CFCI Cfc

- Net sales increased to $23.1 million for the third quarter of 2005, up 6.5% from $21.7 million for the third quarter in 2004. CHICAGO HEIGHTS, Ill., Oct. 26 /PRNewswire-FirstCall/ -- Worldwide holographic and specialty coated film manufacturer, CFC International, Inc. (NASDAQ:CFCI) today reported results for the third quarter of 2005. Sales in the third quarter of 2005 increased 6.5 percent to $23.1 million compared to $21.7 million in the third quarter of 2004. The third quarter 2005 increase in sales was primarily due to solid holographic security sales. Third quarter 2005 net income increased to $1.5 million, or $0.32 cents per share on a fully diluted basis, compared to a net income of $1.4 million or $0.32 cents per share on a fully diluted basis for the third quarter of 2004. This increase in net income was primarily due to higher sales. Earnings per share in the third quarter of 2005 stayed the same because on a fully diluted basis there were more options in the money, and as a result included in the shares outstanding as compared to the third quarter of 2004. "Once again, we have delivered another solid quarter," said Greg Jehlik, CFC's President and Chief Executive Officer. "Sales of our holographic, security and pharmaceutical products continue to grow, as we gain market share by offering our customers innovative solutions that help them combat counterfeiting and provide them with unique technologies. Our European operation's sales volumes have increased, and we are producing profits over the previous year. We continue to make strides in Asia, and have recently added personnel to further strengthen our sales and marketing efforts in that area. Additionally, the Company continues to make capital investments that allow us to expand our capacity and capabilities. These investments will allow us to deliver positive results for the balance of the year and achieve sustainable growth over the long-term." Jehlik further added, "Like most other businesses, we are experiencing higher energy and raw material costs due to the recent hurricanes in the U.S. However, we remain confident that we are well positioned for continued growth, and we are encouraged by the opportunities that we see in front of us." Operating income excluding depreciation and amortization was $3.6 million in the third quarter of 2005, an increase of 7.1 percent compared with $3.4 million in the third quarter of 2004. This increase was primarily due to higher sales and leveraging operating expenses in the third quarter of 2005. Sales for the first nine months of 2005 totaled $68.3 million, an increase of 10.4 percent from $61.9 million for the same period last year. Sales for the first nine months of 2005 reflected higher sales volumes in holographic security and authenticity products and pharmaceutical products sales worldwide. In addition, a strong Euro positively affected sales by $640,000 for the first nine months of 2005. Net income for the first nine months of 2005 increased to $3.5 million, or $0.75 cents per share on a fully diluted basis, from $3.2 million or $0.71 cents per share on a fully diluted basis for the same period last year. Net income for the first nine months of 2005, were favorably affected by higher sales and by leveraging operating expenses, and unfavorably affected by higher material prices, scrap, transaction costs and foreign currency exchange losses due to the strength of the U.S. dollar against the Euro. Operating income excluding depreciation and amortization for the first nine months of 2005 increased 19.2 percent to $10.3 million from $8.6 million in the first nine months of 2005 for the reasons described above. "We are pleased with the positive financial results that CFC has produced for the first nine months of 2005," said Roger Hruby, CFC's Chairman. "These results reflect robust sales of our holographic security products and solid growth in most of our core businesses, both domestically and internationally." Recent Developments The Company reports the addition of Mr. Tommy Chiu as Business Development Manager, Asia. Mr. Chiu has more than 7 years of international sales experience, and will lead the Company's marketing efforts in Asia. The Company reports that it has developed an interactive card design program, CardCAD(TM), that allows users to visualize how its full face holographic laminate HoloLam Plus(TM) patterns look on transaction cards. The program was recently introduced at the International Card Manufacturers Association conference held in Miami, FL on October 16-19, 2005. The Company will be exhibiting at the upcoming Cartes 2005 show at the Paris-Nord Villepinte in Paris, France, November 15-17, 2005 in Booth #4 L 066, where it will feature its card products, such as HoloLam Plus, magnetic stripe, signature panel, security holograms, scratch-off foils and tipping foils for transaction cards. Headquartered in Chicago Heights, Illinois, CFC International is a market leader in the design, manufacture and marketing of holographics and specialty functional coatings that add value to a wide variety of industrial and consumer products. The Company operates facilities in Chicago Heights and Countryside, Illinois; London, England; and Goppingen, Germany. A condensed consolidated balance sheet and statement of operations is attached. Statements made in this press release, including those relating to expectations of future sales, net income and operating costs reductions, estimations of the market size for certain of the company's products or the company's share of those markets and expectations of increased sales attributable to various product lines, are forward looking and are made pursuant to the safe harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in those statements. Among other things, continued unfavorable economic conditions may impact market growth trends or otherwise impact the demand for the company's products and services; competition from existing and new competitors and producers of alternative products will impact the company's ability to penetrate or expand its presence in new or growing markets; uncertainties relating to the company's ability to develop and distribute new proprietary products to respond to market needs in a timely manner may impact the company's ability to exploit new or growing markets; the company's ability to successfully identify and implement productivity improvements and cost reduction initiatives may impact profitability; and risks inherent in international operations, including possible economic, political or monetary instability, may impact the level and profitability of the company's foreign sales. In addition to the factors set forth in this release, the economic, competitive, governmental, technological and other factors identified in the company's filings with the Securities and Exchange Commission, could affect the forward looking statements contained in this press release. We have no obligation to revise or update these forward- looking statements to reflect events or circumstances that arise after the date of this press release or to reflect the occurrence of anticipated events. You may access additional information, including our filings with the Securities and Exchange Commission and previous press releases by visiting CFC International's Internet homepage at http://www.cfcintl.com/ . CFC INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Earnings Per Share and Operating Three Months Ended Nine Months Ended Income Percentage) September 30, September 30, 2005 2004 2005 2004 Net Sales $23,124 $21,718 $68,341 $61,897 Cost of Goods (Excluding Depreciation and Amortization Shown Below) 15,155 13,842 44,107 39,929 Operating Expenses 4,291 4,512 13,467 13,365 Depreciation and Amortization 1,162 1,238 3,506 3,593 Transaction fees 74 - 508 - Operating Income 2,442 2,126 6,753 5,010 Operating Income % 10.6% 9.8% 9.9% 8.1% Interest Expense 276 308 823 894 Interest Income (28) - (37) (1) Interest Rate Swap Valuation (Benefit) Provision (35) 49 (66) (47) Rental Income (46) (50) (114) (118) Foreign Currency Exchange Loss (Gain) 9 (263) 775 (290) Income Before Income Taxes 2,266 2,082 5,372 4,572 Provision for Income Taxes 800 651 1,907 1,419 Net Income (Note 1) $1,466 $1,431 $3,465 $3,153 Diluted Weighted Average Number of Shares Outstanding 4,620 4,488 4,626 4,498 Diluted Earnings Per Share $0.32 $0.32 $0.75 $0.71 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Note 1) $3,678 $3,364 $10,767 $8,603 SUMMARY OF INTERNATIONAL SALES (In Thousands, Except International Sales Three Months Ended Nine Months Ended Percentage) September 30, September 30, 2005 2004 2005 2004 International Sales ($) $10,064 $9,961 $30,784 $29,294 International Sales (%) 43.5% 45.9% 45.0% 47.3% NOTE 1: The Company believes earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) is an appropriate measurement for its business because its enterprise value is more closely aligned with this measurement and because of the continual investment the company makes in long-lived assets. Adjusted EBITDA should not necessarily be considered as an alternative to net income or cash flows from operating activities which are determined in accordance with Generally Accepted Accounting Principles as an indicator of operating performance or as a measure of liquidity. The table that follows reconciles net income to adjusted EBITDA as defined: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2005 2004 2005 2004 Net income $1,466 $1,431 $3,465 $3,153 Add back (subtract): Transaction expenses 74 - 508 - Income taxes 800 651 1,907 1,419 Interest expense 276 308 823 894 Interest income (28) - (37) (1) Interest rate swap valuation (benefit) provision (35) 49 (66) (47) Rental income (46) (50) (114) (118) Foreign currency exchange loss (gain) 9 (263) 775 (290) Depreciation and amortization 1,162 1,238 3,506 3,593 Adjusted EBITDA $3,678 $3,364 $10,767 $8,603 CFC INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2005 AND DECEMBER 31, 2004 September 30, December 31, 2005 2004 ASSETS Cash and cash equivalents $6,264,526 $4,554,699 Restricted cash 311,587 306,271 Accounts receivable, less allowance for doubtful accounts 14,861,225 12,547,380 Inventories 16,900,556 17,709,138 Other current assets 1,449,734 1,389,790 Total current assets 39,787,628 36,507,278 Property, plant and equipment, net 26,852,183 28,602,311 Deferred income taxes 3,517,612 3,528,686 Intangible assets, net 2,215,463 2,393,466 Other assets 251,852 266,806 Goodwill 1,029,462 1,029,462 Fair value of interest rate swap 105,888 39,553 Total assets $73,760,088 $72,367,562 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $6,086,581 $5,625,085 Accounts payable and accrued expenses 14,520,829 15,314,782 Total current liabilities 20,607,410 20,939,867 Deferred income taxes 3,221,756 3,229,584 Long-term debt 14,124,763 15,698,791 Total liabilities 37,953,929 39,868,242 Stockholders' equity 35,806,159 32,499,320 Total liabilities and stockholders' equity $73,760,088 $72,367,562 DATASOURCE: CFC International, Inc. CONTACT: Dennis Lakomy, Chief Financial Officer of CFC International, Inc., +1-708-757-2803 Web site: http://www.cfcintl.com/ Company News On-Call: http://www.prnewswire.com/comp/110663.html

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