Ciba Specialty Chemicals exceeds last year's strong performance.Business Editors BASEL Basel (bä`zəl) or Basle (bäl), Fr. Bâle, canton, N Switzerland, bordering on France and Germany. , Switzerland--(BUSINESS WIRE)--Feb. 4, 2003 Ciba Specialty Chemicals “Ciba” redirects here. For the pre-1971 company, see Novartis. Ciba Specialty Chemicals is a chemical company based in and near Basel, Switzerland. It was formed as the non-pharmaceuticals elements of Novartis were spun out in 1997, following the merger in the :
- Sales up 3% in local currencies; EBITDA margin at 16.6 percent of
sales; net income up 6% in CHF
- Balance sheet strengthened again: net debt further reduced by CHF
888 million, available record cash of nearly 2.4 billion CHF
- New program "Managing for Growth"; mid term targets confirmed
- Outlook 2003: further improvement despite difficult environment
- Higher CHF 3 payout proposed to shareholders again this year, all
through reduction of nominal value
FINANCIAL HIGHLIGHTS (in millions of Swiss francs, except share
and per share data)
Full Year to Full Year Comparisons
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Full Year ended December 31, 2002 2001(1) Change in %
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Net sales 7 085 7 367 3*/-4
Gross profit 2 356 2 379 -1
Operating income (EBIT) 788 761 25*/4
Income from continuing
operations 406 380 7
Cumulative effects of
change in accounting
principles, net of
tax (2) 0 2
Net income 406 382 6
Net income per share,
basic and diluted 5.92 5.76
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EBITDA (3) 1 173 1 230 10*/-5
EBITDA margin (4) 16.6% 16.7%
EBIT margin (5) 11.1% 10.3%
Net cash provided by
operating activities 1 038 1 054 -2
Cash flows from
operating activities,
before restructuring
payments (6) 1 050 1 100 -5
Free cash flow (7) 683 779 -12
Net debt (8) 1 463 2 351 -38
Research and
development
expenditures 294 276 7
Number of employees
at period end 19 007 19 683
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* Percentage change in local currencies; also see footnotes
(1) Effective January 1, 2002, the Company adopted Financial
Accounting Standards Board (FASB) Statement of Financial Accounting
Standard (SFAS) No. 142 "Goodwill and Other Intangible Assets". In
2001, on an adjusted basis, excluding goodwill amortization, operating
income would have been CHF 822 million, income from continuing
operations CHF 441 million, net income CHF 443 million and basic and
diluted earnings per share CHF 6.68.
(2) Effective January 1, 2001, the Company adopted FASB SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" as
amended which replaced existing pronouncements and practices with a
single, integrated accounting framework for derivatives and hedging
activities.
(3) EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) is calculated as operating income (EBIT) plus
depreciation and amortization, which amounted to CHF 385 million
(2001: CHF 469 million).
(4) EBITDA margin is calculated as EBITDA as a percentage of net
sales.
(5) EBIT margin is calculated as EBIT as a percentage of net sales.
(6) Cash Flows from Operating Activities before restructuring payments
is the net cash provided by operating activities less restructuring
payments of CHF 12 million (2001: CHF 46 million).
(7) Free Cash Flow is cash flows from operating activities from
continuing operations before restructuring payments, less net cash
from investing activities (2002: CHF -349 million; 2001: CHF -334
million) before sale (acquisition) of businesses, net of cash (2002:
CHF 116 million; 2001: CHF 144 million), less dividends paid (2002:
CHF -134 million; 2001: CHF -132 million). The Company uses free cash
flows for reinvestment in the business, for repayment of debt and
restructuring programs.
(8) Net Debt is the sum of short-term debt (2002: CHF 1 496 million;
2001: CHF 316 million) and long-term debt (2002: CHF 2 344 million;
2001: CHF 3 678 million) less cash and cash equivalents (2002: CHF 2
361 million; 2001: CHF 1 602 million) and short-term investments
(2002: CHF 16 million; 2001: CHF 41 million).
Ciba Specialty Chemicals today announced financial results for 2002 with higher sales in local markets, improved profitability, continued strong cash generation and a further substantial reduction of net debt. In local currencies, sales were 3 percent higher and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. improved 25 percent. In Swiss francs Noun 1. Swiss franc - the basic unit of money in Switzerland franc - the basic monetary unit in many countries; equal to 100 centimes centime - a fractional monetary unit of several countries: France and Algeria and Belgium and Burkina Faso and Burundi and , despite the negative currency impacts, operating income rose by 4 percent (11.1 percent of sales) and net income was 6 percent higher compared to the previous year. The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margin was kept at a good level of 16.6 percent of sales with tight cost control offsetting difficult market conditions. The continuing strong focus on asset management and cash generation resulted in a free cash flow of CHF CHF In currencies, this is the abbreviation for the Swiss Franc. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 683 million. Net debt was reduced significantly (by CHF 888 million, or -38 percent), compared to year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001, and now totals less than CHF 1.5 billion. A record of nearly CHF 2.4 billion in cash remains available on the balance sheet. For 2003, Ciba Specialty Chemicals expects sales in local currencies, the EBITDA margin and net income in Swiss francs to be above the levels of 2002 and is striving to achieve a free cash flow for 2003 in excess of CHF 600 million. Armin Meyer Mey·er , Annie Florance Nathan 1867-1951. American writer and a founder of Barnard College at Columbia University (1889). Her plays include The Dominant Sex (1911) and Black Souls (1932). , Chairman and Chief Executive Officer, commented: "Ciba Specialty Chemicals has exceeded last year's strong performance. Local sales and net income were both higher than 2001 despite the difficult economic environment. We are clearly benefiting from the simplified sim·pli·fy tr.v. sim·pli·fied, sim·pli·fy·ing, sim·pli·fies To make simple or simpler, as: a. To reduce in complexity or extent. b. To reduce to fundamental parts. c. Group structure as well as from our firm actions to lower the cost base. Many of our businesses grew above market average, also thanks to new product introductions. This allowed us to strengthen our market position. We have proved that we can generate a solid cash flow even in difficult times. We continue to focus strongly on further lowering our cost base, generating cash, managing assets and cutting debt. An increased focus in 2003 and beyond will be on profitable growth, to further improve the top line." Higher CHF 3 payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. proposed to shareholders again this year, all through reduction of nominal value Nominal Value The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates. Notes: When referring to fixed-income securities, the nominal value is also the face value. Based on the Company's performance, particularly the strong free cash flow generation, the Board of Directors will recommend to the Annual General Meeting of Shareholders on March 6, 2003, to repeat the increased cash pay out to shareholders of CHF 3, the same amount as in 2002. The Board of Directors also decided to propose that shareholders receive this payment through a reduction in the nominal value of Ciba Specialty Chemicals stock of CHF 3 per share, bringing the nominal value to CHF 6 per share, which, from a taxation perspective, is an attractive form of payment. Last year, the total cash payout was increased through the first reduction of the nominal value, by CHF 1, which was paid in addition to a dividend of CHF 2. Strong market position reinforced re·in·force also re-en·force or re·en·force tr.v. re·in·forced, re·in·forc·ing, re·in·forc·es 1. To give more force or effectiveness to; strengthen: The news reinforced her hopes. : sales up 3 percent in local currencies - Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). grows 5 percent Full year 2002 sales were 3 percent higher in local currencies than the year before. This growth was achieved mainly from organic growth despite continuing competitive market conditions around the world in most businesses. In Swiss francs, sales reached CHF 7.085 billion, 4 percent lower, reflecting the continuing strength of the Swiss franc against all major currencies. The Swiss franc appreciated 3 percent against the euro, 4 percent against the British pound and 8 percent against the U.S. dollar. Volumes rose substantially by 5 percent. Price reductions slowed down in the second half and could be held to 3 percent. Some price increases were successfully implemented in the fourth quarter. On a regional basis, Asia-Pacific achieved significant growth of 5 percent in local currencies, based on continued strength in Region China (+13 percent in local currencies) and several South East Asian countries Noun 1. Asian country - any one of the nations occupying the Asian continent Asian nation country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries" . The strategy of making long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments in these growth markets is bringing results, with the China Region now becoming Ciba Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Chemicals' third largest market after the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). grew by 2 percent, as did Germany. In the Americas A·mer·i·cas , theSee America. , sales rose 2 percent, with the U.S. slightly ahead of last year's level. High profitability further improved in difficult environment Net income for 2002 was 6 percent higher in Swiss francs, at CHF 406 million. Earnings per share (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) were CHF 5.92. Operating income showed a strong increase of 25 percent in local currencies. In Swiss francs, operating income was up 4 percent, to CHF 788 million, despite negative currency developments, with a resulting improvement in margins from 10.3 percent of sales to 11.1 percent in 2002. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for full year 2002 improved to 33.3 percent of sales, compared to 32.3 percent in 2001. EBITDA rose 10 percent in local currencies, compared to the previous year. Despite the strong currency effect, EBITDA in Swiss francs reached CHF 1.173 billion (-5 percent). The EBITDA margin was kept at a good level of 16.6 percent of sales. On the one hand, operating income and net income benefited from a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. effect of a change in goodwill accounting required under U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). regulations of about CHF 60 million; on the other hand, net income was affected by non-periodic write downs of book values of CHF 45 million of certain participations. Included, among others, was its remaining, reduced ownership in Hexcel Hexcel is a company based in Stamford, Connecticut that manufactures advanced structural materials. The company was founded in 1946 and its first product was supplying honeycomb for the construction of military bombers. , an equity position which stayed with the Company as part of the 1997 spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. that created Ciba Specialty Chemicals and which was mostly sold in 2001. Apart from these special effects special effects, in motion pictures, cinematographic techniques that create illusions in the audience's minds as well as the illusions created using these techniques. also, operating income and net income showed a healthy operational improvement. The keys to this improvement were lower raw material prices, better capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. in the production area, and, primarily, tight cost control in all areas. Four smaller manufacturing facilities were closed over the past two years and significant improvements were introduced in other production areas. Many process improvements were achieved in support areas, led by the consolidation of three supply chains into one, a project which is well on track and expected to be completed in 2003. The IT infrastructure project was completed in 2002. In the last two years, Ciba Specialty Chemicals eliminated 1,300 net positions to adapt its cost structure to the realities of the market. At the same time, the Company also added people in strategic areas such as China and other Asian countries, where business was growing over-proportionally. The Company is on track to fully reach in 2003 the annual savings target of CHF 70 million, which it established as part of the "Fit for Growth" program. Underlining un·der·lin·ing n. 1. The act of drawing a line under; underscoring. 2. Emphasis or stress, as in instruction or argument. the Company's strong commitment to innovation, spending on research and development increased in 2002 by 7 percent in Swiss francs, or 4.2 percent of sales, compared to 3.8 percent in 2001. The stronger balance sheet and cash position led to a reduction of net interest expense of 18 percent. Exchange rate gains and losses and hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. results remained unchanged compared to 2001, although influenced by exchange losses in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. that cannot be hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: . Further strengthened balance sheet: net debt reduced by CHF 888 million to below CHF 1.5 billion The strong focus on cash generation continues to show good results with a free cash flow of CHF 683 million prior to acquisitions, divestments and treasury operations. Key to this was the improved operational performance. Both, inventories and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , again fell as a percentage of sales. Additional to this free cash flow, the Company obtained CHF 344 million from the net sale of treasury stock. With this strong influx of cash, the Company was able to significantly reduce net debt, by CHF 888 million (-38 percent), compared to year-end 2001. Net debt now totals less than CHF 1.5 billion. A record of nearly CHF 2.4 billion in cash remains available on the balance sheet. With this, Ciba Specialty Chemicals is well prepared to maintain its healthy balance sheet even after the upcoming bond debt repayments in 2003 of around CHF 950 million. New program "Managing for Growth" - mid term targets confirmed While the Company has made substantial improvements in cash generation, cost reduction and earnings, an increased focus in 2003 and beyond will be on profitable growth, to further improve the top line. With "Managing for Growth", a variety of projects will be launched with the aim to organically outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. market growth. In addition, the Company is committed to realizing some acquisitions in 2003; however, it will not waver from its policy of making only acquisitions that meet its strict requirements and, by that, keep the risk level as low as possible. Armin Meyer, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. : "Ciba Specialty Chemicals' foundation is financially strong. Our ambition Ambition Alger, Horatio author of a series of rags-to-riches stories. [Am. Lit.: Ragged Dick] Bart, Lily sacrifices her principles and her chance for love in schemes to climb the social ladder. [Am. Lit. is to aggressively seek every opportunity to grow and to become one of the best companies in creatively pursuing and creating profitable growth opportunities. Our initiatives for innovation, cash and people have shown good results; now, we increase our focus on profitable growth. With all of these actions in place, we will stick to our earlier announced targets: 6 percent average annual growth until 2005 and, in 2005, an EBITDA margin of 20 percent of sales and a free cash flow exceeding CHF 1 billion." Clear commitment to corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. , social responsibility and sustainability The Company is complying with the Swiss Code of Best Practice guidelines practice guidelines Medical practice A set of recommendations for Pt management that identifies a specific or range of range of management strategies. See Peer review organization, Practice standards. Cf 'Cookbook' medicine. , the new Swiss Exchange Swiss Exchange The major securities market of Switzerland. Corporate Governance Directive Directive may refer to:
For Ciba Specialty Chemicals, social accountability The traceability of actions performed on a system to a specific system entity (user, process, device). For example, the use of unique user identification and authentication supports accountability; the use of shared user IDs and passwords destroys accountability. and environmental responsibility are fundamental to the business, similar to financial performance. This is reflected in consistent, clear and global practices, formalized for·mal·ize tr.v. for·mal·ized, for·mal·iz·ing, for·mal·iz·es 1. To give a definite form or shape to. 2. a. To make formal. b. in 2002 with a Social Policy Statement, which complements the Code of Conduct adopted in 2000. Together, they shall ensure that internationally recognized best practice standards are applied by the Company worldwide. The Executive Committee has also formalized Ciba's long-standing long-stand·ing adj. Of long duration or existence: a long-standing friendship. long-standing Adjective existing for a long time commitment to be accountable for its products from "cradle to grave grave, space excavated in the earth or rock for the burial of a corpse. When a grave is marked by a protective or memorial structure it is often referred to as a tomb. See burial; funeral customs. ", with the official adoption of Product Stewardship Product stewardship is a concept whereby environmental protection centers around the product itself, and everyone involved in the lifespan of the product is called upon to take up responsibility to reduce its environmental impact. Guiding Principles. Outlook 2003 In the upcoming quarters, Ciba Specialty Chemicals does not expect substantial changes in the current difficult trading conditions. In such a market environment, it is particularly important to continue to reduce the cost base by increasing operational efficiency and by adhering ADHERING. Cleaving to, or joining; as, adhering to the enemies of the United States. 2. The constitution of the United States, art. 3, s 3, defines treason against the United States, to consist only in levying war against them or in adhering to their enemies, to strict expense controls. The Company will need to compensate for around CHF 60 million in additional expenses, mainly for an increase in pension contributions and higher insurance premiums. Despite the anticipated challenging first two quarters of the year, for the full year the Company expects sales in local currencies, the EBITDA margin and net income in Swiss francs to be above the levels of 2002. With the continuous strong focus on cash generation, the Company is striving to achieve a free cash flow for 2003 in excess of CHF 600 million. These forecasts are based on the assumption of an economic recovery later in the year in the United States and, afterwards af·ter·ward also af·ter·wards adv. At a later time; subsequently. afterwards or afterward Adverb later [Old English æfterweard] Adv. 1. , in Europe, as well as reasonably stable currency exchange rates vis-a-vis the Swiss franc, and, as usual, the effects of potential acquisitions are not included. In addition, the Company continues to monitor developments in the geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. climate globally and is prepared to react accordingly. Good overall performance by the Segments
Full Year to Full Year Comparisons by Segments
(in millions of Swiss francs)
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Full Year Full Year Change Change
2002 2001 in % in %
sales sales local CHF
curr.
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Plastic Additives 1 813 1 834 6 -1
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Coating Effects 1 920 1 944 5 -1
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Water & Paper Treatment 1 409 1 486 1 -5
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Textile Effects 1 544 1 673 -2 -8
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Home & Personal Care 399 430 1 -7
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Corporate - -
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Total Group 7 085 7 367 3 -4
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Full Year Full Year
2002 % of 2001 % of
EBITDA Sales EBITDA Sales
----------------------------------------------------------------
----------------------------------------------------------------
Plastic Additives 346 19.1 388 21.1
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Coating Effects 440 22.9 411 21.1
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Water & Paper Treatment 186 13.2 157 10.6
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Textile Effects 208 13.5 248 14.8
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Home & Personal Care 82 20.6 95 22.2
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Corporate -89 - -69 -
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Total Group 1 173 16.6 1 230 16.7
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Plastic Additives expanded its product and service offerings in 2002, driving growth of 6 percent in local currencies in a competitive pricing environment. Capital investments, targeted at de-bottlenecking, allowed the Segment to compete more efficiently. At the same time two smaller plants were closed. Coating Effects had a strong year, with higher results in sales in local currencies (+5 percent) and in profitability. There was strong demand in the coatings, plastics and inks markets, with excellent growth as well in digital printing and in pigments for LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. displays. Water & Paper Treatment continued its turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in 2002, with higher sales in local currencies (+1 percent). There was a further improvement in profitability, with production and personnel costs both decreasing. Strong growth in Asia-Pacific and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , as well as growth in Europe, helped offset weaker sales in NAFTA NAFTA in full North American Free Trade Agreement Trade pact signed by Canada, the U.S., and Mexico in 1992, which took effect in 1994. Inspired by the success of the European Community in reducing trade barriers among its members, NAFTA created the world's . Textile textile Any filament, fibre, or yarn that can be made into fabric or cloth, and the resulting material itself. The word originally referred only to woven fabrics but now includes knitted, bonded, felted, and tufted fabrics as well. Effects continued last year to manage the increasingly rapid shift of textile production markets from Europe and NAFTA to Asia. With its global setup See BIOS setup and install program. , Ciba Specialty Chemicals is in a good position to follow these market moves. There was strong, double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in the oil and water repellent re·pel·lent adj. Capable of driving off or repelling. n. A substance used to drive off or keep away insects. repellent able to repel or drive off; also, an agent that repels. Refers usually to insect repellent. business and good gains in comfort and easy care, while global market weakness continued in dyes for most major fiber grades. Overall, Segment sales, in local currencies, were 2 percent lower. Home & Personal Care continued to successfully expand its product portfolio beyond its traditional whiteners and hygiene hygiene, science of preserving and promoting the health of both the individual and the community. It has many aspects: personal hygiene (proper living habits, cleanliness of body and clothing, healthful diet, a balanced regimen of rest and exercise); domestic hygiene solutions. Sales in local currencies increased 1 percent with UV protection products, solutions for fabric care and its line of sophisticated detergent detergent (dētûr`jənt, dĭ–), substance that aids in the removal of dirt. Detergents act mainly on the oily films that trap dirt particles. whiteners as main growth drivers. Local sales and profitability continue to improve in the 4th quarter
4th Quarter to 4th Quarter Comparisons
(in millions of Swiss francs)
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Three months ended December 31, Q4 2002 Q4 2001(1) Change in %
----------------------------------------------------------------------
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Net sales 1 675 1 703 6*/-2
Gross profit 527 556 -5
Operating income 161 157 29*/3
Net income 94 79 18
EBITDA 257 275 11*/-6
EBITDA margin 15.3% 16.1%
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(1) Effective January 1, 2002, the Company adopted Financial
Accounting Standards Board (FASB) Statement of Financial Accounting
Standard (SFAS) No. 142 "Goodwill and Other Intangible Assets". In the
fourth quarter 2001, on an adjusted basis, excluding goodwill
amortization, operating income would have been CHF 171 million, and
net income CHF 93 million.
Compared with the fourth quarter last year, sales in local
currencies and profitability improved. Sales in local currencies for
the fourth quarter of 2002 were 6 percent higher than in the fourth
quarter 2001; operating income rose 29 percent in local currencies and
3 percent in Swiss francs, despite continuing negative currency
effects; and EBITDA rose by 11 percent in local currencies. Net income
in Swiss francs rose by 18 percent.
4th Quarter to 4th Quarter Comparisons by Segments
(in millions of Swiss francs)
----------------------------------------------------------------------
Q4 Q4 Change Change
2002 2001 in % in %
sales sales local CHF
curr.
----------------------------------------------------------------------
----------------------------------------------------------------------
Plastic Additives 427 417 10 2
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Coating Effects 447 442 8 1
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Water & Paper Treatment 341 363 1 -6
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Textile Effects 361 373 4 -3
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Home & Personal Care 99 108 2 -7
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Corporate - -
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Total Group 1 675 1 703 6 -2
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Q4 Q4
2002 % of 2001 % of
EBITDA Sales EBITDA Sales
-------------------------------------------------------------
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Plastic Additives 66 15.6 79 18.9
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Coating Effects 98 22.0 78 17.6
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Water & Paper Treatment 38 11.0 59 16.3
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Textile Effects 58 16.2 46 12.4
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Home & Personal Care 22 22.0 30 28.6
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Corporate -25 - -17 -
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Total Group 257 15.3 275 16.1
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Quarterly results for the individual segments have oscillated significantly in 2002 because of unpredictable sales swings and one time costs for plant closures. Therefore, on an individual basis, they are not an adequate indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. for the average medium-term performance levels. Ciba Specialty Chemicals (SWX SWX Swiss Exchange (trademark of SWX Swiss Exchange) SWX SolidWorks (3D solid modeling CAD software) SWX Splitter / Wave Division Multiplexer : CIBN, NYSE NYSE See: New York Stock Exchange : CSB CSB Kashubian (SIL code, Poland) CSB Chemical Safety and Hazard Investigation Board CSB Chemical Safety Board (Washington, DC) CSB Community Services Board CSB Computational Systems Bioinformatics ) is a leading company dedicated to producing high-value effects for its customers' products. Our specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. , added in small quantities, enhance the performance, look and feel of the final product. Business success is driven by our long-term strategy of innovation and continuous operational improvements. Ciba brings new and creative thought to the processes and products of our customers in more than 120 countries. Ciba generated sales of around CHF 7.1 billion in 2002 and CHF 294 million was spent on R&D to foster innovation across the Company. Virtual news kit: www.cibasc.com/media - News release in full - Media presentation (available from 10:30 CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr onwards on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Adv. 1. ) - Annual Report 2002 (pdf) including - Business Review 2002 - Financial Review 2002 - EHS EHS Environmental Health and Safety EHS Early Head Start (pre-school program) EHS Extremely Hazardous Substance (EPA) EHS Environmental Health Services EHS Exchange Hosted Services Report 2002 - Photos Ciba Specialty Chemicals Financial calendar - March 6, 2003: Annual General Meeting of Shareholders - April 24, 2003: First Quarter 2003 financial results - May 23, 2003: Proposed capital reduction payment date - August 20, 2003: Half Year 2003 financial results - October October: see month. 23, 2003: Nine Month 2003 financial results Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Forward-looking statements and information contained herein are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. as there are certain important factors that could cause results to differ materially from those anticipated. Such statements reflect the current views of the Company with respect to market conditions and future events and are subject to certain risks, uncertainties and assumptions. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings, pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. of competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , introduction of competing products by other companies, lack of acceptance of new products and services by the Company's targeted customers, changes in the Company's business strategy, the Company's ability to continue to receive adequate raw materials from its suppliers on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs, and changes in the political, social and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and various other factors. Furthermore, the Company does not assume any obligation to update these forward-looking statements.
Ciba Specialty Chemicals
Full Year Report 2002
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Consolidated Financial Highlights
(in millions of Swiss francs, except share and per share data)
......................................................................
Year ended December 31, 2002 2001(1)
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Statements of income
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Net sales 7 085 7 367
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Gross profit 2 356 2 379
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Operating income (EBIT) 788 761
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Financial income and expense, net -215 -193
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Income from continuing operations, before
income taxes and minority interest 573 568
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Provision for income taxes 154 178
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Income from continuing operations,
before minority interest 419 390
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Minority interest 13 10
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Income from continuing operations 406 380
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Cumulative effects of change in accounting
principles, net of tax(2) 0 2
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Net income 406 382
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Basic and diluted earnings per share
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Continuing operations 5.92 5.72
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Cumulative effects of change in
accounting principles(2) 0.00 0.04
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Net income per share 5.92 5.76
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Operating income (EBIT) 788 761
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Depreciation and amortization 385 469
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EBITDA 1 173 1 230
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Balance sheets
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Current assets 5 314 4 827
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Property, plant and equipment, net 3 196 3 565
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Other long-term assets 3 282 3 326
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Total assets 11 792 11 718
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Current liabilities 3 095 1 977
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Long-term liabilities 4 267 5 745
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Minority interests 76 88
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Shareholders' equity 4 354 3 908
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Total liabilities and shareholders'
equity 11 792 11 718
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Statements of cash flows
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Net cash provided by operating activities 1 038 1 054
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Net cash used in investing activities -349 -334
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Net cash provided by (used in)
financing activities 144 -275
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Effect of exchange rate changes on
cash and cash equivalents -74 -22
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Net increase in cash and cash equivalents 759 423
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* Percentage change in local currencies.
(1) Effective January 1, 2002, the Company adopted Financial
Accounting Standards Board (FASB) Statement of Financial
Accounting Standard (SFAS) No. 142 "Goodwill and Other Intangible
Assets". In 2001, on an adjusted basis, excluding goodwill
amortization, operating income would have been CHF 822 million,
income from continuing operations before income taxes and minority
interest CHF 629 million, income from continuing operations before
minority interest CHF 451 million, income from continuing
operations CHF 441 million, net income CHF 443 million and basic
and diluted earnings per share CHF 6.68.
(2) Effective January 1, 2001, the Company adopted FASB SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" as
amended which replaced existing pronouncements and practices with
a single, integrated accounting framework for derivatives and
hedging activities.
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Condensed Business Segment Data
(in millions of Swiss francs)
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Change in %
Local
Year ended December 31, 2002 2001 currencies CHF
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Net sales
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Plastic Additives 1 813 1 834 6 -1
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Coating Effects 1 920 1 944 5 -1
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Water & Paper Treatment 1 409 1 486 1 -5
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Textile Effects 1 544 1 673 -2 -8
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Home & Personal Care 399 430 1 -7
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Corporate - -
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Total net sales 7 085 7 367 3 -4
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Operating income
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Plastic Additives 245 275 4 -11
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Coating Effects 341 312 29 9
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Water & Paper Treatment 98 65 69 51
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Textile Effects 142 181 -1 -21
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Home & Personal Care 56 67 7 -17
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Corporate and other -94 -78 22 21
expenses
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Operating income before
goodwill amortization 788 822 16 -4
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Goodwill amortization(1) - -61 - -
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Total operating income 788 761 25 4
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Change in %
Local
Year ended December 31, 2002 2001 currencies CHF
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EBITDA(2)
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Plastic Additives 346 388 1 -11
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Coating Effects 440 411 23 7
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Water & Paper Treatment 186 157 28 18
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Textile Effects 208 248 0 -16
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Home & Personal Care 82 95 4 -14
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Corporate -89 -69 29 28
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Total EBITDA(2) 1 173 1 230 10 -5
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EBITDA margin(3)
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Plastic Additives 19.1 % 21.1 %
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Coating Effects 22.9 % 21.1 %
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Water & Paper Treatment 13.2 % 10.6 %
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Textile Effects 13.5 % 14.8 %
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Home & Personal Care 20.6 % 22.2 %
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Corporate - -
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Total EBITDA margin(3) 16.6 % 16.7 %
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(1) See footnote (1) to Consolidated Financial Highlights table above.
(2) EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) is calculated as operating income (EBIT) plus
depreciation and amortization, which amounted to CHF 385 million
(2001: CHF 469 million).
(3) EBITDA margin is calculated as EBITDA as a percentage of net
sales.
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