,970,636
CONTINGENCIES
Total liabilities and
stockholders' equity............................. $55,331,154 $39,279,696
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1999 AND 1998, RESPECTIVELY
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales ................ $17,966,951 $13,111,110 $30,971,017 $25,772,247
Cost of goods sold ....... 12,159,653 8,413,292 20,422,960 16,209,427
----------- ----------- ----------- -----------
Gross profit ............. 5,807,298 4,697,818 10,548,057 9,562,820
----------- ----------- ----------- -----------
Marketing and selling
expenses ............... 1,828,165 1,307,179 3,233,770 2,665,376
General and administrative
expenses ............... 1,938,921 1,227,867 3,295,699 2,341,909
Research and development
expenses ............... 390,229 396,143 787,375 762,390
----------- ----------- ----------- -----------
4,157,315 2,931,189 7,316,844 5,769,675
----------- ----------- ----------- -----------
Operating income ......... 1,649,983 1,766,629 3,231,213 3,793,145
Other (income) expenses:
Interest ............... 312,017 172,758 462,401 337,923
Miscellaneous .......... 100,971 (94,664) 174,064 (75,201)
----------- ----------- ----------- -----------
412,988 78,094 636,465 262,722
----------- ----------- ----------- -----------
Income before income
taxes and minority
interest................ 1,236,995 1,688,535 2,594,748 3,530,423
Provision for income
taxes................... 483,835 577,712 1,059,504 1,242,104
----------- ----------- ----------- -----------
753,160 1,110,823 1,535,244 2,288,319
Minority interest
expense of CFC
Applied Holographics.... - (131,188) - (271,092)
----------- ----------- ----------- -----------
Net income................ $ 753,160 $ 979,635 $ 1,535,244 $ 2,017,227
Basic earnings............ $ 0.17 $ 0.21 $ 0.34 $ 0.45
Diluted earnings
per share............... $ 0.16 $ 0.21 $ 0.33 $ 0.44
The accompanying notes are an integral part of the financial statements.
<PAGE>
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 RESPECTIVELY
Six Months Ended June 30,
-------------------------
1999 1998
---- ----
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net income.............................. $ 1,535,244 $ 2,017,227
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization...... 1,367,388 964,585
Minority interest in CFC
Applied Holographics............. - 90,794
Changes in assets and liabilities:
Accounts receivable.............. (413,176) (2,262,834)
Inventories...................... 1,172,953 274,318
Employee receivable.............. (52,516) -
Other current assets............. (324,956) 700,105
Accounts payable................. (188,359) 71,840
Accrued vacation................. 15,255 (9,313)
Accrued bonus.................... (410,888) 453,125
Accrued expenses and other
current liabilities............. (605,244) 386,406
------------ ------------
Net cash provided by operating activities.. $ 2,095,701 $ 2,686,253
------------ ------------
Cash flows from investing activities:
Additions to property, plant and
equipment............................... (1,717,073) (1,051,183)
Cash paid for acquired business.......... (3,825,301) -
------------ ------------
Net cash used in (provided by)
investing activities..................... (5,542,374) (1,051,183)
------------ ------------
Cash flows from financing activities:
Proceeds from term loans for
acquired business....................... 4,457,100 -
Repayment of term loans for
acquired business....................... (8,055,000) -
Proceeds from revolver for
acquired business....................... 3,902,202 -
Repayments of term loans................. (268,744) (62,381)
Repayment of capital lease............... (13,130) 75,417
Net proceeds/distribution of
employee loans.......................... - (1,706)
Issuance of stock........................ 81,266 46,566
Distributions to stockholders............ - (645,495)
------------ ------------
Net cash provided by (used in)
financing activities..................... 103,694 (587,599)
------------ ------------
Effect of exchange rate changes
on cash and cash equivalents............. 5,200 (24,259)
------------ ------------
Increase (decrease) in cash
and cash equivalents..................... (3,337,779) 1,023,212
Cash and cash equivalents:
Beginning of period........................ 5,434,595 1,841,070
------------ ------------
End of Period.............................. $ 2,096,816 $ 2,864,282
=========== ===========
The accompanying notes are an integral part of the financial statements.
CFC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position of the Company
as of June 30, 1999 and December 31, 1998, the results of operations for the
three (3) months and six (6) months ended June 30, 1999 and 1998, and statements
of cash flows for the six (6) months ended June 30, 1999 and 1998.
The unaudited interim consolidated financial statements included herein have
been prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnote disclosures normally accompanying
the annual consolidated financial statements have been omitted. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest annual report on Form 10-K.
Results for an interim period are not necessarily indicative of results for the
entire year and such results are subject to year-end adjustments and an
independent audit.
Certain prior year amounts have been reclassified to conform to current year
presentation.
Note 2. Adoption of New Accounting Standard
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income." This statement requires that
all items recognized under accounting standards as components of comprehensive
income be reported in an annual financial statement that is displayed with the
same prominence as other annual financial statements. This Statement also
requires that an entity classify items of other comprehensive income by their
nature in an annual financial statement. For example, other comprehensive income
may include foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gains and losses on marketable securities classified
as available-for-sale. Annual financial statements for prior periods will be
reclassified, as required. The Company's total comprehensive income was as
follows:
Six Months Ended June 30,
-------------------------
1999 1998
---- ----
Net earnings........................................$1,535,244 $2,017,227
(Less): foreign currency translation adjustment.... 5,200 (182,622)
Total comprehensive income..........................$1,540,444 $1,834,605
Note 3. Earnings Per Share
June 30, 1999 June 30, 1998
------------------------ -----------------------
Per Per
Income Shares Share Income Shares Share
------ ------ ----- ------ ------ -----
Basic Earnings Per
Share:
Income available
to Common
Stockholders....... $1,535,244 4,566,734 $.34 $2,017,227 4,466,507 $.45
Effect of Dilutive
Securities:
Options exercisable.. 3,594 8,978
Convertible debt... 48,000 190,476 27,000 214,286
Diluted Earnings
per Share........... $1,583,244 4,760,804 $.33 $2,044,227 4,689,771 $.44
Note 4. Acquisition of Oeserwerk
On March 19, 1999, the Company acquired substantially all of the assets and
assumed substantially all of the liabilities of Oeserwerk KG for a total cost of
approximately $17 million. Oeserwerk is a manufacturer that applies coatings to
a plastic film from which its customers transfer the dry coating to their
products. The products include printed woodgrain patterns, simulated metal and
pigmented products for the graphics and bookbinding industries. The Oeserwerk
assets consisted principally of buildings and land valued at approximately $6.1
million, machinery and equipment valued at approximately $4.5 million, and trade
accounts receivables and inventory valued at approximately $8.3 million. The
Company financed the acquisition with $3.3 million cash and the issuance of
100,000 shares of restricted common stock. In addition, the Company assumed
approximately $12.3 million of Oeserwerk's debt, and refinanced this debt with
the Deutsche Bank and ABN-AMRO Deutschland. The Company also incurred
approximately $500,000 of fees associated with the acquisition. The results of
operations of Oeserwerk since the acquisition have been included in the
accompanying consolidated financial statements since March 19, 1999.
The following summarized unaudited pro forma financial information for the six
months ended June 30, 1999 and 1998 assumes the acquisition had occurred on
January 1 of each year (in 000's).
1999 1998
---- ----
Net sales............................ $35,687 $37,859
Net income........................... 483 996
Earnings per share:
Basic............................ $.11 $.22
Diluted.......................... $.10 $.21
The pro forma data does not purport to be indicative of the results that would
have been obtained had these events actually occurred at the beginning of the
periods presented, does not reflect any benefits for actions taken subsequent to
the acquisition and is not intended to be a projection of future results.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
The Company formulates, manufactures and sells chemically-complex, transferable
multi-layer coatings for use in many diversified markets such as furniture and
building products, pharmaceutical products, transaction cards (including credit
cards, debit cards, ATM cards and access cards), intaglio printing, and on
holographic packaging and authentication seals.
The Company's gross profit reflects the application of all direct product costs
and direct labor, quality control, shipping and receiving, maintenance, process
engineering, plant management, and a substantial portion of the Company's
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, related depreciation, and corporate audit and legal expense.
Research and development expenses include salaries of technical personnel,
related depreciation and experimental materials.
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, certain items from
the Company's consolidated financial statements as a percentage of net sales for
such period.
Quarter Six months
ended ended
June 30, June 30,
----------- -----------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales ............................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ........................... 67.7 64.2 65.9 62.9
Gross profit ............................ 32.3 35.8 34.1 37.1
Selling, general and administrative ..... 20.9 19.3 21.1 19.4
Research and development ................ 2.2 3.0 2.6 3.0
Operating income ........................ 9.2 13.5 10.4 14.7
Interest expense and other .............. 2.3 0.6 2.0 1.0
Income before taxes and minority interest 6.9 12.9 8.4 13.7
Provision for income taxes .............. 2.7 4.4 3.4 4.8
Minority interest ....................... -- 1.0 -- 1.1
Net income .............................. 4.2% 7.5% 5.0% 7.8%
Quarter Ended June 30, 1999 Compared to Quarter Ended June 30, 1998
- -------------------------------------------------------------------
Net sales for the quarter ended June 30, 1999 increased 37.0% to $18.0 million,
from $13.1 million for the quarter ended June 30, 1998. Printed products sales
for these periods decreased 4.2% to $4.3 million, from $4.5 million, primarily
due to softness in the markets the Company serves. Pharmaceutical product sales
for these periods increased 4.7% to $2.2 million, from $2.1 million, primarily
due to growth in the overall market. Security products (magnetic stripes,
signature panels and tipping products for credit cards, and intaglio printed
products) sales decreased 33.2% to $1.8 million, from $2.6 million. This
decrease was primarily a result of a decline in sales of intaglio printed stocks
and bonds partially offset by a 19.3% increase in sales of products for the
credit card industry, magnetic stripes, signature panel and tipping material.
Sales of simulated metal and other pigmented products increased 482.0% to
$6.7 million for the quarter ended June 30, 1999 from $1.1 million for the
quarter ended June 30, 1998, primarily due to the Oeserwerk acquisition,
which added approximately $5.5 million in net sales to this category in the
second quarter of 1999. Holographic products sales increased 11.2% to $3.0
million for the quarter ended June 30, 1999, compared to $2.7 million for the
quarter ended June 30, 1998. This increase was primarily due to strong demand
for holographic packaging, as it becomes a more important part of our
customers' brand identification, offset by a special one-time promotion in the
second quarter of 1998 in the amount of $1.5 million.
Gross profit for the quarter ended June 30, 1999 increased 23.6% to $5.8
million, from $4.7 million for the quarter ended June 30, 1998, primarily as a
result of the Oeserwerk acquisition. The gross profit margin for the quarter
ended June 30, 1999 decreased to 32.3% from 35.8% for the quarter ended June 30,
1998. This decrease in gross profit margin was primarily attributable to lower
gross profit margins at Oeserwerk, which were 25% in the recently completed
quarter.
Selling, general, and administrative expenses for the quarter ended June 30,
1999 increased 48.6% to $3.8 from $2.5 for the quarter ended June 30, 1998. This
increase was primarily due to the additional $1.2 million in operating expenses
attributable to the Oeserwerk acquisition. Selling, general, and administrative
expenses for the quarter ended June 30, 1999 increased as a percentage of net
sales to 21.0% from 19.3% for the quarter ended June 30, 1998. This increase in
percentage was primarily due to costs associated with integrating Oeserwerk's
operations following the acquisition.
Research and development expenses for the quarter ended June 30, 1999 decreased
1.5% to $390,000 from $396,000 for the quarter ended June 30, 1998. Research and
development expenses for the quarter ended June 30, 1999 decreased as a
percentage of net sales to 2.2% from 3.0% for the quarter ended June 30, 1998.
This decrease in expense was primarily due to costs attributable to the
relocation of the holographics origination laboratory to the Northern Bank Note
facility in June 1998 and the decrease in percentage is primarily due to the
Oeserwerk acquisition.
Operating income for the quarter ended June 30, 1999 decreased 6.6% to $1.7
million, from $1.8 million for the quarter ended June 30, 1998. The decrease in
operating income is primarily due to the decrease in gross profit and increase
in operating expenses noted above. Operating income for the quarter ended June
30, 1999 decreased as a percentage of net sales to 9.2% from 13.5% for the
quarter ended June 30, 1998. This decrease is primarily due to a decrease in
gross profit as a percentage of net sales and increased operating expenses, as
explained above.
Interest expense and other expenses for the quarter ended June 30, 1999
increased 428.8% to $413,000, from $78,000 for the quarter ended June 30, 1998.
This increase was primarily from $180,000 of interest on borrowings due to the
Oeserwerk acquisition in 1999, and $42,000 in royalties paid to Applied
Holographics PLC, a former holographic joint venture partner.
Income taxes for the quarter ended June 30, 1999 decreased to $484,000 from
$578,000 for the quarter ended June 30, 1998. The effective rate for the quarter
ended June 30, 1999 was 39.1% compared to 37.1% in the comparable quarter.
Net income for the quarter ended June 30, 1999 decreased 23.1% to $753,000, from
$979,000 for the quarter ended June 30, 1998. This decrease in net income is
primarily due to the decrease in operating income explained above.
Six months Ended June 30, 1999 Compared to Six months Ended June 30, 1998
- -------------------------------------------------------------------------
Net sales for the six months ended June 30, 1999 increased 20.2% to $31.0
million, from $25.8 million for the six months ended June 30, 1998. Printed
product sales for these periods decreased 3.2% to $8.7 million, from $9.0
million, primarily due to softness in the markets the Company serves.
Pharmaceutical product sales for these periods decreased 1.1% to $4,378,000 from
$4,428,000, primarily due to an unusually large order in the first quarter of
1998 to fill the inventory requirements of a Baxter Healthcare acquisition.
Security product (magnetic stripe, signature panels and tipping products for
credit cards, and intaglio printed products) sales decreased 23.9% to $4.0
million, from $5.2 million in the first half of 1998. This decrease was
primarily a result of a decline in sales of intaglio printed stocks and bonds.
Sales of simulated metal and other pigmented products increased 227.5% to $8.4
million for the six months ended June 30, 1999, from $2.6 million in the first
six months of 1998, primarily due to the Oeserwerk acquisition which added
approximately $6.2 million net sales to this category. Holographic product sales
increased 20.1% to $5.5 million for the six months ended June 30, 1999, compared
to $4.5 million for the six months ended June 30, 1998. This increase was
primarily due to strong demand for authentication labels from a major toy
producer and continuing demand for holographic packaging as it becomes an
important part of brand identification.
Gross profit for the six months ended June 30, 1999, increased 10.3% to $10.6
million, from $9.6 million for the six months ended June 30, 1998, primarily as
a result of the Oeserwerk acquisition. The gross profit margin for the six
months ended June 30, 1999 decreased to 34.1% from 37.1% for the six months
ended June 30, 1998. This decrease in gross profit was attributable to lower
sales on a historical-based business resulting in the Company's fixed costs
being a higher percentage of net sales. The Oeserwerk products had a gross
margin of 25.8%.
Selling, general, and administrative expenses for the six months ended June 30,
1999 increased 30.4% to $6.5 million from $5.0 million for the six months ended
June 30, 1998. This increase was primarily due to the additional $1.4 million in
operating expenses attributable to the Oeserwerk acquisition. Selling, general
and administrative expenses for the six months ended June 30, 1999 increased as
a percent of net sales to 21.1% from 19.4% for the six months ended June 30,
1998. This increase in percentage was primarily due to the reasons noted above.
Research and development expenses for the six months ended June 30, 1999
increased 3.3% to $787,000 from $762,000 for the six months ended June 30, 1998.
Research and development expense for the six months ended June 30, 1999
decreased as a percentage of net sales, to 2.5% from 3.0% for the six months
ended June 30, 1998. This decrease in percentage was primarily due to the
Oeserwerk acquisition.
Operating income for the six months ended June 30, 1999 decreased 14.8% to $3.2
million, from $3.8 million for the six months ended June 30, 1998. The decrease
in operating income is primarily due to the decrease in gross profit as a
percentage of sales and an increase in operating expenses noted above. Operating
income for the six months ended June 30, 1999 decreased as a percentage of net
sales to 10.4% from 14.7% for the six months ended June 30, 1998. This decrease
is primarily due to a decrease in gross profit as a percentage of net sales and
increased operating expenses, as explained above.
Interest and other expenses for the six months ended June 30, 1999 increased
142.3% to $636,000, from $263,000 for the six months ended June 30, 1998. This
increase was primarily interest on borrowings due to the Oeserwerk acquisition,
and $94,600 in royalties paid to Applied Holographics PLC, a former joint
venture partner.
Income taxes for the six months ended June 30, 1999 decreased 14.7% to $1.1
million from $1.2 million for the six months ended June 30, 1998. The effective
rate for the six months ended June 30, 1999 was 40.8% compared to 38.1% in the
comparable period. The increase in the tax rate was primarily caused by the
Oeserwerk acquisition.
Net income for the six months ended June 30, 1999 decreased 23.9% to $1.5
million from $2.0 million for the six months ended June 30, 1998. This decrease
in net income is primarily due to the decrease in operating income explained
above.
Liquidity and Capital Resources
- -------------------------------
Working capital, consisting predominately of inventories and receivables,
decreased from $15.3 million at December 31, 1998 to $15.2 million at June 30,
1999. This decrease was primarily due to an increase in short-term borrowings
and operating liabilities assumed as part of the acquisition of Oeserwerk.
Short-term borrowings and operating liabilities increased by $3.6 million and
$.7 million, respectively, as of those dates as a result of the Oeserwerk
acquisition. In addition, that acquisition increased the Company's inventory and
accounts receivable by $4.8 million and $3.3 million, respectively as of those
dates. Offsetting this increase, the Company's pre-acquisition inventories and
operating liabilities decreased by $1.1 million and $1.2 million, respectively.
The decrease in inventories is due to an aggressive inventory supplies
management program instituted by the Company.
During the first six months of 1999, the Company made no borrowings against the
revolving credit agreement maintained with the Company's primary bank. This
agreement, which expires April 1, 2001, is unsecured and provides for borrowings
up to $4,500,000. The Company believes that the net cash provided by operating
activities and amounts available under the revolving credit agreement are
sufficient to finance the Company's operations and growth.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company does not use derivative financial instruments to address interest
rate, currency, or commodity pricing risks. The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments held by the Company for which it is practicable to estimate that
value. The carrying amount of cash equivalents approximates fair value because
of the short maturity of those instruments. The estimated fair value of the
Company's long-term debt approximated its carrying value at June 30, 1999 and
December 31, 1998 based upon market prices for the same or similar type of
financial instrument.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K and Form 11-K
(a) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on April 1, 1999, relating to the
acquisition of Oeserwerk KG.
The Company filed a report on Form 8-K/A on May 28, 1999, amending the
financial information of its report on Form 8-K filed April 1, 1999.
(c) Report on Form 11-K
The Company filed a report on Form 11-K on June 30, 1999.
<PAGE>
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 August 1, 1999.
CFC INTERNATIONAL, INC.
Dennis W. Lakomy
Vice President, Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)
Jeffrey E. Norby
Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000949859
<NAME> CFC INTERNATIONAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 2,096,816
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0
0
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</TABLE>
