Exhibit 99.1
Cytec Announces First Quarter Results;
Full Year Outlook Provided
WEST PATERSON, N.J.--(BUSINESS WIRE)--May 5, 2005--Cytec
Industries Inc. (NYSE:CYT) announced today that it had incurred a net
loss for the first quarter of 2005 of $6.5 million or $0.16 loss per
basic share on net sales of $564 million. Included in the quarter were
purchase accounting related charges of $44.7 million after-tax, or
$1.06 per basic share, related to the February 28, 2005 acquisition of
the Surface Specialties business, an after tax net loss of $12.7
million or $0.30 per basic share related to foreign currency and
interest rate derivative transactions associated with the Surface
Specialties acquisition, a charge of $1.0 million after tax or $0.02
per basic share related to employee redundancy costs, a charge of $3.2
million after tax, or $0.08 per basic share, related to the settlement
of an environmental dispute and an income tax benefit of $16.2, or
$0.39 per basic share, resulting from the completion of prior years
tax audits. Excluding these items, net earnings were $38.9 million or
$0.89 on a diluted share basis. Net earnings for the comparable period
of 2004 were $33.2 million or $0.83 per diluted share, on net sales of
$415 million.
David Lilley, Chairman, President and Chief Executive Officer
said, "We were pleased to close on our acquisition of Surface
Specialties on February 28, 2005 and this obviously had a major impact
on our first quarter results." The acquisition was valued at $1.8
billion of which $1.5 billion was paid in cash and the remainder in
5,772,857 shares of Cytec stock valued at $0.3 billion. The cash
portion was funded with the following: $725 million from a five year
term loan, $600 million from a 364 day credit facility and $180
million of Cytec's existing cash. Cytec expects to refinance the $600
million 364 day credit facility with long term debt later this year.
Mr. Lilley commented further, "Overall, sales for the quarter were
up 36% compared to the same quarter in 2004, with 27% due to the
acquisition of the Surface Specialties business which reflects one
month of operations under Cytec. Selling prices increased 6% as our
initiatives are catching up to the significant raw material cost
increases we have encountered. Base selling volumes were up 2% and
favorable exchange increased sales 1%. The integration of Surface
Specialties into Cytec continues and we are excited about the
possibilities this acquisition brings to us."
The segment results discussed below have been restated to reflect
our new organization following the Surface Specialties acquisition. A
recap of the reorganization is as follows:
-- Cytec Performance Specialties - Includes the Water Treatment
Chemicals, Mining Chemicals, Phosphine and Phosphorus
Specialties, Polymer Additives and Specialty Additives product
lines.
-- Cytec Surface Specialties - Includes the acquired Surface
Specialties product lines plus Cytec's previously existing
Coating Chemicals and Performance Chemicals product lines.
-- Cytec Specialty Materials is renamed Cytec Engineered
Materials.
-- Building Block Chemicals remains unchanged.
Cytec Performance Specialties Sales increased 11%; Operating
Earnings increased to $14 million
Mr. Lilley continued, "In Cytec Performance Specialties selling
prices were up 5%, selling volumes increased 4% and exchange added 2%
to sales. The selling price increases were across all product lines as
we continue with our efforts to compensate for the high raw material
and energy costs. Volumes were much improved in water treatment and
mining chemicals where demand remained strong. This was offset
somewhat by lower volumes in polymer additives where we experienced a
slowdown in demand in the latter part of the quarter.
The increase in operating earnings of $5 million was due to higher
selling volumes and prices along with improved plant operations
offsetting raw material cost increases.
Cytec Surface Specialties Sales increased 152%; Operating Earnings
decreased to $35 million loss
"The Cytec Surface Specialties segment includes one month of
operations from the recently acquired Surface Specialties business
which accounts for the majority of the sales increase. Our base
coating and performance chemicals product lines had increased selling
volumes and prices of 1% each and exchange added 2%. Overall, we
experienced a slowdown in demand in the latter part of the quarter
particularly in the European and Asia-Pacific regions for the majority
of the product lines in this segment.
"There were two charges to segment operating earnings during the
quarter which related to purchase accounting required in connection
with the acquisition of Surface Specialties. First, finished goods
inventory of the acquired business were recorded at their fair value
which exceeded normal manufacturing costs. Operating earnings include
a charge of $10.5 million ($7.7 million after tax or $0.18 per basic
share) for these excess costs. We expect a similar amount next quarter
as we work off the acquired inventory. The second was a pre-tax charge
of $37.0 (after-tax $37.0 million or $0.88 per basic share) for
purchased in-process research and development activities of the
acquired business based on their fair value. Excluding these amounts,
operating earnings increased to $13.0 million reflecting the favorable
impact of the acquisition, the increase in base sales and improved
plant operations.
Cytec Engineered Materials Sales increase 6% and Operating
Earnings flat
"Cytec Engineered Materials sales increased primarily due to
volume increases to our large commercial aircraft and rotorcraft
customers. The favorable effect on operating earnings from the higher
sales was offset by operating difficulties in our two European
manufacturing sites and increased selling and research costs as we
continue to invest in the future.
Building Block Chemicals Sales increase 15% and Operating Earnings
increase slightly
"In Building Block Chemicals, selling prices increased 25% which
was in-line with the increase in raw material costs. Exchange added 1%
to sales while selling volumes were down 11%. The decrease in selling
volumes was primarily in the European and Asia-Pacific regions
partially offset by stronger demand in the U.S.
"Operating earnings improved slightly as the decrease in selling
volumes was more than offset by improved plant operations."
Earnings in Associated Companies
James P. Cronin, Executive Vice President and Chief Financial
Officer commented, "Earlier this month we announced that we reached a
definitive agreement to sell our 50% interest in CYRO Industries
(CYRO) to our partner, Degussa, for cash consideration of $95 million
subject to customary closing conditions. We expect the closing to
occur at the end of this month and that the proceeds will essentially
cover the book value of our investment in CYRO. The net after tax
proceeds will be used to pay down debt related to our acquisition of
Surface Specialties. For the quarter, sales and earnings from CYRO
increased from the year ago period primarily due to volume gains."
Corporate and Unallocated
Mr. Cronin added, "During the quarter, we recorded a pre-tax
charge in other income (expense), net for $4.4 million ($3.2 after tax
or $0.08 per basic share) related to a settlement to resolve a dispute
over an environmental remediation matter. The dispute related to a
site formerly operated by American Cyanamid Company which it had sold
in the 1940's. Cytec was spun off from American Cyanamid Company in
1993. While the Company believed its defenses were strong,
circumstances developed late in the quarter which led us to accelerate
discussions towards a final settlement. We were pleased to settle this
dispute and avoid significant legal fees as well as eliminate any risk
relating to potential litigation."
Also, during the quarter the Company recorded a net pre-tax loss
in other income (expense), net of $20.0 million ($12.7 after tax or
$0.30 per basic share) pertaining to foreign currency and interest
rate derivative transactions related to the acquisition of the Surface
Specialties business. These derivatives were entered into to partially
hedge the impact of increases in the value of the Euro and increases
in interest rates related to the Surface Specialties acquisition and
require mark to market accounting. Hence any changes to the fair value
are recorded as a gain or loss in the period incurred. The currency
derivatives were closed out as of the date of the acquisition while
the interest rate derivatives are still outstanding pending the
anticipated refinancing of our 364 day credit facility. In addition,
included in Corporate and Unallocated is a charge of $1.4 million
($1.0 after tax or $0.02 per basic share) for employee redundancies
related to the acquisition.
Mr. Cronin commented further, "Effective January 1, 2005 we have
changed our method for costing inventories in the United States from
the last-in/first-out (LIFO) to the first-in/first-out (FIFO) method.
Our international subsidiaries utilize the FIFO method. After the
acquisition of Surface Specialties, which also utilizes the FIFO
method of inventory costing, our inventory under the LIFO method
decreased to less than 35% of total inventory. We believe the FIFO
method is preferable because the FIFO method more accurately reflects
the current cost of inventory and the change results in a uniform
method of inventory valuation globally. As required by generally
accepted accounting principles, we have applied the effects of the
change from LIFO to FIFO and restated our prior year financials as if
the change was already in place. The impact of this change in
accounting principle was to increase first quarter 2004 pre-tax
earnings by $2.0, (net after-tax $1.3 million or $0.03 per basic
share). In addition, in the third quarter of 2004 we adopted Financial
Accounting Standards Board Staff Position No. 106-2 (FSP 106-2),
Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003".
Accounting principles required that we restate the first two quarters
of 2004 for the effect of FSP 106-2. The impact of the adoption of FSP
106-2 was to increase first quarter 2004 pre-tax earnings by $0.9
million, (net after-tax $0.7 million or $0.02 per basic share.)"
To assist investors in their analysis of Cytec's results, there is
a separate schedule at the end of this release of the restatements
mentioned above by quarter and full year for 2004 providing segment
operating earnings, net after-tax earnings and basic and diluted
earnings per share.
Interest Expense
Interest expense is significantly higher than the prior year
quarter due to the higher levels of debt outstanding associated with
the Surface Specialties acquisition.
Income Tax Expense
Mr. Cronin continued, "The Company's effective tax rate on the
loss from continuing operations for the quarter was a tax benefit of
67%. The tax rate was favorably impacted by a reduction in income tax
expense of $16.2 million ($0.39 per basic share) in the quarter
related to final approval by the Congressional Joint Committee on
Taxation of the Internal Revenue Service's examination of our tax
returns for the years 1999 through 2001 and by losses incurred in the
U.S. on the hedge derivatives and was unfavorably impacted by the
write-off of in-process research and development expenses related to
the Surface Specialties acquisition. Excluding these three items, the
Company's underlying effective tax rate for the quarter would have
been 27% which compares to 24% in the same period of last year. As
expected, this increase is primarily attributable to earnings from
Surface Specialties entities in countries with higher tax rates than
those in which we previously operated."
Earnings from Discontinued Operations
Discontinued operations represents the net after tax results of
the Surface Specialties' amino resins product line which the Company
has previously agreed to divest.
Cash Flow
Cash flow used by operations was $30.6 million for the quarter.
Trade accounts receivable increased by $5 million due to higher levels
of sales. Inventory dollars increased by $21 million reflecting rising
raw material costs, planned purchases to ensure adequate supply of
certain materials and the slowing demand in the latter part of the
quarter. The first quarter operating cash flow includes payments of
$20 million for incentive compensation and profit sharing payouts for
prior year results which were previously reflected in accrued expenses
and $5 million of payments related to the currency derivatives
entered into in connection with the Surface Specialties acquisition.
Other payments for the quarter include pension and retiree medical
funding of $11 million. Capital spending for the quarter was $17
million and for the full year we expect capital spending to be about
$120 million as our spending increases sequentially for the rest of
the year due to certain capacity expansion projects as well as the
addition of Surface Specialties.
2005 Outlook
Mr. Lilley commented further, "We begin 2005 focused both on our
business and the integration of Surface Specialties into Cytec. On the
business side, oil and gas prices have increased and remain stubbornly
high which is keeping the upward pressure on raw material and energy
costs. We continue to aggressively pursue selling price increases to
compensate and we now believe we are beginning to catch up and improve
margins. However, we are concerned with the slowdown in demand which
we, and our customers, have seen in the latter part of the quarter,
particularly in Europe and Asia in our Performance Specialties and
Surface Specialties segments and, at present, do not foresee a
significant decline in raw material and energy costs. Segment detail
for the full year is as follows:
"In Cytec Performance Specialties we are forecasting sales to
increase in a range of 5%-10% with about two-thirds due to selling
price increases and the remainder split between volume and exchange.
Most of the volume increase is in the mining chemical product line
where demand for copper and alumina remains strong. Operating earnings
are forecast to increase in a range of 12%-15% due to the selling
price increases as well as reduced operating costs offsetting raw
material cost increases.
"In Cytec Surface Specialties there is uncertainty in the
industrial coatings markets due to the softening at the end of the
first quarter and we are taking a prudent view going forward. We have
raised selling prices where possible and we do expect to cover a
majority of our raw material cost increases but not all. The softening
markets coupled with selling price increases have led to a volume
decline versus last year. So for 2005, we are forecasting sales in a
range of $1.4 to $1.5 billion including $1.10-$1.15 billion relating
to 10 months of operations for the Surface Specialties acquisition. We
are taking steps now to insure that our costs are appropriately
aligned with our view of the markets and we are on track to exceed our
synergy targets as discussed below. Taking into account the above, we
expect operating earnings for this segment to be in a range of
$95-$100 million.
"Cytec Engineered Materials sales are forecast to increase in a
range of 8%-12% due primarily to expected build rate increases in both
military and commercial aircraft. Operating earnings are forecast to
increase 15% - 20% due to the higher selling volumes partially offset
by continued investments in plants and commercial costs to support our
future growth.
"Building Block Chemical sales are forecast to increase 15%-20%
primarily due to higher selling prices which tend to move in line with
raw material and energy input costs. There is a lot of uncertainty in
the acrylonitrile market. Demand in Asia, particularly China, seems to
have slowed and there is new capacity in China that is now operating.
Propylene, the key raw material for acyrlonitrile, is now back in full
supply and costs, for now, seem to be trending down from their current
high levels. Operating earnings are forecast to increase approximately
20% from 2004. The primary driver for this improvement is our
expectation that most of our plants will run at capacity throughout
the year with good demand. In 2004, several of our plants were down
for scheduled maintenance work and the acrylonitrile plant ran at a
reduced rate for part of the year due to propylene supply shortages.
"Corporate and Unallocated will be slightly more unfavorable than
the prior year and equity earnings will be about 50% less than 2004
due to the pending sale of our 50% share of our joint venture, Cyro
Industries. Based on anticipated interest rates, interest expense, net
will be in a range of $63-$66 million. Our estimated annual underlying
effective tax rate for ongoing operations is forecast to be 27%."
Mr. Cronin added, "In order to take advantage of current interest
rates, we gave notice to the remarketing agent for our $120 million
Mandatory Par Put Remarketed Securities of our election to redeem
these securities at the optional redemption price of approximately
$141 million including $21 million for the value of redeeming the
securities prior to their final maturity. In conjunction with
this transaction, we expect to recognize in the second quarter of 2005
a total pre-tax net expense of approximately $22.0 million."
In closing Mr. Lilley commented, "Concerning our acquisition, we
are increasing our synergy target by $10 million to a $35 million
annual run rate which we expect to achieve by year end with about $20
million of this reflected in our 2005 full year forecast. We also
expect to incur approximately $7.5 million ($5.5 million after tax or
$0.13 per diluted share) of integration and severance costs as part of
the acquisition.
"Based on the above we are taking a prudent view considering the
uncertainty in our raw material outlook and certain end markets. Our
forecast of overall annual sales is in a range of $3.0-$3.1 billion
with the majority of this due to selling price increases, plus
$1.10-$1.15 billion in sales related to the Surface Specialties
acquisition. Our forecast for full year diluted earnings per share,
which excludes the purchase accounting charges for in-process research
and development and inventory step-up, the environmental dispute
settlement, the acquisition related net hedge gains or losses, the
forecasted charges for the early redemption of debt, the actual and
forecasted integration and severance costs and the tax benefit from
the closure of prior year audits, is a range of $3.30 to $3.45.
"Cytec is continuing its practice of providing full year sales and
earnings guidance but beginning with this earnings release has
discontinued its practice of providing quarterly earnings guidance, as
we remain focused on the long-term health and growth of Cytec for our
shareholders."
Investor Conference Call to be Held on May 6, 2005, 11:00 A.M. ET
Cytec will host their first quarter earnings release conference
call on May 6, 2005 at 11:00 a.m. ET. The conference call will also
be simultaneously webcast for all investors from Cytec's website
www.cytec.com. Select the Investor Relations page to access the live
conference call.
A recording of the conference call may be accessed by telephone
from 2:00 p.m. ET on May 6, 2005 until May 27, 2005 at 11:00 p.m. ET
by calling 888-203-1112 (U.S.) or 719-457-0820 (International) and
entering access code 9755453. The conference call recording will also
be accessible on Cytec's website for 3 weeks after the conference
call.
Use of Non-GAAP Measures
Management believes that net earnings, basic and diluted earnings
per share before special items, which are non-GAAP measurements, are
meaningful to investors because they provide a view of the Company
with respect to ongoing operating results. Special items represent
significant charges or credits that are important to an understanding
of the Company's overall operating results in the period presented.
Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles (GAAP) and should not be
viewed as an alternative to GAAP measures of performance. A
reconciliation of GAAP measurements to non-GAAP can be found at the
end of this release.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained
herein, statements contained in this release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Achieving the results
described in these statements involves a number of risks,
uncertainties and other factors that could cause actual results to
differ materially, as discussed in Cytec's filings with the Securities
and Exchange Commission.
Corporate Profile
Cytec Industries is a specialty chemicals and materials technology
company with pro forma sales in 2004, including the Surface
Specialties acquisition, of approximately $3.0 billion. Its growth
strategies are based on developing technologically advanced customer
solutions for global markets including: aerospace, coatings, mining,
plastics and water treatment.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except share and per share amounts)
Quarter
Ended
March 31,
---------------------
2005 2004
---------------------
Net sales $563.9 $415.2
Manufacturing cost of sales 440.3 310.1
Selling and technical services 44.7 34.8
Research and process development 13.0 9.0
Administrative and general 17.8 13.2
Amortization of acquisition intangibles 4.0 1.4
Write-off of acquired in-process research 37.0 -
and development
---------------------
Earnings from operations 7.1 46.7
Other income (expense), net (20.4) 0.9
Equity in earnings of associated companies 2.1 0.3
Interest expense, net 9.5 3.8
---------------------
Earnings (loss) from continuing operations before
income taxes (20.7) 44.0
Income tax provision (benefit) (13.7) 10.8
---------------------
Earnings (loss) from continuing operations
(7.0) 33.2
Earnings from discontinued operations 0.5 -
---------------------
Net earnings (loss) $(6.5) $33.2
======= =======
Earnings (loss) from continuing operations per
common share
Basic $(0.17) $0.85
Diluted $(0.17) $0.83
Earnings from discontinued operations per common
share
Basic $0.01 -
Diluted $0.01 -
Net earnings (loss) per common share
Basic $(0.16) $0.85
Diluted $(0.16) $0.83
Weighted average shares outstanding (000 omitted)
Basic 42,119 39,099
Diluted 43,489 40,100
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED NET SALES AND EARNINGS (LOSS) FROM OPERATIONS BY
BUSINESS SEGMENT
(Millions of dollars)
Quarter Ended
March 31,
---------------
2005 2004
---- ----
Net sales
- ---------
Cytec Performance Specialties
Sales to external customers $173.4 $156.6
Intersegment sales 1.1 1.3
Cytec Surface Specialties 190.8 75.7
Cytec Engineered Materials 127.8 120.3
Building Block Chemicals
Sales to external customers 71.9 62.6
Intersegment sales 23.2 19.3
------- --------
Net sales from segments 588.2 435.8
Elimination of intersegment revenue (24.3) (20.6)
------- --------
Total consolidated net sales $563.9 $415.2
===== =====
% of % of
Earnings (loss) from operations sales sales
----- -----
Cytec Performance Specialties $14.2 8% $9.5 6%
Cytec Surface Specialties (34.5) -18% 8.6 11%
Cytec Engineered Materials 23.4 18% 23.5 20%
Building Block Chemicals 7.3 8% 6.9 8%
------ ------
Earnings from segments 10.4 2% 48.5 11%
Corporate and Unallocated (3.3) (1.8)
------ ------
Total consolidated earnings from operations $7.1 1% $46.7 11%
==== ====
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share and per share amounts)
March December
31, 2005 31, 2004
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $76.7 $323.8
Accounts receivable, less allowance for
doubtful accounts of $9.2 and $6.7 in
2005 and 2004, respectively 493.2 248.2
Due from related party 21.7 0.0
Other accounts receivable 96.7 54.1
Inventories 516.7 263.8
Deferred income taxes 61.9 23.3
Other current assets 51.0 29.3
Assets held for sale 144.6 0.0
----------- -----------
Total current assets 1,462.5 942.5
Investment in associated companies 90.9 85.5
Plants, equipment and facilities, at cost 2,080.0 1,627.2
Less: accumulated depreciation (940.3) (948.6)
----------- -----------
Net plant investment 1,139.7 678.6
Acquisition intangibles, net of accumulated
amortization 554.7 66.8
Goodwill 1,004.7 342.4
Deferred income taxes 0.0 54.6
Other assets 117.4 81.2
----------- -----------
Total assets $4,369.9 $2,251.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $613.7 $0.0
Accounts payable 271.1 138.1
Accrued expenses 217.8 178.1
Current maturities of long term debt 12.4 119.0
Income taxes payable 65.0 61.5
Liabilities held for sale 35.5 0.0
----------- -----------
Total current liabilities 1,215.5 496.7
Long-term debt 1,153.9 300.1
Pension and other postretirement benefit
liabilities 387.6 348.3
Other noncurrent liabilities 250.0 174.5
Deferred income taxes liabilities 144.3 0.0
Minority interest 1.7 0.0
Stockholders' equity
Common stock, $0.1 par value per share,
150,000,000 shares authorized, issued
48,132,640 shares 0.5 0.5
Additional paid-in capital 236.5 122.8
Retained earnings 1,098.0 1,108.5
Unearned compensation (5.4) (3.1)
Minimum pension liability adjustment (109.5) (108.5)
Unrealized gain (loss) on derivative
instruments 1.1 (0.5)
Accumulated translation adjustments 64.7 73.3
Treasury stock, at cost,
2,191,352 shares in 2005 and
8,297,863 shares in 2004 (69.0) (261.0)
----------- -----------
Total stockholders' equity 1,216.9 932.0
----------- -----------
Total liabilities and stockholders' equity $4,369.9 $2,251.6
========= =========
CYTEC INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Quarter Ended
March 31,
-----------------
2005 2004
--------- -------
Cash flows provided by (used for) operating
activities
Net earnings (loss) provided by continuing operations $(7.0) $33.5
Noncash items included in earnings:
Dividends from associated companies greater
than (less than) earnings (1.0) 0.8
Depreciation 23.3 21.6
Amortization 5.1 2.7
Deferred income taxes (8.2) 7.3
Write-off of Acquired in-process research
and development 37.0 0.0
Gain on sale of assets (1.0) (0.6)
Other (1.1) (0.3)
Changes in operating assets and liabilities
Trade accounts receivable (5.4) (28.9)
Other receivables 4.4 (3.8)
Inventories (21.2) (11.0)
Other assets 0.5 (8.0)
Accounts payable (7.8) 44.0
Accrued expenses (13.8) (24.6)
Income taxes payable (24.4) 0.7
Other liabilities (11.1) (10.7)
--------- -------
Net cash provided by (used for) operating activities
of continuing operations (31.7) 22.7
Net cash provided by operating activities of
discontinued operations 1.1 0.0
--------- -------
Net cash flows provided by (used for) operating
activities (30.6) 22.7
--------- -------
Cash flows provided by (used for) investing
activities
Additions to plants, equipment and facilities (17.1) (16.9)
Proceeds received on sale of assets 1.4 0.7
Advance payment received on land lease 0.0 9.1
Acquisition of businesses, net of cash received (1,474.6) 0.0
Advanced payment of contingent consideration (26.5) 0.0
Minority interest (1.0) 0.0
--------- -------
Net cash flows provided by (used for) investing
activities (1,517.8) (7.1)
--------- -------
Cash flows provided by (used for) financing
activities
Proceeds from the exercise of stock options 8.8 2.9
Purchase of treasury stock 0.0 (13.2)
Change in short-term borrowings 581.9 (0.1)
Proceeds from long term debt 725.0 0.0
Deferred financing costs (4.7) 0.0
Proceeds from termination of interest rate swap 0.0 2.7
Cash dividends (4.0) (3.9)
--------- -------
Net cash flows provided by (used for) financing
activities 1,307.0 (11.6)
--------- -------
Effect of exchange rate changes on cash and cash
equivalents (5.7) (3.5)
--------- -------
Increase (decrease) in cash and cash equivalents (247.1) 0.5
Cash and cash equivalents, beginning of period 323.8 251.1
--------- -------
Cash and cash equivalents, end of period $76.7 $251.6
======== =======
CYTEC INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
INCOME RESTATEMENT FOR CHANGE IN INVENTORY COSTING METHODOLOGY
AND FSP 106-2
Unaudited
(Millions of dollars, except per share amounts)
Three Months Ended Three Months Ended
March 31, June 30,
-----------------------------------
2004 2004 2004 2004
-----------------------------------
Reported Restated Reported Restated
Net sales $415.2 $415.2 $422.0 $422.0
Manufacturing cost of sales 312.7 310.1 314.6 311.6
Selling and technical services 34.9 34.8 35.2 35.1
Research and process development 9.1 9.1 10.4 10.3
Administrative and general 13.3 13.2 14.8 14.7
Amortization of acquisition
intangibles 1.4 1.4 1.4 1.4
-----------------------------------
Earnings from operations 43.8 46.7 45.6 48.9
Other income (expense), net 0.9 0.9 (8.6) (8.6)
Equity in earnings of associated
companies 0.3 0.3 0.5 0.5
Interest expense, net 3.8 3.8 4.5 4.5
-----------------------------------
Earnings before income taxes and
cumulative effect of accounting
change 41.2 44.0 33.0 36.3
Income tax provision 9.9 10.8 4.0 5.1
-----------------------------------
Net earnings $31.3 $33.2 $29.0 $31.2
Premium paid to redeem preferred
stock
-----------------------------------
Net earnings available to common
shareholders $31.30 $33.2 $29.0 $31.2
===================================
Earnings per common share
Basic $0.80 $0.85 $0.74 $0.80
Diluted $0.78 $0.83 $0.72 $0.77
Three Months Ended Three Months Ended
September 30, December 31
-----------------------------------
2004 2004 2004 2004
-----------------------------------
Reported Restated Reported Restated
Net sales $433.5 $433.5 $450.6 $450.6
Manufacturing cost of sales 334.1 332.3 350.9 349.0
Selling and technical services 34.0 34.0 36.0 36.0
Research and process development 10.0 10.0 10.6 10.6
Administrative and general 22.0 22.0 15.3 15.3
Amortization of acquisition
intangibles 1.3 1.3 1.4 1.4
-----------------------------------
Earnings from operations 32.1 33.9 36.4 38.3
Other income (expense), net (4.9) (4.9) 29.5 29.5
Equity in earnings of associated
companies 2.2 2.2 2.2 2.2
Interest expense, net 4.7 4.7 4.4 4.4
-----------------------------------
Earnings before income taxes and
cumulative effect of accounting
change 24.7 26.5 63.7 65.6
Income tax provision 5.4 6.1 18.6 19.4
-----------------------------------
Net earnings $19.3 $20.4 $45.1 $46.2
Premium paid to redeem preferred
stock 9.9 9.9
-----------------------------------
Net earnings available to common
shareholders $9.4 $10.5 $45.1 $46.2
===================================
Earnings per common share
Basic $0.24 $0.27 $1.13 $1.17
Diluted $0.23 $0.26 $1.09 $1.13
CYTEC INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
INCOME
RESTATEMENT FOR CHANGE IN INVENTORY COSTING METHODOLOGY
Unaudited
(Millions of dollars, except per share amounts)
Year Ended
December 31
-------------------
2004 2004
--------- ---------
Reported Restated
Net sales $1,721.3 $1,721.3
Manufacturing cost of sales 1,311.2 1,303.1
Selling and technical services 139.8 139.8
Research and process development 40.0 40.0
Administrative and general 65.1 65.1
Amortization of acquisition intangibles 5.6 5.6
--------- ---------
Earnings from operations 159.6 167.7
Other income expense, net 16.9 16.9
Equity in earnings of associated companies 5.2 5.2
Interest expense, net 17.4 17.4
--------- ---------
Earnings before income taxes and cumulative effect
of accounting change 164.3 172.4
Income tax provision 38.2 41.4
--------- ---------
Net earnings $126.1 $131.0
Premium paid to redeem preferred stock 9.9 9.9
--------- ---------
Net earnings available to common shareholders $116.2 $121.1
========= =========
Earnings per common share
Basic $2.94 $3.06
Diluted $2.84 $2.96
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED NET SALES AND EARNINGS FROM OPERATIONS BY BUSINESS
SEGMENT
RESTATEMENT FOR CHANGE IN INVENTORY COSTING METHODOLOGY AND FSP 106-2
Millions of dollars
Full
Three Months Ended Year
March 31 June 30 Sept 30 Dec 31 Ended
2004 2004 2004 2004 2004
-----------------------------------------
NET SALES
Cytec Performance Specialties $156.7 164.7 176.1 172.8 670.2
Cytec Surface Specialties 75.7 77.8 76.0 74.0 303.4
Cytec Engineered Materials 120.3 128.1 121.2 117.4 487.0
Building Block Chemicals 62.6 51.3 60.2 86.5 260.6
-----------------------------------------
TOTAL $415.3 422.0 433.5 450.6 1,721.3
=========================================
Three Months Ended Full
--------------------------------- Year
March 31 June 30 Sept 30 Dec 31 Ended
2004 2004 2004 2004 2004
-----------------------------------------
Earnings From Operations
Cytec Performance Specialties $9.5 10.9 13.5 16.6 50.4
Cytec Surface Specialties 8.6 11.9 7.3 8.0 35.8
Cytec Engineered Materials 23.5 26.7 19.5 13.8 83.4
Building Block Chemicals 6.9 2.0 3.7 3.1 15.6
Unallocated (1.8) (2.5) (10.1) (3.2) (17.5)
-----------------------------------------
TOTAL $46.7 48.9 33.9 38.3 167.7
=========================================
Cytec Industries Inc.
Reconciliation of GAAP and Non-GAAP Measures
Management believes that net earnings, basic and diluted earnings
per share before special items, which are non-GAAP measurements, are
meaningful to investors because they provide a view of the Company
with respect to ongoing operating results. Special items represent
significant charges or credits that are important to an understanding
of the Company's overall operating results in the periods presented.
Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles (GAAP) and should not be
viewed as an alternative to GAAP measures of performance.
Three Months Ended March 31, 2005
GAAP Net Loss $(6.5)
--------
- - Purchase accounting in-process research and development
write off (after tax) 37.0
- - Purchase accounting fair value inventory over
manufacturing cost (after tax) 7.7
- - Loss on currency and interest rate derivative transactions
(after tax) 12.7
- - Charge for employee redundancy costs (after tax) 1.0
- - Settlement of environmental matter (after tax) 3.2
- - Income tax benefit from completion of prior years audits (16.2)
========
Non-GAAP Net Earnings $38.9
========
Non-GAAP Basic Earnings Per Share $0.92
========
Non-GAAP Diluted Earnings Per Share $0.89
========
CONTACT: Cytec Industries Inc.
Investment Community:
David M. Drillock, 973-357-3249
or
Media:
Gail Petersen, 973-357-3319