===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K/A
Amendment No. 1 to Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 1999
--------------------
CFC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27222 36-3434526
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
500 State Street
Chicago, Illinois 60411
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 891-3456
--------------------
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<PAGE>
The undersigned Registrant hereby amends the following items of its Current
Report on Form 8-K filed April 1, 1999, as set forth in the pages attached
hereto:
Item 7. Financial Statements, Pro Forma Financial Information And Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of the business acquired are filed
herewith as Exhibit 99.1 hereto and are incorporated herein by
the reference.
(b) Pro Forma Financial Information.
The pro forma information relating to the business acquired is
filed herewith as Exhibit 99.2 hereto and is incorporated
herein by this reference.
(c) Exhibits.
The exhibits to this report are listed in the Exhibit Index
set forth elsewhere herein.
<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, in the City of Chicago Heights, State of
Illinois.
CFC INTERNATIONAL, INC.
By: /s/ Dennis Lakomy
Dennis Lakomy
Vice President and Chief Financial Officer
Dated: June 1, 1999
<PAGE>
Exhibit Index
-------------
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 * Asset Purchase Agreement dated March 19, 1999.
99.1 Audited consolidated financial statements of Oeserwerk Ernst
Oeser & Sohne KG ("Oeser") for the two years ended December 31,
1998.
99.2 Unaudited pro forma condensed combined statements of income of
CFC International, Inc. for the year ended December 31, 1998.
- ----------
* Previously filed.
<PAGE>
EXHIBIT 99.1
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Stockholders of the
Oeserwerk Ernst Oeser & Sohne KG
We have audited the accompanying consolidated balance sheets of the Oeserwerk
Ernst Oeser & Sohne KG and subsidiaries ("Oeser") as of December 31, 1998 and
1997, and the related consolidated statements of operations and cash flows each
of the years in the two-year period ended December 31, 1998. These consolidated
financial statements are the responsibility of Oeser's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Germany and the United States. 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 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Oeser as of December
31, 1998 and 1997 and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting principles
in Germany.
Accounting principles generally accepted in Germany vary in certain significant
respects from accounting principles generally accepted in the United States
("U.S. GAAP"). Application of generally accepted accounting principles in the
United States would have affected the results of operations for each of the
years in the two-year period ended December 31, 1998 and equity as of December
31, 1998 and 1997, to the extent summarized in Note 2 to the consolidated
financial statements.
KPMG
Stuttgart, Germany
May 26, 1999
<PAGE>
OESERWERK ERNST OESER & SOHNE KG
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS OF DEUTSCHE MARKS)
1998 1997
---- ----
A. FIXED ASSETS
I. Intangible Assets
Software .................. 77 573
II. Tangible Assets
1. Land, leasehold rights and
buildings including buildings
on third party land ............ 5,481 5,640
2. Technical equipment and machines 3,526 3,031
3. Other equipment, factory and
office equipment ............... 1,143 1,346
4. Payments on account and assets
under construction ............. 668 639
------ ------
10,818 10,656
III. Financial Assets ................... 24 21
------ ------
10,919 11,250
B. Current Assets
I. Inventories
1. Raw materials and supplies ..... 2,984 2,852
2. Work-in-process ................ 235 271
3. Finished goods and goods
purchased for resale ........... 4,693 6,745
4. Advance payments on
inventories and assets under
construction ................... 0 18
------ ------
7,912 9,886
II. Receivables and other assets
1. Trade receivables .............. 5,444 6,692
2. Receivables from shareholders .. 179 0
3. Receivables from associated
companies ...................... 0 1,508
4. Other assets ................... 580 627
------ ------
6,203 8,827
IV. Cheques, cash-in-hand,
bank balances ...................... 682 486
------ ------
14,797 19,199
C. Prepaid expenses ........................ 114 85
------ ------
25,830 30,534
====== ======
See accompanying notes to consolidated financial statements
<PAGE>
OESERWERK ERNST OESER & SOHNE KG
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS OF DEUTSCHE MARKS)
1998 1997
---- ----
A. EQUITY
I. Subscribed capital 7,724 7,724
II. Capital reserves 12 12
III. Accumulated deficit (5,923) (1,324)
IV. Other (3) 3
------- -------
1,810 6,415
B. ACCRUALS
1. Tax accruals 9 0
2. Other accruals 1,606 828
------- -------
1,615 828
C. LIABILITIES
1. Bank borrowings 16,954 17,510
2. Payments received on
account of orders 52 2
3. Trade payables 3,237 2,080
4. Payables to shareholders 907 2,341
5. Other liabilities 1,255 1,358
------- -------
22,405 23,291
------- -------
25,830 30,534
======= =======
See accompanying notes to consolidated financial statements
<PAGE>
OESERWERK ERNST OESER & SOHNE KG
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS OF DEUTSCHE MARKS)
1998 1997
---- ----
SALES ......................................... 40,497 43,291
Increase in finished goods
and work-in-process ......................... -674 -146
Own work capitalized .......................... 63 77
Other operating income ........................ 1,857 514
------ ------
41,743 43,736
Cost of materials-
a) cost of raw materials,
supplies and trading stock ................. 18,713 21,606
b) cost of purchased services ................. 299 0
Personnel expense
a) wages and salaries ......................... 12,035 12,058
b) social security, pension
and other benefits costs ................... 2,776 3,718
thereof pension cost: ......................... 0 0
Depreciation, amortization and
write-offs on tangible
Assets, and plant and equipment ............... 1,341 1,878
Amortization and write-offs
of current assets ........................... 831 484
Other operating expense ....................... 7,930 3,860
------ ------
-2,182 132
Net other financial income .................... 119 91
Net interest expense .......................... -1,212 -1,205
------ ------
Net financial expense ......................... -1,093 -1,114
Loss from ordinary activities ................. -3,275 -982
Extraordinary expense ......................... -1,210 0
Income taxes .................................. -61 -177
Other taxes ................................... -53 -42
====== ======
Net Loss ...................................... -4,599 -1,201
====== ======
Accumulated deficit
- beginning of the year ..................... -1,324 -123
====== ======
Accumulated deficit
- end of the year ........................... -5,923 -1,324
====== ======
See accompanying notes to consolidated financial statements
<PAGE>
OESERWERK ERNST OESER & SOHNE KG
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENEDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS OF DEUTSCHE MARKS)
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (German GAAP) ............................. -4,599 -1,201
Depreciation and amortization ...................... 2,172 2,362
Loss on disposals of assets and
financial assets ................................. -840 -28
Increase in accruals ............................... 787 381
Increase/decrease in inventories,
trade receivables and
other assets ..................................... 3,737 -823
Decrease in trade payables and
other liabilities ................................ -330 -250
----- -----
Net cash provided by
operating activities ............................. 927 441
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals of fixed assets
and financial assets ............................. 1,878 47
Purchases of fixed assets .......................... -2,048 -1,556
----- -----
Net cash used for
investing activities ............................. -170 -1,509
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank loans ............................ -4,139 -315
Proceeds from bank loans ........................... 3,583 1,667
Other changes in equity ............................ -5 5
----- -----
Net cash provided by
financing activities ............................. -561 1,357
Net increase in cash ............................... 196 289
Cash at beginning of year .......................... 486 197
===== =====
Cash balance at end of year ........................ 682 486
===== =====
Supplemental disclosure of
cash flow information
Interest paid .................................. 1,212 1,205
Income taxes paid .............................. 72 169
See accompanying notes to consolidated financial statements
<PAGE>
Background
- ----------
The OESERWERK ERNST OESER & SOHNE KG("Oeser") is owned by the Oeser family.
Oeser is a limited partnership and therefore not subject to income tax. However
the company is subject to trade income tax. As of March 19, 1999 the entity
changed it's legal structure to be a corporation (GmbH).
CFC INTERNATIONAL, INC. ("CFC") of Chicago Heights, Illinois, USA have entered
into a purchase agreement for the acquisition of Oeser. The effective date for
the acquisition was March 19, 1999.
The consolidated financial statements have been prepared under the assumption
that the above sale would not result in significant changes in the basis of
valuation. Therefore, any influences which could occur out of the sale have not
been considered.
1. DISCLOSURES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNDER GERMAN GAAP
The consolidated financial statements of Oeser have been prepared in accordance
with the regulations of the German Commercial Code (HGB).
CONSOLIDATED COMPANIES
The consolidated financial statements include all companies that are
subsidiaries of Oeser in accordance with Section 290 of the German Commercial
Code. Oeser had a 25% interest in an associated company, which was recorded on a
cost basis. This investment was sold in 1998.
The consolidated financial statements of Oeser include the following companies:
o Oeserwerk Ernst Oeser & Sohne KG, Goppingen/Germany
- OESER France Sarl., Villejuif/France
- OESER Italy S.R.L., Pordenone/Italy
Oeser Italy was founded in 1997 and its respective financial statements are
included as of December 31, 1997. Oeser Italy was sold in April 1999 to a third
party. This sale resulted in a loss of KDM 624 in 1999.
<PAGE>
PRINCIPLES OF CONSOLIDATION
The equity consolidation of the group is performed according to the book value
method as prescribed by German accounting standards. The carrying value of the
shares owned by the parent company is eliminated against the amount, which these
shares represent in the equity of the subsidiary company. The elimination is
based on the values at the time of acquisition of shares or first consolidation
of the subsidiary in the consolidated financial statements.
Intercompany balances and transactions have been eliminated in consolidation.
METHODS OF ACCOUNTING AND VALUATION
The financial statements of the consolidated companies have generally been
prepared in accordance with the same methods of accounting and valuation for
Oeser.
Intangible assets acquired are stated at cost and are depreciated straight line
with useful lives between 4 and 5 years.
Property and equipment are stated at acquisition or manufacturing cost.
Depreciation is based on the underlying - and permitted for tax purposes -
useful economic lives of the assets.
At the German companies, in calculating depreciation on movable fixed assets, an
entire year's depreciation is charged for additions recorded during the first
half of the year and a half year's depreciation is charged for additions made
during the second half of the year. Low-value assets with an individual purchase
price of up to DM 800 are fully depreciated in the year of purchase and are
disclosed as disposal.
The following useful lives and depreciation rates are used in calculating
ordinary depreciation:
Useful
life Depreciation
(years) Method
------- ------
Building ...................................... 40 straight line
Technical equipment and machinery ............. 7-10 straight line
EDP equipment and vehicle fleet ............... 4-5 straight line
Tools ......................................... 5 straight line
Factory and office equipment .................. 5-10 straight line
<PAGE>
Inventory is valued at the lower of acquisition or manufacturing cost or market,
cost being generally determined on the basis of an average or first-in,
first-out method. Manufacturing costs comprise direct material and labor and
applicable manufacturing overheads, including depreciation charges.
Raw materials are valued at average cost. Obsolescence risks have been accounted
for.
Unfinished and finished goods are valued at manufacturing costs. Such
manufacturing costs include direct material, material related overhead, direct
labor costs, labor related overhead and related depreciation of property, plant
and equipment. Appropriate reserves have been recorded for obsolete or slow
moving items.
Receivables and other assets are recorded at face value less write-downs or
allowances. All known risks have been accounted for. In addition to the specific
allowance for bad debts a general allowance of 1 % has been recorded on domestic
receivables in accordance with German tax regulations. Outside of Germany the
general allowance is recorded based on past experience.
Non interest bearing and low interest bearing receivables due after more than
one year are reported at present values.
Receivables denominated in foreign currencies are stated at the lower of the
rate in effect at the date the receivable was recorded or the rate in effect at
the balance sheet date.
An accrued liability for taxes and other contingencies is recorded when an
obligation with third parties has been incurred, its utilization is probable and
the amount can be reasonably estimated.
Liabilities are recorded at face value. Liabilities in foreign currency are
stated at the rate in effect at the date the liability was recorded or at the
higher rate in effect at the balance sheet date.
<PAGE>
FOREIGN CURRENCY TRANSLATION
Assets and liabilities reported by foreign subsidiaries have been translated
into Deutsche Marks using the exchange rate in effect at the balance sheet date.
Translation differences in the balance sheet between the two years resulting
from translation at different exchange rates are recorded in other equity.
Revenues, expenses and net income/loss for the year have been translated into
Deutsche Marks using the exchange rate in effect at the balance sheet date. The
resulting translation difference are not material and is recorded in other
equity.
DISCLOSURES TO THE CONSOLIDATED BALANCE SHEETS
FIXED ASSETS
See Exhibit 1 for details of the development of fixed assets in 1997 and 1998.
RECEIVABLES
Receivables from affiliated companies comprise trade receivables and are due
within one year.
SUBSCRIBED CAPITAL
The subscribed capital only comprises the capital of Oeser.
ACCRUALS
Other accruals mainly include warranty obligations, termination pay, audit fees,
workmen's compensation, outstanding invoices, accrued losses from an EDP-lease
contract and vacation and Christmas bonus.
LIABILITIES
All liabilities have a maturity within 1 year except the bank borrowings. From
the bank borrowings an amount of KDM 10,620 (12/31/1998) and of KDM 8,239
(31/12/1997) is due within 1 year and KDM 2,677 (12/31/1998) and of KDM 2,142
(31/12/1997) have a maturity of 5 years and more.
Of the bank borrowings, an amount of KDM 7,598 (12/31/1998) and of KDM 7,686
(31/12/1997) is secured by a mortgage on real estate.
OTHER FINANCIAL OBLIGATIONS
The other financial obligations consisting of:
- - EDP-leasing amounts to KDM 2,277. at year-end 1998 and KDM 0 at year-end 1997.
- - rent contracts amounts to KDM 73. at year-end 1998 and KDM 73 at
year-end 1997.
DISCLOSURES TO THE CONSOLIDATED STATEMENTS OF OPERATIONS
SALES
1998 1997
---- ----
(KDM) (KDM)
------ ------
Classification by geographical area
Domestic (Germany) .............................. 21,008 25,310
Rest of the world ............................... 19,489 18,098
------ ------
40,497 43,408
====== ======
INTEREST EXPENSE
This position subdivides as follows:
1998 1997
---- ----
(KDM) (KDM)
------ ------
Interest expense ................................ 1,307 1,260
Interest income ................................. 116 86
------ ------
1,191 1,174
====== ======
Extraordinary Expense
The extraordinary expense in 1997 covers restructuring costs and includes
consulting fees and severance payments made to former employees.
<PAGE>
OTHER NOTES
Employees
1998 1997
---- ----
Average number of employees
Hourly employees ............... 90 90
Salaried employees ............. 99 103
Trainees ....................... 3 3
=== ===
192 196
=== ===
Number of employees at balance sheet date
Hourly employees ............... 84 95
Salaried employees ............. 99 99
Trainees ....................... 3 3
=== ===
176 197
=== ===
NOTES TO THE ORGANIZATION aND PARENT COMPANY (OESER)
The Management of OESER includes the following:
Heinz Jochen Oeser (up to 12/31/1998)
Dr. Ernst Georg Oeser (up to 12/31/1998)
Jochen Oeser
Florian Oeser
Management remuneration paid by OESER amounted to KDM 649 in 1998 and KDM 840 in
1997.
<PAGE>
NOTE 2
RECONCILIATION TO U.S. GAAP
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in Germany. Those
principles differ from accounting principles generally accepted in the United
States of America. Following are the significant differences relating to the
Company's consolidated financial statements:
a) The lease contract regarding the Software and the EDP-equipment have been
classified in the statutory accounts according to German GAAP as an
operating lease. According to US-GAAP this contract should be classified as
an capital lease. (total purchase value:
KDM 2,643, monthly rate KDM 81 over 36 month)
b) Under German GAAP the associated company was recorded on a cost basis. Under
US-GAAP this investment was accounted for on the equity method.
c) Deferred taxes for a tax loss carried forward (trade tax on income) have not
been recorded according to German GAAP in the consolidated statements. This
amount should be booked according to US-GAAP. However, under US-GAAP a
valuation allowance was recorded and there would be no net deferred tax
assets.
d) The difference between US-GAAP and German GAAP as it relates to the
receivables and liabilities denominated in foreign currencies and the
translation of the financial amounts of foreign subsidiaries did not result
in significant US-GAAP to German GAAP differences.
Net Income in Accordance with U.S. GAAP
1998 1997
(KDM) (KDM)
----- -----
German GAAP net loss ................ -4,599 -1,201
a) Capital Lease .................... -43 0
b) Equity method for consolidation
of affiliated companies .......... -268 99
------ ------
Net loss in accordance with U.S. GAAP -4,910 -1,102
====== ======
Reconciliation of German GAAP Equity to U.S. GAAP Equity
1998 1997
(KDM) (KDM)
----- -----
Equity as reported in the
German GAAP consolidated
balance sheets
1,810 6,415
----- -----
a) Capital Lease .................. -43 0
b) Equity method for consolidation
of affiliated companies ........ 0 268
----- -----
Equity in accordance with U.S. GAAP 1,767 6,683
===== =====
Goppingen, May 26, 1999
<PAGE>
OESERWERK ERNST OESER & SOHNE KG (GERMAN GAAP)
(IN DM 000)
- ----------------------------------------------------------------------------
Acquistions and
Production Costs Accumu-
------------------------------------ lated Net Depre-
Deprecia- Book cia-
tion Value tion
---- ----- ----
Balance Balance Balance Balance For
On Addi- Trans- Dis- On On On The
1/1/98 tions fers posals 12/31/98 12/31/98 12/31/98 Year
------ ----- ---- ------ -------- -------- -------- ----
I. Intangible
assets
Software 1,542 75 19 1,376 260 183 77 47
------ ------ --- ----- ------ ----- ------ -----
II. Tangible
assets
1. Land, 9,887 14 - - 9,901 4,420 5,481 172
lease-
hold
rights
and
buildings
2. Technical 22,439 895 380 39 23,675 20,149 3,526 778
equipment
and
machines
3. Other 5,743 569 1 1,225 5,088 3,945 1,443 344
equipment,
factory
and office
equipment
4. Payments on 639 492 (400) 63 668 - 368 -
account,
and assets
under
construction
------ ----- ---- ----- ------ ------ ------ -----
38,708 1,970 (19) 1,327 39,332 28,514 10,818 1,294
------ ----- ---- ----- ------ ------ ------ -----
III. Financial
assets
1. Shares in
affiliated
companies - - - - - - - -
2. Other loans 21 3 - - 24 - 24 -
------ ----- ---- ----- ------ ------ ------ -----
21 3 - - 24 - 24 -
====== ===== ==== ===== ====== ====== ====== =====
40,271 2,048 - 2,703 39,616 28,697 10,919 1,341
====== ===== ==== ===== ====== ====== ====== =====
<PAGE>
OESERWERK ERNST OESER & SOHNE KG (GERMAN GAAP)
(IN DM 000)
- ----------------------------------------------------------------------------
Acquistions and
Production Costs Accumu-
------------------------------------ lated Net Depre-
Deprecia- Book cia-
tion Value tion
---- ----- ----
Balance Balance Balance Balance For
On Addi- Trans- Dis- On On On The
1/1/98 tions fers posals 12/31/98 12/31/98 12/31/98 Year
------ ----- ---- ------ -------- -------- -------- ----
I. Intangible
assets
Software 1,359 102 81 - 1,542 969 573 303
------ ----- ---- ---- ------ ------ ------ -----
II. Tangible
assets
1. Land, 9,041 152 694 - 9,887 4,247 5,640 164
lease-
hold
rights
and
buildings
2. Technical 20,810 668 961 - 22,439 19,408 3,031 97
equipment
and
machines
3. Other 5,682 271 (195) 15 5,743 4,397 1,346 440
equipment,
factory
and office
equipment
4. Payments 1,819 361(1,541) - 639 - 639 -
on account,
and assets
under
construction
------ ----- ---- ---- ------ ------ ------ -----
37,352 1,452 (81) 15 38,708 28,052 10,656 1,575
------ ----- ---- ---- ------ ------ ------ -----
III. Financial
assets
1. Shares in 5 - - 5 - - - -
affiliated
companies
2. Other loans 19 2 - - 21 - 21 -
------ ----- ---- ---- ------ ------ ------ -----
24 2 - 5 21 - 21 -
====== ===== ==== ==== ====== ====== ====== ======
38,735 1,556 - 20 40,271 29,021 11,250 1,878
====== ===== ==== ==== ====== ====== ====== ======
<PAGE>
EXHIBIT 99.2
CFC INTERNATIONAL, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
AND NARRATIVE DISCLOSURE
(REFLECTING THE ASSETS PURCHASED AND
LIABILITIES ASSUMED AND THE REVENUES AND
EXPENSES ACQUIRED FROM
OESERWERK ERNST OESER & SOHNE KG
INTRODUCTORY NOTE
The following unaudited pro forma consolidated financial statements
reflect the inclusion of the financial position and results of operations of
Oeserwerk Ernst Oeser & Sohne KG (Oeser) which was acquired by CFC
International, Inc. (the "Company") on March 19, 1999. The Acquisition of Oeser
by the Company (the "Acquisition") has been accounted for using the purchase
method of accounting and, accordingly, the purchase price has been allocated to
the assets purchased and the liabilities assumed or anticipated based on the
estimated fair values at the acquisition date. The excess of the purchase price
over the fair value of the assets less liabilities will be amortized on a
straight-line basis over fifteen years.
The unaudited pro forma adjustments are based upon available
information and upon certain assumptions that the Company believes are
reasonable.
The unaudited pro forma financial data do not purport to be indicative
of the Company's financial position or results of operations that would actually
have been obtained had the transaction been completed as of the date of for the
periods presented, or to project the Company's financial position or results of
operations at any future date or for any future period.
The unaudited pro forma statements of earnings for the twelve months
ended December 31, 1998 include adjustments for depreciation, amortization of
goodwill and interest expense based upon the allocated cost of the acquisition
and its related financing as if the acquisition occurred January 1, 1998. Pro
forma adjustments have not been made to reflect either manufacturing cost
savings which management believes can be realized by the reduction of Oeser's
workforce, as of December 31, 1998 estimated to be $1.4 million, reduced duty
and freight by utilizing Oeser's manufacturing facility to produce the Company's
products for the European common market, and non-reoccurring restructuring
charges of approximately $700,000 reduced in the 1998 historical Oeser financial
statements.
The pro forma unaudited balance sheet as of December 31, 1998 reflects
the acquisition and the financing of such acquisition as if these events
occurred as of December 31, 1998. The $4.9 million paid for the Acquisition was
financed from the Company's cash and common stock and is reflected as such in
the pro forma unaudited balance sheet.
<PAGE>
CFC INTERNATIONAL, INC.
PRO FORMA UNAUDITED CONDENSED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1998
(In Thousands)
December 31, 1998
--------------------------------------------------
Pro
Forma
Adjust- Pro
CFC Oeser (a) ments Forma
--- --------- ----- -----
Net sales $51,047 $22,990 $ - $74,037
Cost of goods sold 31,915 18,317 - 50,232
Selling, general and 12,000 6,806 10 (b) 18,416
administrative expenses (400) (d)
------- ------- -------- -------
43,915 25,123 (390) 68,648
Operating income (loss) 7,132 (2,133) 390 5,389
before interest and taxes
Interest expense and other 881 620 154 (e) 1,655
------- ------- -------- -------
Income (loss) before taxes 6,251 (2,753) 236 3,734
and minority interest
Provision for income taxes 2,260 35 (1,435) (c) 980
120 (f)
Minority interest 343 - - 343
------- ------- -------- -------
Net income (loss) $ 3,648 $(2,788) $ 1,551 $ 2,411
Basic earnings per share $ 0.82 $ 0.54
Average shares outstanding 4,454 4,554
Diluted earnings per share $ 0.80 $ 0.51
Average shares outstanding 4,662 4,762
<PAGE>
CFC INTERNATIONAL, INC.
NOTES TO PRO FORMA UNAUDITED
CONDENSED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1998
(a) Represents the revenues and expenses of Oeser for the twelve months
ended December 31, 1998, as included in Appendix A to this Form 8-K/A
adjusted for U.S. GAAP reconciling items.
(b) Amortization of goodwill to reflect amortization over a fifteen (15)
year period of estimated excess fair value over net book value of
assets required.
(c) Tax effect Oeser profits as a GmbH as it was converted to a GmbH at the
date of acquisition.
(d) Reflects adjustment for impact of adverse lease contract.
(e) Reflects impact on interest income for cash considerations and expenses
in connection with the acquisition.
(f) Tax effect of purchase accounting adjustments.
<PAGE>
CFC INTERNATIONAL, INC.
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
TWELVE MONTHS ENDED DECEMBER 31, 1998
(In Thousands)
December 31, 1998
---------------------------------------------
Pro Pro
Forma Forma
Adjust- Consoli-
CFC Oeser (b) ments dation
--- --------- ----- ------
ASSETS:
Current Assets:
Cash and cash equivalents $ 5,435 $ 407 $(3,851) (d) $ 1,991
Accounts receivable, net 7,767 3,246 - 11,013
Inventories 7,435 4,718 358 (a) 12,511
Prepaid expenses and other 723 919 - 1,642
current assets
Deferred income taxes 869 - 333 (i) 1,202
------- ------- ------- -------
Total current assets 22,229 9,290 (3,160) 28,359
Property, plant and 15,324 6,656 3,819 (a) 25,799
Equipment, net
Other assets 1,727 60 148 (j) 1,935
------- ------- ------- -------
$39,280 $16,006 $ 807 $56,093
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current Liabilities:
Current maturities of
long-term debt $ 1,348 $ 5,859 $ - $ 7,207
Due to shareholders - 541 (541) (c) -
Accounts payable and
accrued expenses 5,574 3,672 - 9,246
------- ------- ------- -------
Total current liabilities 6,922 10,072 (541) 16,453
Deferred income taxes 2,110 - - 2,110
Long-term debt 9,277 4,880 - 14,157
Other long-term liabilities - - 775 (g) 1,502
- - 727 (h) -
Shareholders' equity 20,971 1,054 900 (f) 21,871
------- ------- ------- -------
$39,280 $16,006 $ 807 $56,093
<PAGE>
CFC INTERNATIONAL, INC.
NOTES TO PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(a) Adjustment of inventories and property, plant and equipment based
upon purchase accounting.
(b) Reflects Combined Balance Sheet as of December 31, 1998 included in
Appendix A to this Form 8-K/A adjusted for U.S. GAAP.
(c) Elimination of shareholder loans, as they were not assumed in the
acquisition.
(d) Reflects consideration and fees to purchase Oeser.
(e) Elimination of net assets of Oeser.
(f) Reflects 100,000 shares of the Company's stock issued as
partial consideration for the acquisition.
(g) Reflects recording of adverse lease commitment.
(h) Reflects recording of severance provision related to Oeser employees.
(i) Reflects recording of deferred income taxes.
(j) Reflects recording of goodwill.
