Exhibit 99.1
Cytec Announces First Quarter Results; Full Year 2006 Outlook Updated
WEST PATERSON, N.J.--(BUSINESS WIRE)--May 2, 2006--Cytec
Industries Inc. (NYSE:CYT) announced today net earnings for the first
quarter of 2006 of $38.0 million or $0.79 per diluted share on net
sales of $819 million. Included in the quarter is a cumulative effect
of accounting change after-tax charge of $1.2 million or $0.03 per
diluted share related to the adoption of Financial Accounting Standard
No. 123R, "Share Based Payment" (SFAS 123R) and a net restructuring
charge of $0.4 million (after-tax $0.3 million). Excluding these
items, net earnings were $39.5 million or $0.82 per diluted share.
Net loss for the first quarter of 2005 was $6.5 million or $0.16
per basic share on net sales of $564 million. Included in the net loss
were purchase accounting related charges of $10.5 million (after-tax
$7.7 million, or $0.18 per basic share), related to acquired
inventories from Surface Specialties being recorded at fair value
which exceeded normal manufacturing cost, and $37.0 million or $0.88
per basic share related to the write-off of in-process research and
development costs of Surface Specialties, a restructuring charge of
$1.3 million ($1.0 million after-tax, or $0.02 per basic share)
related to employee redundancy costs, a charge of $20.0 million
(after-tax $12.7 million or $0.30 per basic share) related to currency
and interest rate derivative transactions associated with the Surface
Specialties acquisition, a $4.4 million settlement to resolve a
dispute over an environmental matter (after-tax $3.2 million or $0.08
per basic share) and an income tax benefit of $16.2 million ($0.38 per
basic share) resulting from the completion of prior year tax audits.
Excluding these items, net earnings were $38.9 million or $0.92 per
basic share ($0.89 per diluted share basis).
David Lilley, Chairman, President and Chief Executive Officer
said, "Our first quarter results gave us a positive start to 2006. As
expected, we have our share of challenges, such as raw material costs
which remain volatile and are higher than the year ago period.
However, we are encouraged by the continuing improvement in our
Specialty Chemical segments, notably the Surface Specialties product
lines. Cytec Engineered Materials had a solid quarter while Building
Block Chemicals was impacted by poor margin spreads on acrylonitrile
and plant downtime due to scheduled maintenance work."
Cytec Performance Chemicals Sales increased 15% to $226 million;
Operating Earnings increased to $17.9 million
Mr. Lilley continued, "In Cytec Performance Chemicals, sales of
product lines related to the acquisition of Surface Specialties,
completed on February 28, 2005, added 10% to sales, selling volumes
increased 3%, selling prices increased 4% and exchange rate changes
decreased sales 2%. Strong sales volume in mining chemicals and
specialty additives and phosphines were partially offset by lower
selling volumes in polymer additives resulting from weak polyolefin
market demand and price competition in our mature products. Also in
water treatment chemicals, selling volumes were lower, primarily into
the paper sector.
"Operating earnings increased $10.3 million primarily due to the
addition of the acquired product lines partially offset by higher raw
material costs and expense of $0.6 million for stock options and stock
appreciation rights settled in stock related to the adoption of SFAS
123R. Included in 2005 and related to the Surface Specialties
acquisition, is a write-off of acquired in-process research and
development costs of $6.9 million and a charge of $1.3 million for the
excess of the fair value of the finished goods inventory of the
acquired business over normal manufacturing cost.
Cytec Surface Specialties Sales increased 122% to $374 million;
Operating Earnings increased to $29.4 million
"In Cytec Surface Specialties, sales of product lines related to
the acquisition of Surface Specialties added 114% to sales, selling
volumes increased 12%, selling prices increased 1% and exchange rate
changes decreased sales 5%. The increase in selling volumes was strong
in Europe particularly in the latter part of the quarter and Asia also
showed good growth. North American demand also improved towards the
latter part of the quarter.
"Operating earnings of $29.4 million was primarily due to the
addition of the Surface Specialties product lines, increased selling
volumes and selling prices and lower operating costs partially offset
by higher raw material costs, unfavorable exchange rate changes and
expense of $1.1 million for stock options and stock appreciation
rights settled in stock related to the adoption of SFAS 123R. Included
in 2005 and related to the Surface Specialties acquisition, is a
write-off of acquired in-process research and development costs of
$30.1 million and a charge of $9.2 million for the excess of the fair
value of the finished goods inventory of the acquired business over
normal manufacturing cost.
Cytec Engineered Materials Sales increase 9% to $139 million;
Operating Earnings increase to $23.9 million
"Cytec Engineered Materials selling volumes increased 8%, selling
prices increased 2% and exchange rate changes decreased sales 1%. The
selling volume increase was primarily due to higher build rates for
large commercial aircraft partially offset by the expected ramp down
in volume to a European high-end automotive program.
"Operating earnings improved slightly to $23.9 million, primarily
due to higher selling volumes and selling prices which were mostly
offset by increased raw material costs and expense of $0.6 million for
stock options and stock appreciation rights settled in stock related
to the adoption of SFAS 123R.
Building Block Chemicals Sales increase 12% to $80 million;
Operating loss of $0.3 million
"Building Block Chemicals selling volumes increased 10%, selling
prices increased 3% and exchange rate changes decreased sales 1%. The
volume increase was primarily in Europe, partially offset by lower
selling volumes in Asia.
"The operating loss for the quarter was primarily the result of
poor margin spreads on acrylonitrile sales as well as the impact of
the acrylonitrile plant being down two weeks during the quarter for
scheduled maintenance. In addition, our melamine manufacturing joint
venture partner did not take any production during the quarter. The
resulting operational inefficiencies associated with the melamine
plant being down for about half the quarter reduced earnings by
slightly over $1 million. Also included is expense of $0.3 million for
stock options and stock appreciation rights settled in stock related
to the adoption of SFAS 123R."
Earnings in Associated Companies
Earnings in Associated Companies for the first quarter of 2006
decreased from the prior year period as a result of the May 2005 sale
of our 50% interest in CYRO Industries to our former partner, Degussa.
Corporate and Unallocated
James P. Cronin, Executive Vice President and Chief Financial
Officer commented, "During the quarter, we recorded a net
restructuring charge of $0.4 million made up of an additional
restructuring charge of $1.7 million for employee-related severance
costs and a reduction of $1.3 million of the previous quarter
restructuring accrual primarily as a result of incurring less costs
than originally estimated due to personnel leaving Cytec on their own.
Both of these relate primarily to the formation of Cytec Specialty
Chemicals, which was announced in the fourth quarter of 2005, whereby
we combined our specialty chemicals product lines into one
organization under one leadership team.
"Included in other income (expense), net in the first quarter of
2005 is a net pre-tax loss of $20.0 million ($12.7 million after-tax)
pertaining to currency and interest rate derivative transactions
related to the acquisition of the Surface Specialties business."
Interest Expense
Interest expense is significantly higher than the prior year
quarter primarily due to the higher average levels of debt outstanding
resulting from the Surface Specialties acquisition.
Income Tax Expense
Mr. Cronin added, "Our tax provision for the first quarter of 2006
was $14.5 million, or 27%, on the earnings before income taxes. For
the comparable period of 2005, the Company's effective tax rate on the
loss from continuing operations for the quarter was a tax benefit of
66%. The 2005 tax rate was favorably impacted by a reduction in income
tax expense of $16.2 million ($0.38 per basic share) in the quarter
related to the completion of exams of prior year tax returns for the
years 1999 through 2001 and by losses incurred in the U.S. on the
derivatives related to the financing for the Surface Specialties
acquisition and was unfavorably impacted by the non-deductible
write-off of in-process research and development expenses related to
the Surface Specialties acquisition. Excluding these items, the
underlying rate for the same period of 2005 was 27%."
Other
Mr. Cronin continued, "In regards to the adoption of SFAS 123R,
operating earnings in the quarter include additional charges for stock
options and stock appreciation rights that are settled in common stock
of $2.6 million pre-tax. We also recorded a cumulative effect charge
of $1.2 million after-tax primarily relating to the recognition of
costs for the fair value of our cash settled stock appreciation rights
which had been issued in prior years.
Cash Flow
"Cash flow provided by operations was $21 million for the quarter.
Trade accounts receivable dollars were up sequentially due to higher
sales but days outstanding were essentially flat with year end 2005.
Inventory dollars were up as we have built some inventory in light of
stronger demand and raw material costs increased from year end
although our days are flat with year end 2005. Capital spending for
the quarter was $16 million and our full year estimate of $110 million
is unchanged. We continue to pay down debt in advance of scheduled
payment dates and during the quarter we paid down $53 million of our
debt."
2006 Outlook
Mr. Lilley commented further, "Our first quarter results have
given us momentum in a number of areas and there are a few areas that
need improvement. On the demand side, the story remains the same, that
is, we expect our aerospace markets to continue to grow as the build
rates for large commercial aircraft, business jets, military aircraft
and commercial rotorcraft continue to increase and our customers
utilize more advanced composites. Our forecast for weak industrial
demand in North America and Europe, as it relates to our Cytec
Specialty Chemicals segments, remains the same for now. We did see
improvement in the latter part of the quarter in Europe but we remain
cautious until we see a more sustainable improvement in demand. We
continue to expect Asia-Pacific and Latin America to have good growth
in 2006. Volatile raw material and energy costs continue to make
passing along price increases difficult and we see this continuing
throughout 2006. Oil costs are presently high and we are assessing
whether this is a temporary spike or a new cost level. Our concern
remains primarily propylene derivative costs as they impact our
Specialty Chemicals business. Depending on the view we take this
quarter, we will decide what compensating actions, such as product
price increases, we can initiate."
Mr. Lilley continued with some additional comments, "In Cytec
Specialty Chemicals we see no change to our overall guidance with
improvement in Cytec Surface Specialties offset by a reduction in
Cytec Performance Chemicals. More specifically, in Cytec Performance
Chemicals, we see continuing strong demand in our mining chemicals and
specialty additives and phosphine chemicals product lines and more
moderate demand in the remainder with the exception of polymer
additives. In polymer additives, our team has done a good job with our
technologically differentiated products but we are facing a tough
operating environment with severe price competition in certain of the
lower end products. We are looking at all appropriate actions in light
of this operating environment to improve returns in polymer additives.
Taking into account the above, we are changing our full year guidance
for sales to $900 to $925 million from our previous guidance of
$900-940 million and for operating earnings to $65 to $70 million from
our previous guidance of $70 to $75 million.
"In Cytec Surface Specialties, we were encouraged by the improved
demand in the latter part of the quarter in North America and Europe.
We expect to continue to see good progress in the Asia-Pacific and
Latin American regions and from new global product introductions.
There are many opportunities to improve our manufacturing and supply
chain operations and while these improvement initiatives take time to
implement we believe we are on track to improve earnings in this
segment over the short and medium term. Taking into account the above,
we are changing our full year guidance for sales to $1.48 to $1.52
billion from our previous guidance of $1.46 to $1.51 billion and for
operating earnings to $95 to $105 million from our previous guidance
of $85 to $95 million.
"In Cytec Engineered Materials, we continue to anticipate
increased aircraft production spurred by the recent orders and the
rising backlog at the large aircraft manufacturers, and continuing
development of new applications for advanced composites. We have a
strong order book for the year although it is somewhat back-end
loaded. In light of the continuing opportunities with aircraft
manufacturers as they develop new platforms for the future, we
continue to expect a high level of investment in our selling,
technical and research and development expenses. Taking into account
the above, we are changing our full year guidance for sales to $600 to
$620 million from our previous guidance of $590 to $620 million and
for operating earnings to $115 to $120 million from our previous
guidance of $110 to $120 million.
"Building Block Chemicals had a difficult first quarter. Oil costs
are higher and we continue to watch the impact on propylene costs and
acrylonitrile margin spreads. We had previously expected some margin
improvement for the rest of the year but this now appears unlikely.
Our operating team is focused on what they can control, particularly
manufacturing costs, to offset the weak product selling prices. Taking
into account the above, we are changing our full year guidance for
sales to $310 to $330 million from our previous guidance of $340 to
$355 million and for operating earnings to $12 to $15 million from our
previous guidance of $17 to $20 million.
"We forecast no change in our guidance for Corporate and
Unallocated, other income/(expense), equity earnings and interest
expense, net. Our forecast for our underlying annual effective tax
rate for ongoing operations remains at 27%.
"Overall, we remain cautious on the demand side and expect
continuing raw material volatility and as a result we are reiterating
our forecast of overall annual 2006 sales to be in a range of $3.3 to
$3.4 billion and our forecast for full year diluted earnings per share
remains at $3.45 to $3.70. As a reminder, our reported results for
2005 include only 10 months of operations from the acquired Surface
Specialties business. Two month pro-forma 2005 sales were $225
million."
The guidance for the year includes pre-tax expense for stock
options and stock appreciation rights settled in stock of
approximately $10.5 million ($7.7 million after-tax or $0.16 per
diluted share) as a result of adopting SFAS 123R as of January 1,
2006.
Excluded from the full year guidance are the following items.
Approximately $3 million pre-tax for integration expenses related to
the Surface Specialties acquisition and this spending will begin in
the second quarter of 2006. This is reduced from our previous estimate
of $4 to 5 million. These integration expenses, the majority of which
are duplicative in nature, are anticipated to be incurred primarily as
a result of the elimination of transition service agreements currently
in place with the former owner regarding the information technology
hardware infrastructure and are expected to be completed in 2006. Also
excluded is the cumulative effect of accounting change after-tax
charge of $1.2 million related to the adoption of SFAS 123R. In
addition, we previously estimated restructuring charges in the first
half of the year to be in the range of $3 to $5 million, of which $1.7
million was recorded in the first quarter and we continue to identify
further benefits of the previously announced organization
consolidation of the specialty chemicals product lines into Cytec
Specialty Chemicals. We continue to look for other restructuring
opportunities to improve our productivity in our chemical
manufacturing operations.
In closing Mr. Lilley commented, "Overall we had a solid start to
2006 but continue to face rapidly changing market conditions. We are
hopeful the economic momentum we saw in the latter part of the quarter
in North America and Europe will continue. However, the Cytec team
remains focused on what we can control so we can deliver the highest
performance for all our stakeholders."
Investor Conference Call to be Held on May 3, 2006 11:00 A.M. ET
Cytec will host their first quarter earnings release conference
call on May 3, 2006 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 3, 2006 until May 24, 2006 at 11:00 p.m. ET
by calling 888-203-1112 (U.S.) or 719-457-0820 (International) and
entering access code 1726247. 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 Inc. is a global specialty chemicals and
materials company focused on developing, manufacturing and selling
value-added products with pro forma sales in 2005 of approximately
$3.2 billion. Our products serve a diverse range of end markets
including aerospace, adhesives, automotive and industrial coatings,
chemical intermediates, inks, mining, plastics and water treatment. We
use our technology and application development expertise to create
chemical and material solutions that are formulated to perform
specific and important functions in the finished products of our
customers.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per share amounts)
-----------------
Three Months
Ended
March 31,
2006 2005
- ----------------------------------------------------------------------
Net sales $819.4 $563.9
Manufacturing cost of sales 645.9 440.3
Selling and technical services 52.8 44.7
Research and process development 18.8 13.0
Administrative and general 24.9 17.8
Amortization of acquisition intangibles 8.8 4.0
Write-off of acquired in-process research and
development - 37.0
- ----------------------------------------------------------------------
Earnings from operations 68.2 7.1
Other income (expense), net (0.8) (20.4)
Equity in earnings of associated companies 0.8 2.1
Interest expense, net 14.5 9.5
- ----------------------------------------------------------------------
Earnings (loss) from continuing operations before
income taxes and cumulative effect of accounting
change 53.7 (20.7)
Income tax provision (benefit) 14.5 (13.7)
- ----------------------------------------------------------------------
Earnings (loss) from continuing operations before
cumulative effect of accounting change 39.2 (7.0)
Cumulative effect of accounting change (net of income
tax benefit of $0.7) (1.2) -
- ----------------------------------------------------------------------
Earnings (loss) from continuing operations 38.0 (7.0)
Earnings from discontinued operations (net of income
tax provision of $0.7) - 0.5
- ----------------------------------------------------------------------
Net earnings (loss) $38.0 $(6.5)
Basic earnings (loss) per common share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change $0.84 $(0.17)
Cumulative effect of accounting change, net of taxes (0.03) -
Earnings from discontinued operations, net of taxes - 0.01
- ----------------------------------------------------------------------
Net earnings (loss) $0.81 $(0.16)
Diluted earnings (loss) per common share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change $0.82 $(0.17)
Cumulative effect of accounting change, net of taxes (0.03) -
Earnings from discontinued operations, net of taxes - 0.01
- ----------------------------------------------------------------------
Net earnings (loss) $0.79 $(0.16)
- ----------------------------------------------------------------------
Dividends per common share $0.10 $0.10
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Weighted average shares outstanding: (in thousands)
- ----------------------------------------------------------------------
Basic 46,914 42,119
- ----------------------------------------------------------------------
Diluted 48,061 42,119
======================================================================
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED NET SALES AND EARNINGS FROM CONTINUING OPERATIONS BY
BUSINESS SEGMENT
(Millions of dollars)
(Unaudited)
Three Months Ended
March 31,
------------- -------------
2006 2005
------------- -------------
Net sales
- ---------
Cytec Performance Chemicals
Sales to external customers $ 225.9 $ 196.0
Intersegment sales 1.8 1.1
Cytec Surface Specialties 374.0 168.2
Cytec Engineered Materials 139.0 127.8
Building Block Chemicals
Sales to external customers 80.5 71.9
Intersegment sales 23.1 23.2
-------- --------
Net sales from segments 844.3 588.2
Elimination of intersegment revenue (24.9) (24.3)
-------- --------
Total net sales $ 819.4 $ 563.9
======================================================================
% of % of
Sales Sales
------ ------
Earnings (loss) from operations
- -------------------------------
Cytec Performance Chemicals $ 17.9 8% $ 7.6 4%
Cytec Surface Specialties 29.4 8% (27.9) -17%
Cytec Engineered Materials 23.9 17% 23.4 18%
Building Block Chemicals (0.3) 0% 7.3 8%
------ ------
Earnings from segments 70.9 8% 10.4 2%
Corporate and Unallocated (2.7) (3.3)
------ ------
Total earnings from operations $ 68.2 8% $ 7.1 1%
======================================================================
Note:
1. Earnings from operations in 2005 for Cytec Performance Chemicals
includes $1.3 for amortization of inventory step up of finished
goods acquired and $7.0 charge related to write-off of acquired
in-process research and development, both related to the Surface
Specialties acquisition.
2. Earnings from operations in 2005 for Cytec Surface Specialties
includes $9.2 for amortization of inventory step up of finished
goods acquired and $30.0 charge related to write-off of acquired
in-process research and development, both related to the Surface
Specialties acquisition.
3. Corporate and Unallocated in 2005 includes $1.3 charge for
restructuring and in 2006 includes a net restructuring charge of
$0.4.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions, except per share amounts)
-----------------------
March 31, December 31,
2006 2005
- ----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $47.8 $68.6
Trade accounts receivable, less allowance for
doubtful accounts of $7.2 and $7.8 at March
31, 2006 and December 31, 2005, respectively 519.3 493.8
Due from related party 10.1 8.0
Other accounts receivable 71.3 65.9
Inventories 442.7 424.7
Deferred income taxes 13.2 12.2
Other current assets 26.9 31.4
- ----------------------------------------------------------------------
Total current assets 1,131.3 1,104.6
- ----------------------------------------------------------------------
Investment in associated companies 21.0 20.3
Plants, equipment and facilities, at cost 2,091.2 2,064.3
Less: accumulated depreciation (1,018.5) (988.8)
- ----------------------------------------------------------------------
Net plant investment 1,072.7 1,075.5
- ----------------------------------------------------------------------
Acquisition intangibles, net of accumulated
amortization of $60.7 and $51.0 at March 31,
2006 and December 31, 2005, respectively 491.2 491.5
Goodwill 1,022.0 1,012.2
Other assets 103.9 106.4
- ----------------------------------------------------------------------
Total assets $3,842.1 $3,810.5
======================================================================
Liabilities
Current liabilities
Accounts payable $291.3 $278.6
Short-term borrowings 33.3 34.3
Current maturities of long-term debt 8.0 51.2
Accrued expenses 193.9 218.3
Income taxes payable 43.4 43.5
- ----------------------------------------------------------------------
Total current liabilities 569.9 625.9
- ----------------------------------------------------------------------
Long-term debt 1,224.6 1,225.5
Pension and other postretirement benefit
liabilities 434.7 432.5
Other noncurrent liabilities 235.6 224.4
Deferred income taxes 56.4 64.1
Stockholders' equity
Common stock, $.01 par value per share,
150,000,000 shares authorized; issued
48,132,640 shares 0.5 0.5
Additional paid-in capital 244.3 235.6
Retained earnings 1,183.0 1,149.7
Unearned compensation - (2.5)
Accumulated other comprehensive income (loss):
Minimum pension liability (115.0) (115.0)
Unrealized net gains on cash flow hedges 1.1 0.4
Accumulated translation adjustments 41.4 27.6
- ----------------------------------------------------------------------
(72.5) (87.0)
Treasury stock, at cost, 1,089,883 shares in
2006 and 1,833,812 shares in 2005 (34.4) (58.2)
- ----------------------------------------------------------------------
Total stockholders' equity 1,320.9 1,238.1
- ----------------------------------------------------------------------
Total liabilities and stockholders' equity $3,842.1 $3,810.5
======================================================================
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)
--------------------
Three Months Ended
March 31,
- ----------------------------------------------------------------------
2006 2005
- ----------------------------------------------------------------------
Cash flows provided by (used in) operating
activities
Net earnings (loss) $38.0 $(6.5)
Earnings from discontinued operations, net of
taxes - 0.5
- ----------------------------------------------------------------------
Earnings (loss) from continuing operations 38.0 (7.0)
Noncash items included in net earnings from
continuing operations:
Depreciation 27.9 23.3
Amortization 10.9 4.2
Share-based compensation 2.9 0.9
Deferred income taxes (0.9) (8.2)
Write-off of acquired in-process research and
development - 37.0
Amortization of write-up to fair value of
finished goods purchased in acquisition - 10.5
Gain on sale of assets - (1.0)
Cumulative effect of accounting change, net of
taxes 1.2 -
Other 3.1 (2.1)
Changes in operating assets and liabilities
(excluding effects of 2005 acquisition):
Trade accounts receivable (19.1) (5.4)
Other receivables (7.5) 4.4
Inventories (13.2) (31.7)
Other assets (4.8) 0.5
Accounts payable 9.4 (7.8)
Accrued expenses (27.7) (13.8)
Income taxes payable (1.9) (24.4)
Other liabilities 2.6 (11.1)
- ----------------------------------------------------------------------
Net cash provided by (used in) operating
activities of continuing operations 20.9 (31.7)
Net cash provided by operating activities of
discontinued operations - 1.1
- ----------------------------------------------------------------------
Net cash provided by (used in) operating
activities 20.9 (30.6)
- ----------------------------------------------------------------------
Cash flows (used in) investing activities
Acquisition of business, net of cash received (0.5) (1,501.1)
Additions to plants, equipment and facilities (16.3) (17.1)
Proceeds received on sale of assets - 1.4
- ----------------------------------------------------------------------
Net cash used in investing activities (16.8) (1,516.8)
- ----------------------------------------------------------------------
Cash flows provided by (used in) financing
activities
Proceeds from long-term debt 23.0 725.0
Payments on long-term debt (75.3) -
Change in short-term borrowings (1.0) 581.9
Cash dividends (4.7) (4.0)
Proceeds from the exercise of stock options and
warrants 26.4 8.8
Deferred financing costs - (4.7)
Excess tax benefits from share-based payment
arrangements 6.4 -
Other (0.6) (1.0)
- ----------------------------------------------------------------------
Net cash provided by (used in) financing
activities (25.8) 1,306.0
- ----------------------------------------------------------------------
Effect of currency rate changes on cash and cash
equivalents 0.9 (5.7)
- ----------------------------------------------------------------------
Decrease in cash and cash equivalents (20.8) (247.1)
Cash and cash equivalents, beginning of period 68.6 323.8
- ----------------------------------------------------------------------
Cash and cash equivalents, end of period $47.8 $76.7
======================================================================
Cytec Industries Inc.
Reconciliation of GAAP and Non-GAAP Measures
Amounts in millions except per share amounts
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, 2006
Net Diluted
Earnings EPS
-------- -------
GAAP Net Earnings $38.0 $0.79
- Cumulative effect of accounting change (after-tax) 1.2 0.03
- Restructuring charge (after-tax) 0.3 -
Non-GAAP Net Earnings $39.5 $0.82
======== =======
Three Months ended March 31, 2005
Net Basic
Earnings EPS
-------- -------
GAAP Net Loss $(6.5) $(.16)
- Purchase accounting charges for fair value of
inventory in excess of normal manufacturing cost
(after-tax) 7.7 0.18
- Write-off of in-process research and development
costs of Surface Specialties 37.0 0.88
- Loss on currency and interest rate derivative
transactions (after-tax) 12.7 0.30
- Income tax benefit reflecting favorable
developments on of tax audits with respect to prior
years returns (16.2) (0.38)
- Restructuring costs (after-tax) 1.0 0.02
- Settlement to resolve a dispute over an
environmental matter (after-tax) 3.2 0.08
Non-GAAP Net Earnings $38.9 $0.92
======== =======
Non-GAAP diluted earnings per share $0.89
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CONTACT: Cytec Industries Inc.
Investment Community:
David M. Drillock, 973-357-3249
or
Media:
Gail Petersen, 973-357-3319
www.cytec.com