Cytec Exceeds Consensus Estimates with First Quarter EPS of $.68.Business & High Tech Editors WEST PATERSON West Paterson (păt`ərsən), borough (1990 pop. 10,982), Passaic co., NE N.J., a suburb of Paterson; inc. 1914. Electric, electronic, and photographic products are made in the borough. , N.J.--(BUSINESS WIRE)--April 13, 2000 Excludes Special Gain of $0.06 From Insurance Settlement Cytec Industries 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. Cytec is a result of its spin-off from American Cyanamid Company. Inc. (NYSE NYSE See: New York Stock Exchange : CYT) announced today that net earnings for the first quarter of 2000 were $32 million, and that earnings per share increased to $0.74 per 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. share on sales of $360 million. Results for the quarter include an after tax gain of $2.8 million or $0.06 per diluted share from an insurance settlement. This compares to net earnings of $28 million, or $0.63 per diluted share, on sales of $355 million for the comparable period of 1999. 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. Segments Achieve Double-Digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. Sales and Earnings Growth David Lilley David William Lilley (born 31 October 1977, in Bellshill) is a Scottish professional footballer currently playing for Scottish Premier League club Kilmarnock. Lilley, a defender began his career at Queen of the South and had spells with Aberdeen, Ross County (on loan) and , Chairman, President and Chief Executive Officer said, "Cytec's first quarter 2000 performance reflects the top-line and earnings momentum of our two Specialty Chemical segments. Their combined year-over-year performance reflects 10% sales growth, a 14% volume increase and 19% growth in operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before . We achieved these improved sales results from increased volumes of new products and continuing expansion into the 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). and Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of markets. Earnings improved through the combination of these strong sales achievements, the benefits of the accretive "bolt-on" acquisitions and the productivity improvements from our Operational Excellence programs. "Specialty Materials sales and earnings declined primarily due to lower build rates of large commercial aircraft. We serve many other sectors of the aerospace market and they are growing. The ongoing consolidation of our Cytec Fiberite operations was enhanced by Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. productivity programs which contributed to a 100 basis point increase in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to reach 19%, compared to the same period in 1999. "Building Block Chemicals sales and earnings were up significantly during this quarter, as the acrylonitrile acrylonitrile /ac·ry·lo·ni·trile/ (ak?ri-lo-ni´tril) a colorless halogenated hydrocarbon used in the making of plastics and as a pesticide; its vapors are irritant to the respiratory tract and eyes, may cause systemic poisoning, and are markets have strengthened and our plant operations improved. Our equity in earnings of joint ventures improved primarily due to the performance of Criterion Catalyst. "Looking at the full year, Cytec has excellent momentum in its Specialty Chemical businesses, with positive signs for market conditions in Specialty Materials and Building Blocks. We continue to be confident that our recent portfolio realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. will accelerate Cytec's sales and earnings growth. For the year 2000 our target continues to be 10% EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth (excluding the gain from the insurance settlement) from the normalized $2.60 per share that we earned in 1999." Water and Industrial Process Chemicals Sales Grew 9% to $96 Million, Operating Earnings Increased 5% to $10 Million Mr. Lilley Lilley is a surname, and may refer to:
"Selling volumes were up 13%, with the acquisition of Inspec Mining Chemicals accounting for approximately 5% of the improved volumes. Selling prices were down 2% and exchange rate changes reduced sales by 2%. The higher operating earnings were adversely impacted by the effect of exchange rates in 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). and increased raw material costs-- primarily
propylene propylene /pro·pyl·ene/ (pro´pi-len) a gaseous hydrocarbon, CH3CHdbondCH2.propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. ." Performance Products Sales Grew 11% to $119 Million, Operating Earnings Increased 25% to $15 Million "Performance Products sales increased 11% to $119 million and operating earnings increased 25% to $15 million. We achieved double-digit sales growth in our Specialty Resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. business and in our Polymer Additives business. "Selling volumes were up 15% of which 6% was due to the acquisition of the amino amino /ami·no/ (ah-me´no) (am´i-no?) the monovalent radical NH2, when not united with an acid radical. a·mi·no adj. coatings resins business of BIP BIP - An incorrect singular of BIPS. One billion instructions per second is 1 BIPS, not 1 BIP. Ltd. in October October: see month. of last year. Polymer Additives volume growth was the result of strong sales of most of its products in Asia and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , and the continued success of our re-launch of certain products in Europe. For the segment, selling prices declined 2% and changes in exchange rates decreased sales another 2%. "We continue to see the benefits of Operational Excellence initiatives driving process improvements that increase throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and quality at our Willow willow, common name for some members of the Salicaceae, a family of deciduous trees and shrubs of worldwide distribution, especially abundant from north temperate to arctic areas. Island, West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. operations where we manufacture products for all of the Performance Products businesses. As a result of manufacturing productivity and strong volume growth, we increased the segment operating margins 200 basis points to 13 percent." Specialty Materials Sales Decrease 17% to $100 Million, Operating Earnings Down 14% to $19 Million, Margin Improves 100 Basis Points to 19% "Specialty Materials sales were $100 million, a decrease of 17%. Sales were impacted by lower build rates primarily for large commercial aircraft. Customer cycle time improvements, leading to inventory and supply chain reductions, and the transition from carbon fiber to less expensive glass fiber for certain aircraft interiors applications also impacted sales and earnings. "Operating earnings were $19 million and our operating margin improved to 19% reflecting the benefits of the ongoing manufacturing rationalization rationalization, in psychology: see defense mechanism. programs started last year. Selling prices decreased 1% which was offset by lower raw material costs," Mr. Lilley continued. Building Block Chemicals Sales Up 13% to $46 Million, Operating Earnings Improve to $4.0 Million Mr. Lilley continued, "Building Block Chemicals first quarter sales were $46 million, a 13% increase. Improved global demand and plant outages have caused a tight acrylonitrile market and sharply increased selling prices. However, the cost of propylene, the key raw material for acrylonitrile, has risen faster than selling prices, which reduced first quarter acrylonitrile margins when compared to the same period of 1999. Operating earnings were $4.0 million compared to $2.6 million for the same quarter last year as our plants ran well at lower costs. "For the segment overall, selling prices were up 15%, exchange rate changes decreased sales 2% and volumes were up 1%. Excluding the effect of our methanol methanol, methyl alcohol, or wood alcohol, CH3OH, a colorless, flammable liquid that is miscible with water in all proportions. Methanol is a monohydric alcohol. It melts at −97. divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). in the fourth quarter of last year, volumes were up 6%." Criterion Catalyst Improves, Insurance Settlement Reached James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. P. Cronin Cronin is a surname, and may refer to
associated company n → società collegata was up primarily due to improved sales volume and stringent cost controls at Criterion Catalyst. "During the quarter we entered into a settlement agreement with a group of insurance carriers in an environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a coverage suit. The amount of the settlement, net of expenses, is $4.2 million or $2.8 after tax. Payments are expected to be received in the second and third quarters of 2000. Cash Flow Mr. Cronin added, "Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was impacted by several events. Accounts payable decreased due to the timing of 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. 1999 vendor payments as a precaution against any Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 event, thereby increasing cash clearing in the first quarter of this year. Inventory increased as a result of the timing of production campaigns and inventory build in anticipation of ending certain tolling agreements in several of our businesses." Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Continues Mr. Cronin further stated, "During the quarter we invested $14 million to buy 542,000 shares of Cytec stock, bringing the total cost of shares repurchased to $56 million under our current $100 million share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may authorization The right or permission to use a system resource; the process of granting access. See access control. ." Portfolio Realignment to Focus on Growth Mr. Lilley concluded, "During the quarter we announced the realignment of our business portfolio into Platforms for growth and Value businesses. This enables us to better focus our resources for the growth of Cytec. Our work on strategic alternatives for the paper chemicals product line continued during the quarter. Our commitment to enhanced shareholder value must be relentless." Company Profile Cytec Industries Inc. is a global specialty chemicals and materials company. Its growth strategies employ technologically based customer solutions for markets which include: aerospace, plastics, industrial coatings An industrial coating is a paint or coating defined by its protective, rather than its aesthetic properties, although it can provide both. The most common use of industrial coatings is for corrosion control of steel or concrete. , mining, paper, and water treatment. Cytec is in the S&P Mid-Cap Mid-cap Short for "Middle Cap," mid cap refers to stocks with a market capitalization of between $2 billion to $10 billion. Notes: As the name implies, a mid-cap is in the middle of the pack. A mid-cap isn't too big, but at the same time has a relatively decent market cap. 400 Index. Forward-Looking and Cautionary Statements Except for the historical information and discussions contained herein, statements contained in this release may constitute "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. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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. Financial Tables to Follow
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except share and per share amounts)
Three Months Ended
March 31,
==================
2000 1999
------- -------
------- -------
Net sales $ 360,4 $ 355,3
Manufacturing cost of sales 251,2 249,9
Selling and technical services 39,5 37,1
Research and process development 9,5 10,3
Administrative and general 11,4 11,4
Amortization of acquisition intangibles 3,1 2,8
------- -------
Earnings from operations 45,7 43,8
Other income (expense), net 4,1 2,3
Equity in earnings of associated companies 6,5 4,2
Interest expense, net 7,3 6,9
------- -------
Earnings before income taxes 49,0 43,4
Income tax provision 16,9 15,2
------- -------
Net earnings $ 32,1 $ 28,2
======= =======
Earnings per common share
Basic $0,77 $0,65
Diluted $0,74 $0,63
Weighted average shares outstanding
Basic 41.652.000 43.186.000
Diluted 43.233.000 44.695.000
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NET SALES AND EARNINGS FROM OPERATIONS BY BUSINESS SEGMENT
(Millions of dollars)
Three Months Ended
March 31,
----------------------
2000 1999
----- -----
Net sales
Water and Industrial Process Chemicals $ 95,6 87,5
$
Performance Products 119,1 106,9
Specialty Materials 99,6 120,1
Building Block Chemicals
Sales to external customers 46,1 40,7
Intersegment sales 13,4 10,0
----- -----
Net sales from segments 373,8 365,2
Other revenues - 0,1
Elimination of intersegment revenue (13,4) (10,0)
----- -----
Total consolidated net sales $ 360,4 355,3
$
===== =====
Earnings from operations % of Sales % of Sales
Water and Industrial Process Chemicals $ 10,0 10% 9,5 11%
$
Performance Products 15,0 13% 12,0 11%
Specialty Materials 18,5 19% 21,5 18%
Building Block Chemicals 4,0 7% 2,6 5%
---- ----
Earnings from segments 47,5 13% 45,6 12%
Corporate and Unallocated (1,8) (1,8)
---- ----
Total consolidated earnings from
operations $ 45,7 13% $ 43,8 12%
$
===== =====
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share and per share amounts)
March 31, December 31,
2000 1999
------- -------
ASSETS
Current assets
Cash and cash equivalents $ 3,5 $ 12,0
Accounts receivable, less allowance for
doubtful accounts of $9.5 and $9.3 in
2000 and 1999, respectively 259,6 248,5
Inventories 153,8 139,5
Deferred income taxes 54,1 61,7
Other current assets 34,8 29,4
------- -------
Total current assets 505,8 491,1
Investment in associated companies 151,1 146,4
Plants, equipment and facilities, at cost 1.350,6 1.352,6
Less: accumulated depreciation (704,0) (696,9)
------- -------
Net plant investment 646,6 655,7
Acquisition intangibles, net of accumulated
amortization 392,3 395,2
Deferred income taxes 50,6 48,8
Other assets 26,0 22,7
------- -------
Total assets $1.772,4 $1.759,9
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 107,3 $ 118,5
Accrued expenses 192,5 198,4
Income taxes payable 51,2 49,2
------- -------
Total current liabilities 351,0 366,1
Long-term debt 435,8 422,5
Other noncurrent liabilities 461,4 465,5
Stockholders' equity
Preferred stock, 20,000,000 shares
authorized, issued and outstanding 4,000
shares, Series C Cumulative, $.01 par
value at liquidation value of $25 per
share 0,1 0,1
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 158,9 159,8
Retained earnings 609,6 577,5
Unearned compensation (5,1) (1,9)
Accumulated translation adjustments (18,3) (14,3)
Treasury stock, at cost,
6,818,023 shares in 2000, and
6,522,967 shares in 1999 (221,5) (215,9)
-------- -------
Total stockholders' equity 524,2 505,8
-------- -------
Total liabilities and stockholders' equity $1.772,4 $1.759,9
======== =======
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Three Months Ended
March 31,
-------------------
2000 1999
---- ----
Cash flows provided by (used for) operating
activities
Net earnings $ 32,1 $ 28,2
Noncash items included in earnings:
Dividends from associated companies
less than earnings (5,9) (3,8)
Depreciation 20,5 20,3
Amortization 3,8 2,8
Deferred income taxes 5,9 (4,4)
Gain on sale of assets - (2,4)
Other 0,2 (0,3)
Changes in operating assets and liabilities
Accounts receivable (13,1) (4,6)
Inventories (15,3) 0,6
Accounts payable (10,5) 5,1
Accrued expenses (0,6) (13,8)
Income taxes payable 3,3 23,8
Other assets (12,5) (10,0)
Other liabilities (4,0) (6,4)
-------- ---------
Net cash flows provided by operating
activities 3,9 35,1
-------- ---------
Cash flows provided by (used for) investing
activities
Additions to plants, equipment and
facilities (15,7) (17,8)
Proceeds received on sale of assets 1,3 5,7
Acquisition of business, net of cash
received - (4,0)
-------- ---------
Net cash flows used for investing activities (14,4) (16,1)
-------- ---------
Cash flows provided by (used for) financing
activities
Proceeds from the exercise of stock
options 2,5 0,4
Purchase of treasury stock (13,8) (12,8)
Change in short term borrowings - (10,3)
Change in long term debt 13,3 12,0
Proceeds received on sale of put options 0,2 0,6
-------- ---------
Net cash flows provided by (used for)
financing activities 2,2 (10,1)
-------- ---------
Effect of exchange rate changes on cash and
cash equivalents (0,2) 0,1
-------- ---------
Increase (decrease) in cash and cash
equivalents (8,5) 9,0
Cash and cash equivalents, beginning of
period 12,0 1,7
-------- ---------
Cash and cash equivalents, end of period $ 3,5 $ 10,7
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