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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 March 31, 2004

----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition from to
---------- ----------

Commission File No. 0-27222

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
(Address of Principal Executive Offices)

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 ( )

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act).

YES ( ) NO ( X )

As of April 29, 2004, the Registrant had issued and outstanding 3,878,485 shares
of Common Stock, par value $.01 per share, and 512,989 shares of Class B Common
Stock, par value $.01 per share.






CFC INTERNATIONAL, INC.

INDEX TO FORM 10-Q



Pages
-----

Part I - Financial Information:

Item 1. Financial Statements

Consolidated Balance Sheets - March 31, 2004
and December 31, 2003.......................................... 5

Consolidated Statements of Operations for the
three (3) months ended March 31, 2004 and March 31, 2003....... 6

Consolidated Statements of Cash Flows for the three (3)
months ended March 31, 2004 and March 31, 2003................. 7

Notes to Consolidated Financial Statements....................... 8-11


Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 12-15

Item 3. Quantitative and Qualitative Disclosures about
Market Risks..................................................... 16

Item 4. Controls and Procedures................................... 16

Part II - Other Information

Item 6. Exhibits and Report on Form 8-K........................... 17

Signatures......................................................... 18

Certifications..................................................... 19-24








SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

The Company believes that certain statements contained in this report and in the
future filings by the Company with the Securities and Exchange Commission and in
the Company's written and oral statements made by or with the approval of an
authorized executive officer that are not historical facts constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby.

The words and phrases "looking ahead," "is confident," "should be," "will,"
"predicted," "believe," "plan," "intend," "estimates," "likely," "expect" and
"anticipate" and similar expressions identify forward-looking statements.

These forward-looking statements reflect the Company's current views with
respect to future events and financial performance, but are subject to many
uncertainties and factors relating to the Company's operations and business
environment which may affect the accuracy of forward-looking statements and
cause the actual results of the Company to be materially different from any
future results expressed or implied by such forward-looking statements. As a
result, in some future quarter the Company's operating results may fall below
the expectations of securities analysts and investors. In such an event, the
trading price of the Company's common stock would likely be materially and
adversely affected. Many of the factors that will determine results of
operations are beyond the Company's ability to control or predict.

Some of the factors that could cause or contribute to such differences include:

o The effect of the continuing unfavorable economic conditions on market
growth trends in general and the impact on the Company's customers, the
demand for the Company's products and services, and the Company's ordinary
sources of supply, in particular;

o Risks inherent in international operations, including possible economic,
political or monetary instability and its impact on the level and
profitability of foreign sales;

o Uncertainties relating to the Company's ability to consummate its business
strategy, including the unavailability of suitable acquisition candidates,
or the Company's inability to finance future acquisitions or successfully
realize synergies and cost savings from the integration of acquired
businesses;

o Changes in the costs and availability of raw materials and the Company's
ability to adjust selling prices to reflect those changes;

o The Company's reliance on existing senior management and the impact of the
loss of any of those persons or its inability to continue to identify, hire
and retain qualified management personnel;

o Uncertainties relating to the Company's ability to develop and distribute
new proprietary products to respond to market needs in a timely manner and
the Company's ability to continue to protect its proprietary product
information and technology;







o The Company's ability to continue to successfully identify and implement
productivity improvements and cost reduction initiatives;

o The Company's reliance on a small number of significant customers;

o Uncertainties relating to the Company's ability to continue to compete
effectively with other producers of specialty transferable coatings and
producers of alternative products with greater financial and management
resources;

o Control of the Company by a principal stockholder; and

o The effects of terrorism and armed conflicts on the Company's operations,
demands for products and sources of supply.

The risks included here are not exhaustive. We operate in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and it
is not possible for us to predict all such risk factors, nor can we assess the
impacts of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking
statements as a prediction of actual results. We have no obligation to revise or
update these forward-looking statements to reflect events or circumstances that
arise after April 29, 2004 or to reflect the occurrence of anticipated events.

Investors should also be aware that while we do, from time to time, communicate
with securities analysts, it is against our policy to disclose to them any
material non-public information or other confidential commercial information.
Accordingly, investors should not assume that we agree with any statement or
report issued by any analyst irrespective of the content of the statement or
report. Thus, to the extent that reports issued by securities analysts contain
any projections, forecasts or opinions, such reports are not our responsibility.







Part I - Financial Information
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 2004 AND DECEMBER 31, 2003

March 31, December 31,
2004 2003
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 5,310,597 $ 5,672,647
Accounts receivable, less allowance
for doubtful accounts and
customer credits of $1,684,000 (2004)
and $1,767,000 (2003) ........................ 12,808,091 9,821,047

Inventories:
Raw materials ................................ 3,325,691 4,488,351
Work in process .............................. 2,237,498 1,858,727
Finished goods ............................... 7,403,581 6,703,633
------------ ------------
12,966,770 13,050,711
Prepaid expenses and other current assets ...... 768,868 856,153
Deferred income tax assets ..................... 1,019,178 915,493
------------ ------------
Total current assets ....................... 32,873,504 30,316,051
------------ ------------
Property, plant and equipment, net ............. 28,424,753 28,116,892
Deferred income tax assets ..................... 3,204,130 3,280,891
Intangible assets, net ......................... 3,624,874 3,695,899
Other assets ................................... 99,084 105,078
------------ ------------
Total assets ............................... $ 68,226,345 $ 65,514,811
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt .............. $ 11,057,791 $ 9,716,066
Accounts payable ............................... 4,706,098 4,769,539
Accrued compensation and benefits .............. 1,646,737 1,032,115
Accrued expenses and other
current liabilities .......................... 4,393,862 4,273,938
------------ ------------
Total current liabilities .................... 21,804,488 19,791,658
------------ ------------
Deferred income tax liabilities ................ 2,680,247 2,680,247
Fair value of interest rate swap ............... 114,245 47,783
Long-term debt, net of current portion ......... 14,590,676 15,066,109
------------ ------------
Total liabilities .......................... 39,189,656 37,585,797
------------ ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Voting Preferred Stock, par value
$.01 per share, 750 shares authorized,
no shares issued and outstanding ............. -- --
Common stock, $.01 par value,
10,000,000 shares authorized;
shares issued of 4,446,127
(2004 and 2003, respectively) ................ 44,462 44,462
Class B common stock, $.01 par value,
750,000 shares authorized;
512,989 shares issued and outstanding ........ 5,130 5,130
Additional paid-in capital ..................... 12,167,569 12,167,569
Retained earnings .............................. 17,715,920 16,589,249
Accumulated other comprehensive income ......... 1,762,011 1,781,007
------------ ------------
31,695,092 30,587,417
Less - 565,867 treasury shares of
common stock, at cost ........................ (2,658,403) (2,658,403)
------------ ------------
29,036,689 27,929,014
------------ ------------
Total liabilities and stockholders' equity . $ 68,226,345 $ 65,514,811
============ ============

The accompanying notes are an integral part of the consolidated
financial statements.










CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2004 AND 2003


Three Months Ended March 31,
----------------------------
2004 2003
---- ----
(Unaudited)

Net sales ...................................... $ 20,824,297 $ 15,709,847
Cost of goods sold (excluding depreciation and
amortization shown below) ...................... 13,024,195 10,179,940
Selling, general and administrative expenses ... 3,895,155 3,308,203
Research and development expenses .............. 608,116 529,181
Depreciation and amortization expense .......... 1,338,681 1,078,294
------------ ------------
Total operating expenses ....................... 18,866,147 15,095,618
------------ ------------

Operating income ............................... 1,958,150 614,229

Other (income) expense:
Interest expense ............................. 298,591 266,991
Interest swap valuation ...................... 66,462 --
Other income ................................. (28,012) (7,320)
------------ ------------
Total other expense, net ....................... 337,041 259,671
------------ ------------
Income before income taxes ..................... 1,621,109 354,558
Provision for income taxes ..................... 494,438 108,140
------------ ------------
Net income ..................................... $ 1,126,671 $ 246,418
============ ============


Basic earnings per share ....................... $ 0.26 $ 0.06

Diluted earnings per share ..................... $ 0.25 $ 0.06




The accompanying notes are an integral part of the consolidated
financial statements.







CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2004 AND 2003

Three Months Ended March 31,
2004 2003
---- ----
(Unaudited)
Cash flows from operating activities:
Net income ................................... $ 1,126,671 $ 246,418
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization .......... 1,373,808 1,209,549
Interest rate swap valuation ........... 66,462 --
Deferred income taxes .................. (216,068) 306,367
Changes in assets and liabilities:
Accounts receivable, net ............. (3,101,554) (1,206,623)
Inventories, net ..................... (38,967) 876,737
Other current assets ................. 91,844 (525,800)
Other assets ......................... 5,994 17,817
Accounts payable ..................... (38,714) (22,632)
Accrued compensation and benefits .... 666,374 (688,399)
Accrued expenses and other
current liabilities ................ 115,820 (194,081)
----------- -----------
Net cash provided by operating activities ...... $ 51,670 $ 19,353
----------- -----------

Cash flows from investing activities:
Purchase of property, plant and
equipment .................................. (1,879,205) (858,585)
----------- -----------
Cash used in investing activities .............. (1,879,205) (858,585)
----------- -----------

Cash flows from financing activities:
Proceeds from revolving loan ................. 2,400,000 779,089
Repayments of revolving loan ................. (1,043,940) (3,261)
Proceeds from term loan ...................... 3,255,024 122,545
Repayments of term loans ..................... (3,480,404) (361,915)
Issuance of common stock ..................... -- 11,298
----------- -----------
Net cash provided by financing
activities ................................... 1,130,680 547,756
----------- -----------

Effect of exchange rate changes on cash
and cash equivalents ......................... 334,805 (67,876)
----------- -----------
(Decrease) in cash and cash equivalents ........ (362,050) (359,352)

Cash and cash equivalents:
Beginning of period ............................ 5,672,647 5,990,077
----------- -----------
End of Period .................................. $ 5,310,597 $ 5,630,725
=========== ===========

The accompanying notes are an integral part of the consolidated
financial statements.








CFC INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004 AND 2003
(Unaudited)

Note 1. Basis of Presentation

In the opinion of management, the accompanying interim 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 March 31, 2004 and December 31, 2003 (audited), the results of
operations for the three (3) months ended March 31, 2004 and 2003, and
statements of cash flows for the three (3) months ended March 31, 2004 and 2003.

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.

Note 2. Earnings Per Share

Three Months Ended
------------------------------------------------------------
March 31, 2004 March 31, 2003
---------------------------- ----------------------------
Per Per
Income Shares Share Income Shares Share
------ ------ ----- ------ ------ -----

Basic earnings
per share:
Income available
to Common
Stockholders..... $1,126,671 4,393,249 $0.26 $246,418 4,386,146 $0.06
Effect of
Dilutive
Securities:
Options
exercisable..... 29,269 6,174
Convertible
debt........... 10,425 71,427 (0.01) 12,000 95,237 -
---------- --------- ------ ------- -------- -----
Diluted
earnings
per share........ $1,137,096 4,493,945 $0.25 $258,418 4,487,557 $0.06
========== ========= ===== ======== ========= =====






Note 3. Business Segments and International Operations

The Company operates 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. Net sales for each of
these products (in thousands) for the three months ended March 31, 2004 and 2003
were as follows:

Three Months Ended March 31,
2004 2003
----------------- -----------------
Net Net
Net Sales (In Thousands) Sales % Sales $

Holographic Products ............... $ 4,137 19.9 $ 3,172 20.2
Printed Products ................... 7,785 37.4 4,849 30.8
Pharmaceutical Products ............ 3,157 15.1 2,994 19.1
Security Products .................. 2,204 10.6 1,763 11.2
Simulated Metal and Other
Pigmented Products ............... 3,541 17.0 2,932 18.7
------- ----- ------- -----
Total .............................. $20,824 100.0 $15,710 100.0
======= ===== ======= =====

The following is sales information by geographic area for the three months ended
March 31, 2004 and 2003, and long lived asset information as of March 31, 2004
and December 31, 2003:

Three months ended
March 31,
-------------------------------
Net Sales (In Thousands) 2004 2003
---- ----
United States .......................... $10,855 $ 7,281
Europe ................................. 6,851 6,248
Other Foreign .......................... 3,118 2,181
------- -------
Total .................................. $20,824 $15,710
======= =======

Long Lived Assets
(In Thousands) March 31, 2004 December 31, 2003
-------------- -----------------
United States .......................... $19,379 $18,490
Europe ................................. 12,770 13,428
------- -------
Total .................................. $32,149 $31,918
======= =======

Europe and other foreign revenue are based on the country in which the customer
is domiciled.

Note 4. Comprehensive Income

The Company's total comprehensive (loss) income was as follows:

Three Months Ended March 31,
----------------------------
2004 2003
---- ----
Net income........................ $1,126,671 $246,418
Foreign currency translation
adjustment...................... (18,996) 207,203
----------- --------
Total comprehensive income........ $1,107,675 $453,621
=========== ========








Note 5. Contingencies and Commitments

From time to time, the Company is subject to legal proceedings and claims that
arise in the normal course of 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.

Note 6. Derivative Instruments

On April 4, 2003, the Company executed two interest rate swap agreements to fix
the interest rates on the Company's U.S. term loans. The Company entered into
these agreements to reduce the risk of adverse changes in variable interest
rates. The notional amounts were $4,606,324 (with a fixed rate of 4.43%), and
$2,303,840 (with a fixed rate of 4.82%) on April 4, 2003. The swap agreements
terminate on January 31, 2008. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. These derivatives do not qualify
for hedge accounting and, accordingly, the Company has recorded these derivative
instruments and the associated assets or liabilities at their fair values with
the related gains or losses recorded as other income or expense in the
consolidated statements of operations.

Note 7. Loan Refinancing

Two notes in Germany matured March 30, 2004 and were refinanced into a
$3,074,000 (2.5 million Euros) three-year term loan bearing interest at 4.9% per
annum. Interest and principal are to be paid quarterly, in arrears in the amount
of $108,000 (88,000 Euros), with a balloon payment of $1,886,000 (1.5 million
Euros) due March 31, 2006.

Note 8. Supplemental Pro Forma Information

The Company currently accounts for stock based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations. Had the Company accounted for stock
based compensation in accordance with Statement of Financial Accounting
Standards No. 123 (SFAS No. 123) "Accounting for Stock-Based Compensation," the
Company would have reported the following pro forma amounts for the three months
ended March 31, 2004 and 2003:

Three Months Ended
---------------------------------
03/31/04 03/31/03
-------- --------

Net income as reported................... $1,126,671 $246,418
Pro forma adjustment - additional
compensation expense had SFAS No. 123
been adopted, net of tax............... (16,296) (14,945)
-------------- --------------
Pro forma net income..................... $1,110,375 $231,473
============== ==============

Diluted earnings per share as reported... $0.25 $0.06
Pro forma effect of compensation expense. -- (0.01)
-------------- --------------
Pro forma diluted earnings per share..... $0.25 $0.05
============== ==============









Note 9. Net Operating Loss Tax Asset

Our German business has generated cumulative tax net operating loss carry
forwards (NOLs) totaling 7.1 million Euros through March 31, 2004. These NOLs
are being carried forward to offset future taxable income in Germany. The
Company has recorded cumulative deferred tax assets of $3.2 million as of March
31, 2004 relating to the benefit of these NOLs. At present time the unused NOLs
have no expiration date. Although realization of the deferred tax asset is not
assured, the Company has concluded that it is more likely than not that the tax
asset will be realized, and accordingly no valuation allowance has been
provided. This is principally based upon a prudent and feasible business
strategy which shifts production to the Company's plant in Germany and also
after considering benefits realized from cost reduction measures the Company has
already taken including closing the UK finishing operations and warehouse and
reducing employee headcount. If the Company concludes that as a result of
actions planned or taken, that the operating results in Germany can not achieve
or maintain profitability, or if there are changes to the Germany tax law, the
Company may need to adjust the value of the Company's deferred tax assets
resulting in a reduction to income in the period in which such determination is
made.







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 holographic
packaging and authentication seals, furniture and building products,
pharmaceutical products and transaction cards (including credit cards, debit
cards, ATM cards and access cards), and intaglio printing.

The Company's cost of goods sold reflects all direct product costs and direct
labor, quality control, shipping and receiving, maintenance, process engineering
and plant management, but excludes depreciation and amortization. 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 and experimental materials.

Results of Operations
- ---------------------

The following table sets forth, certain items from the Company's consolidated
financial statements as a percentage of net sales for the periods presented:

Three Months Ended
March 31,
---------------------------
2004 2003
---- ----
(Unaudited)

Net sales ............................................ 100.0% 100.0%
------ ------
Cost of goods sold (excluding
depreciation and amortization
shown below) ....................................... 62.6 64.8
Selling, general and administrative .................. 18.7 21.0
Research and development ............................. 2.9 3.4
Depreciation and amortization ........................ 6.4 6.9
------ ------
Total operating expenses ............................. 90.6 96.1
------ ------
Operating income ..................................... 9.4 3.9
Interest expense and other ........................... 1.6 1.6
------ ------
Income before taxes .................................. 7.8 2.3
Provision for income taxes ........................... 2.4 0.7
------ ------
Net income .......................................... 5.4% 1.6%
====== ======









Quarter Ended March 31, 2004 Compared to Quarter Ended March 31, 2003

Net sales for the quarter ended March 31, 2004 increased 32.6% to $20.8 million,
from $15.7 million, for the quarter ended March 31, 2003. The Euro strengthened
15.6% compared to the U.S. dollar, and as a result sales increased approximately
$0.9 million in the first quarter of 2004. Holographic product sales increased
30.4% to $4.1 million for the quarter ended March 31, 2004, compared to $3.2
million for the quarter ended March 31, 2003. This increase is primarily due to
strong demand in domestic packaging. Printed product sales increased 60.6% to
$7.8 million, from $4.8 million primarily due to and increase in market share
domestically as a result of a major competitor withdrawing from the market.
Pharmaceutical product sales increased 5.4% to $3.2 million for the quarter
ended March 31, 2004, from $3.0 million for the quarter ended March 31, 2003.
Pharmaceutical product sales increased primarily in Europe as the Company's
customers expanded their penetration. Security product (mag stripe, signature
panels, and tipping products for credit cards, intaglio-printed products and
gift cards) sales increased 25.0% to $2.2 million, from $1.8 million. This
increase is due to larger gift card volumes and an increase in market
penetration in sales of mag stripe and signature panel domestically. Sales of
specialty pigmented and other simulated metal products increased 20.8% to $3.5
million, from $2.9 million, primarily due to the increase in the strength of the
Euro and increased market share domestically.

Cost of goods sold for the quarter ended March 31, 2004 increased 27.9% to $13.0
million, from $10.2 million for the quarter ended March 31, 2003. This increase
was primarily due to the increase in sales. The cost of goods sold as a
percentage of net sales for the quarter ended March 31, 2004 decreased to 62.5%
from 64.8% for the quarter ended March 31, 2003 primarily due improved
productivity and better utilization of the Company's fixed manufacturing costs.

Selling, general, and administrative expenses for the quarter ended March 31,
2004 increased 17.7% to $3.9 million, from $3.3 million for the quarter ended
March 31, 2003. This increase is due primarily to the strength of the Euro
against the U.S. dollar; domestic hiring costs and profitability based incentive
compensation accruals. As a percent of net sales these costs were 18.7% for the
quarter ended March 31, 2004, and 21.1% for the quarter ended March 31, 2003.
The decrease in percentage is primarily due to the higher sales volume.

Research and development expenses for the quarter ended March 31, 2004 increased
14.9% to $608,000, from $529,000 for the quarter ended March 31, 2003. This
increase is primarily due to an increase in personnel costs. Research and
development expenses for the quarter ended March 31, 2004 decreased as a
percentage of net sales, to 2.9% from 3.4% for the quarter ended March 31, 2003.
This decrease in percentage was primarily due to the higher sales volume.

Depreciation and amortization expenses for the quarter ended March 31, 2004
increased 24.1% to $1.3 million, from $1.1 million for the quarter ended March
31, 2003. This increase was primarily due to the depreciation on additional
domestic fixed assets including the installation of two thermal regenerative
oxidizers in December 2003, and the strength of the Euro in translation of
European depreciation. Depreciation and amortization expense as a percentage of
net sales for the quarter ended March 31, 2004, decreased to 6.4% from 6.9% for
the quarter ended March 31, 2003 primarily due to the higher sales volume.






Operating income for the quarter ended March 31, 2004 increased 218.8% to $2.0
million, from $614,000 for the quarter ended March 31, 2003. The increase in
operating income is due primarily due to the reasons noted above. Operating
income for the quarter ended March 31, 2004 increased as a percentage of net
sales to 9.4% from 3.9% for the quarter ended March 31, 2003. This increase is
due primarily to the reasons noted above.

Interest expense for the quarter ended March 31, 2004 increased 11.8% to
$299,000, from $267,000 for the quarter ended March 31, 2003. This increase was
due primarily to the Company's increased borrowing to finance the purchase the
building and land immediately west of its Chicago Heights property, and
borrowings to finance two thermal regenerative oxidizers.

Other income for the quarter ended March 31, 2004 increased to $28,000 from
$7,000 for the quarter ended March 31, 2003. This increase is due primarily to
rental income from the newly acquired Chicago Heights property.

The effective income tax rate is 30.5% for both the quarter ended March 31, 2004
and March 31, 2003.

Net income for the quarter ended March 31, 2004 increased 357.2% to $1.1
million, from $246,000 for the quarter ended March 31, 2003. This increase in
net income was due primarily to the factors affecting sales, income and
expenses, as discussed above.

Liquidity and Capital Resources
- -------------------------------

The Company's cash flow from operations increased by $33,000 to $52,000 in 2004
from $19,000 in 2003 primarily due to an increase in net income of $0.9 million,
plus an increase in depreciation and amortization of $0.2 million, offset by an
increase in current assets. Working capital increased by $0.5 million during the
first three months of 2004 as compared to the same period in 2003. The primary
reasons for this increase are an increase of $3.0 million in customer
receivables, and an increase in deferred income taxes of $0.1 million, offset by
an increase in current portion of debt of $1.3 million, an increase in accounts
payable accrued compensation and benefits and other accrued expenses of $0.7
million, a decrease in prepaid and other current assets of $0.1 million, a
decrease in inventories of $0.1 million and a decrease of $0.4 million in cash.

Two notes in Germany matured March 30, 2004 and were refinanced into a
$3,074,000 (2.5 million Euros) three-year term loan bearing interest at 4.9% per
annum. Interest and principal are to be paid quarterly, in arrears in the amount
of $108,000 (88,000 Euros), with a balloon payment of $1,886,000 (1.5 million
Euros) due March 31, 2006.








Our German business has generated cumulative tax net operating loss carry
forwards (NOLs) totaling 7.1 million Euros through March 31, 2004. These NOLs
are being carried forward to offset future taxable income in Germany. The
Company has recorded cumulative deferred tax assets of $3.2 million as of March
31, 2004 relating to the benefit of these NOLs. At present time the unused NOLs
have no expiration date. Although realization of the deferred tax asset is not
assured, the Company has concluded that it is more likely than not that the tax
asset will be realized, and accordingly no valuation allowance has been
provided. This is principally based upon a prudent and feasible business
strategy which shifts production to the Company's plant in Germany and also
after considering benefits realized from cost reduction measures the Company has
already taken including closing the UK finishing operation and warehouse and
reducing employee headcount. During the first quarter of operations for 2004,
the German operations generated a profit. If the Company concludes that as a
result of actions planned or taken, that the operating results in Germany can
not achieve or maintain profitability, or if there are changes to the Germany
tax law, the Company may need to adjust the value of the Company's deferred tax
assets resulting in a reduction to income in the period in which such
determination is made.

At March 31, 2004, the Company had available $6.2 million under the revolving
credit agreement maintained with the company's primary bank. This agreement,
which matures April 1, 2005, is collateralized by the Company's trade accounts
receivables and inventories. The Company expects to renew its loan revolving
credit agreements in the normal course prior to the maturity date. 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 growth and future capital requirements. The Company had no material
commitments to purchase capital assets as of March 31, 2004.

Euro Conversion
- ---------------

Member countries of the European Union have established fixed conversion rates
between their existing currencies ("legacy currencies") and one common currency,
the Euro. Since January 1, 2002, the new Euro-denominated notes and coins are in
circulation and legacy currencies have been withdrawn from circulation. The
Company has a manufacturing facility located in a member country (Germany), and
the conversion to the Euro has eliminated currency exchange rate risk for
transactions among the member countries, which for the Company primarily
consists of payments to suppliers. In addition, because the Company uses
foreign-denominated debt to meet its financial requirements and to reduce its
foreign currency risks, certain of these financial instruments are denominated
in Euro to finance European activities. The Company addressed all issues
involved with converting to the new currency, and the conversion did not have a
significant impact on its financial position, results of operations or cash
flows. At March 31, 2004, the Company had total assets of $29.9 million and net
assets of $10.0 million invested in Europe.








Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company does not use derivative financial instruments to address 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 their fair value because of the short maturity
of those instruments. The estimated fair value of accounts receivable
approximated its carrying value at March 31, 2004 and December 31, 2003 based
upon analysis of their collectability and net realizable value. The estimated
fair value of the Company's long-term debt approximated its carrying value at
March 31, 2004 and December 31, 2003, based upon market prices for the same or
similar type of financial instrument. The Company minimizes its exposure to the
impact of fluctuation in foreign exchange rates in situations for certain sales
for products sold in Europe but manufactured in the U.S. through the movement of
production of those products to Europe. There are no other activities of the
Company where management believes exchange rates have a material impact with
respect to the underlying transactions. In January 2003, the Company renewed its
main loan agreements. The two main domestic loans, Term Loan A and Term Loan B
were renewed at a floating prime rate of interest with a one-time option to lock
in a fixed rate of interest. The Company executed two interest rate swap
agreements to the fixed interest rate on Term Loan A at 4.82% on the principal
balance of $2,303,840, and Term Loan B at 4.43% on the principal balance of
$4,606,324 on April 4, 2003. The swap agreements terminate on January 31, 2008.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. These derivatives do not qualify for hedge accounting and
accordingly, the Company will record these derivative instruments and the
associated assets or liabilities at their fair values with the related gains or
losses recorded as other income or expense in the consolidated statements of
income.

Item 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures upon which these financial statements and management
discussion are based pursuant to Securities Exchange Act Rule 13a-15as of March
31, 2004. Based on their evaluation, our principal executive officer and
principal financial officer have concluded that the Company's disclosure
controls and procedures were effective as of March 31, 2004. There were no
significant changes in our internal controls or in other factors that could
significantly affect these controls in the first quarter of 2004.









Part II - Other Information

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

31.1 Certification of CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2 Certification of CFO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1 Certification of CEO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

32.2 Certification of CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

b. Reports on Form 8-K
During the fiscal fourth quarter of 2003, and through the date of
this filing, a Report on Form 8-K dated April 23, 2004, reporting on
Item 7 (Financial Statements and Exhibits) and Item 12 (Results of
Operations and Financial Condition) was filed. In accordance with
General Instruction B of Form 8-K, the Report submitted to the
Securities and Exchange Commission under Item 12 of Form 8-K is not
deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act"), and is not subject to the
liabilities of that section. We are not incorporating, and will not
incorporate by reference, such Report into any filing under the
Securities Act of 1933 or the Exchange Act.











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 April 29, 2004.


CFC INTERNATIONAL, INC.


------------------------------------
Dennis W. Lakomy
Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)