UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly
period ended March 31, 2000
---- 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
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 May 8, 2000, the Registrant had issued and outstanding 4,061,016 shares
of Common Stock, par value $.01 per share, and 512,989 shares of Class B Common
Stock, par value $.01 per share.
<PAGE>
CFC INTERNATIONAL, INC.
INDEX TO FORM 10-Q/A
Page
----
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets - March 31, 2000
and December 31, 1999........................... 3
Consolidated Statements of Income for the
three (3) months ended March 31, 2000
and March 31, 1999.............................. 4
Consolidated Statements of Cash Flows for
the three (3) months ended March 31, 2000
and March 31, 1999.............................. 5
Notes to Consolidated Financial Statements....... 6-8
Part II - Other Information:
Signatures......................................... 12
<PAGE>
Part I
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2000 AND DECEMBER 31, 1999
March 31, December 31,
2000 1999
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................... $ 1,206,279 $ 1,908,989
Accounts receivable, less allowance
for doubtful accounts of $1,026,149
and $1,209,000 respectively ................ 12,189,948
11,263,452
Employee receivable
85,022 37,083
Inventories:
Raw materials ............................ 2,384,158 2,556,769
Work in process .......................... 2,288,325 1,576,822
Finished goods ........................... 6,812,529 6,253,805
----------- -----------
11,485,012 10,387,396
Prepaid expenses and other current assets..... 988,970 1,778,477
Deferred income taxes......................... 1,437,266 1,437,266
----------- -----------
Total current assets...................... 27,392,497 26,812,663
----------- -----------
Property, plant and equipment, net............ 26,177,659 26,558,177
Intangible assets............................. 3,532,000 -
Other assets.................................. 2,021,302 1,991,158
----------- -----------
Total assets.................................. $59,123,458 $55,361,998
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of Note payable............... $ 3,205,853 $ -
Current portion of long-term debt............. 7,385,019 7,394,335
Accounts payable.............................. 3,386,715 2,545,831
Accrued environmental liability............... 244,937 244,937
Accrued bonus................................. 336,333 177,809
Accrued vacation.............................. 759,785 617,752
Other accrued expenses and
current liabilities......................... 4,061,449 5,037,582
----------- -----------
Total current liabilities................... 19,380,091 16,018,246
Deferred income taxes......................... 1,963,346 1,963,346
Long-term debt................................ 13,469,179 13,635,116
----------- -----------
Total liabilities........................... 34,812,616 31,616,708
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000
shares authorized; 4,417,101 and
4,392,700 shares issued at March 31, 2000
and December 31, 1999 respectively.......... 43,955 43,927
Class B common stock, $.01 par value,
750,000 shares authorized; 512,989
shares were issued and outstanding at
March 31, 2000 and December 31, 1999
respectively................................ 5,130 5,130
Additional paid-in capital.................... 11,651,989 11,607,695
Retained earnings............................. 15,036,066 14,225,154
Accumulated other comprehensive income........ (764,321) (503,445)
----------- -----------
25,972,819 25,378,461
Less 358,646 and 353,346 treasury shares
of common stock, at cost at March 31, 2000
and December 31, 1999 respectively.......... (1,661,977) (1,633,171)
----------- -----------
24,310,842 23,745,290
----------- -----------
Total liabilities and stockholders' equity.. $59,123,458 $55,361,998
=========== ===========
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
(Unaudited)
Net sales .................................... $18,258,436 $13,004,066
Cost of goods sold ........................... 11,375,060 8,263,307
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Gross profit ................................. 6,883,376 4,740.759
----------- -----------
Marketing and selling expenses ............... 2,194,357 1,405,605
General and administrative expenses .......... 2,238,091 1,356,779
Research and development expenses ............ 741,264 397,146
----------- -----------
5,173,711 3,159,530
----------- -----------
Operating income ............................. 1,709,664 1,581,229
Other (income) expenses:
Interest ................................. 294,435 150,384
Miscellaneous ............................ 169,002 73,094
----------- -----------
463,437 223,478
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Income before income taxes and
minority interest .......................... 1,246,227 1,357,751
Provision for income taxes ................... 435,315 575,669
----------- -----------
810,912 782,082
----------- -----------
Net income ................................... $ 810,912 $ 782,082
=========== ===========
Basic earnings ............................... $ 0.18 $ 0.17
Diluted earnings per share ................... $ 0.18 $ 0.17
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Three Months Ended March 31,
2000 1999
---- ----
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net income ................................... $ 810,912 $ 782,083
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization ............. 847,133 608,322
Changes in assets and liabilities:
Accounts receivable ..................... (1,189,638) (213,647)
Inventories ............................. (1,387,733) 572,191
Employee receivable...................... (50,604) (936)
Other current assets..................... 613,959 (580,451)
Accounts payable......................... 923,018 966,890
Accrued vacation......................... 142,151 (16,755)
Accrued bonus............................ 160,923 (448,865)
Accrued expenses and other current
liabilities............................. (618,840) (194,372)
----------- -----------
Net cash provided by operating activities..... $ 251,280 $1,474,460
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment... (902,045) (1,055,621)
Cash paid for acquired business rights....... (356,206) -
Cash paid for acquired business.............. - (3,265,301)
----------- -----------
Net cash used in investing activities.......... (1,258,251) (4,320,922)
----------- -----------
Cash flows from financing activities:
Proceeds from term loans..................... - 10,981
Repayments of term loans..................... 90,493 (162,118)
Repayment of capital lease................... - (6,619)
Issuance of stock............................ 16,325 36,160
----------- -----------
Net cash provided by (used in)
financing activities......................... 106,818 (121,596)
----------- -----------
Effect of exchange rate changes on cash
and cash equivalents......................... 197,443 (5,003)
----------- -----------
Decrease in cash and cash equivalents.......... (702,710) (2,973,061)
Cash and cash equivalents:
Beginning of period............................. 1,909,989 5,434,595
End of Period................................... $1,206,279 $2,461,234
=========== ===========
Non-cash financing and investing activities:
Issuance of installment note payable for
acquisition of business rights.............. $3,240,000 $ -
The accompanying notes are an integral part of
the financial statements.
<PAGE>
CFC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(Unaudited)
Note 1. Basis of Presentation
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 March 31, 2000 and December 31, 1999,
the results of operations for the three (3) months ended March 31, 2000 and
1999, and statements of cash flows for the three (3) months ended March 31, 2000
and 1999.
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. Comprehensive Income
The Company's total comprehensive income was as follows:
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
Net earnings.......................................... $810,912 $782,083
(Less): foreign currency translation adjustment...... 260,876 5,003
-------- --------
Total comprehensive income............................ $550,036 $777,080
======== ========
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Note 3. Earnings Per Share
March 31, 2000 March 31, 1999
------------------------- ------------------------
Per Per
Income Shares Share Income Shares Share
------ ------ ----- ------ ------ -----
Basic Earnings
Per Share:
Income available to
Common Stockholders..... $810,912 4,571,347 $.18 $782,083 4,565,595 $.17
Effect of Dilutive
Securities:
Options exercisable.... 3,397 2,663
Convertible debt....... 21,000 166,667 24,000 190,476
Diluted Earnings
per Share............... $831,912 4,741,410 $.18 $806,083 4,758,734 $.17
Note 4. Purchase of Worldwide Holographic Technology Rights
On January 3, 2000, the Company exercised its option to purchase the worldwide
rights to the holographic technology of Applied Holographics PLC for $3.6
million. The acquisition of these rights was financed by a nine month
non-interest bearing installment note issued by the Company and $.4 million in
cash.
Note 5. Business Segments and International Operations
The Company and its subsidiaries operate in a single business segment, which is
the formulating and manufacturing of chemically-complex, multi-layered
functional coatings. The Company produces five primary types of coating
products. Sales for each of these products (in millions) for the three months
ended March 31, 2000 and 1999 are as follows:
2000 1999
---- ----
Printed Products $ 4.9 $ 4.4
Pharmaceutical Products 2.2 2.2
Security Products 1.6 2.2
Holographic Products 3.2 2.4
Specialty Pigmented and Other Simulated Metal Products 6.4 1.8
----- -----
Total $18.3 $13.0
===== =====
The following is sales by geographic area for the three months ended March 31,
2000 and 1999 and long-lived asset information as of March 31, 2000 and December
31, 1999:
Sales (In Thousands) 2000 1999
---- ----
United States $ 9,212 $ 8,600
Germany 4,469 805
Foreign 4,577 3,599
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Total $18,258 $13,004
======= =======
Net Fixed Assets
(In Thousands) 2000 1999
---- ----
United States $15,869 $15,510
Germany 10,069 10,773
Foreign 240 275
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Total $26,178 $26,558
======= =======
Foreign revenue is based on the country in which the customer is domiciled.
<PAGE>
Note 6. 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. 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 three
months ended March 31, 1999 assumes the acquisition had occurred on January 1 of
each year (in 000's).
1999
----
Net sales $20,616
Net income 285
Earnings per share:
Basic $0.06
Diluted $0.06
Note 7. Contingencies
From time to time, the Company is subject to legal proceedings and claims which
arise in the normal course of its business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not have a
material adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
<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 May 11, 2000.
CFC INTERNATIONAL, INC.
Dennis W. Lakomy
Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)
Jeffrey E. Norby
Vice President, Controller
(Principal Accounting Officer)
