Cytec Exceeds Expectations With Fourth Quarter 1999 EPS of $.68; Full Year 1999 EPS Increases to $2.73.Business 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. , NJ--(BUSINESS WIRE)--Jan. 24, 2000 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) today announced that fourth quarter 1999 earnings increased 6% to $.69 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 (excluding a $.01 per share net effect of restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. ), compared to $.65 per diluted share (excluding a $.06 per share gain from sale of the bulk molding compounds business) in the fourth quarter of 1998. 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. Achieves 11% Sales Growth, 36% 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 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, &uot;Cytec's fourth quarter 1999 performance reflects the top-line and earnings momentum of our two specialty chemical segments. Their combined year-over-year performance reflects 11% sales growth, and 36% operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. growth primarily from increased volumes, accretive bolt-on acquisitions, and a 400 basis point operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: expansion in Performance Products.&uot; Specialty Materials Increases Operating Earnings 12% Mr. Lilley Lilley is a surname, and may refer to:
Building Block Chemicals Results Reflect Reduced Margins, 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 Improved &uot;Acrylonitrile pricing, demand and margins continued improving sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen during the quarter. However, the lower margins of Building Block chemicals, downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. at the acrylonitrile plant, and other operational difficulties led to a small operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the fourth quarter.&uot; Fourth Quarter Comparison Is Solid, Momentum Established For Full Year 2000 In the fourth quarter ended December December: see month. 31, 1999, Cytec achieved net earnings of $29.9 million on sales of $354 million. This compares to fourth quarter 1998 net earnings of $32.0 million on sales of $352 million. Mr. Lilley stated, &uot;Cytec's growth strategies are on track. We have the organizational focus to execute our growth plan and an absolute commitment to our performance objectives---which include double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in earnings per diluted share, excluding non-recurring items. Given the challenging business environment in the chemical industry, I am particularly proud of the results the Cytec team achieved around the world during 1999.&uot; Fourth Quarter 1999 Restructuring Charge Enhances Structural Profitability &uot;Included in results for the 1999 fourth quarter are restructuring charges of $3.6 million, primarily related to the consolidation of certain Specialty Materials' manufacturing and research activities and the Fortier Fortier can refer to: People
n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down and related personnel reductions. Also in the fourth quarter, the Company reduced its existing restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. due to incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. lower costs than expected for the shutdown of the Warner's, NJ facility and incurring fewer personnel reductions by filling unanticipated open positions. As a result, the Company recognized a restructuring credit of $3.0 million. Excluding the effect of a $.01 per share net charge for these two items, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.69 for the 1999 fourth quarter.&uot; Cytec Achieves Sixth Consecutive Year Of 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 In 1999. Non-recurring Items Mark Progress on Strategic Objectives Mr. Lilley then added, &uot;For the full year ended December 31, 1999, Cytec achieved earnings per diluted share of $2.73, our sixth consecutive annual increase, up from $2.68 per diluted share in 1998. Full year 1999 performance reflects the positive effects of higher sales volumes in specialty chemicals, strategic acquisitions, manufacturing rationalization rationalization, in psychology: see defense mechanism. , restructuring benefits and completion of nearly half of our $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 program.&uot; The EPS of $2.73 in 1999 includes an $.18 per diluted share reduction in income tax expense from utilization of additional prior years' tax credits; this was partially offset by a $.04 per share charge for tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. expenses. In 1999 we exceeded our objective of consistently reducing Cytec's effective tax rate from 43% in 1994 to 35% by 1999. Excluding the benefit relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the use of prior years' tax credits, our underlying effective tax rate was 34.5% in 1999, down from 37.0% in 1998. The EPS of $2.68 in 1998 includes a $.06 per share gain from the sale of the bulk molding compounds business----one of a series of divestments that along with strategic acquisitions has strengthened our portfolio, and---for the sixth consecutive year---increased Cytec's operating margin to 13.1% in 1999.&uot; Water and Industrial Process Chemicals Fourth Quarter Sales Increased 10% to $99 Million, Operating Earnings Increased 5% to $10 Million Mr. Lilley continued, &uot;Selling volumes for this segment were up 15% of which 6% was due to the 1999 acquisitions of Inspec's and Nottingham's mining chemical businesses. These `bolt-ons' build on our franchise position in mining chemicals. Selling prices were down 3% and exchange rate changes decreased sales 2%. A shift in the product sales mix sales mix See product mix. reduced the operating margin 100 basis points to 10%. However, operating earnings were up as a result of higher sales volume and reduced operating costs operating costs npl → gastos mpl operacionales .&uot; Performance Products Fourth Quarter Sales Increased 12% to $115 Million, Operating Earnings Increased 67% to $15.5 Million &uot;Performance Products sales increased 12% to $115 million and operating earnings increased $6 million or 67%. We achieved over a 400 basis point increase in the operating margin raising the fourth quarter margin to 13%. Overall, selling volumes were up 14%, with 4% due to the October October: see month. 1999 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 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 of BIP BIP - An incorrect singular of BIPS. One billion instructions per second is 1 BIPS, not 1 BIP. Ltd., partially offset by a 2% decline in selling prices for the segment. Selling volumes were higher in all product lines.&uot; Specialty Materials Achieves Fourth Quarter Sales of $95 Million, Operating Earnings Increase to $20.8 Million &uot;Specialty Materials' sales were $95 million, a decrease of 18%. Approximately 5% of the sales decrease was due to the 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). of the molding compounds business and other minor product lines; a 3% decline in selling prices was offset by lower raw material costs. Sales growth in the company's other aerospace market segments, such as regional aircraft, enhanced by new product introductions, new applications and new qualifications, mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the decline in sales to the 100 passenger-plus commercial aircraft segment. Consistent with our 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. plan, we continue to drive margin expansion through operational excellence, removing structural costs, and rationalizing manufacturing facilities.&uot; Building Block Chemicals Fourth Quarter Sales Increase 3%, Margins Squeezed &uot;Building Block Chemicals sales were $46 million, a 3% increase over the prior year. Acrylonitrile volumes and prices increased, primarily due to growing demand from the Asian acrylic fiber acrylic fiber n. Any of numerous synthetic fibers polymerized from acrylonitrile. acrylic fiber Any of numerous synthetic fibers polymerized from acrylonitrile. Noun 1. market and unanticipated global acrylonitrile production outages. Building Blocks' selling prices, primarily of acrylonitrile, were up 2%---although exchange rates decreased sales 2%. While acrylonitrile spreads have improved sequentially during 1999, the fourth quarter 1999 spread is below the spread for the same period of 1998, as a result of significantly higher 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. costs. In addition, lower sales and margins primarily of melamine melamine (mĕl`əmēn'), common name for 2,4,6-triamino-1,3,5-triazine. Melamine is a trimer (see polymer) of cyanamide, H2NC≡N, and is synthesized from calcium carbide. and acrylamide acrylamide /acryl·a·mide/ (ah-kril´ah-mid) a vinyl monomer used in the production of polymers with many industrial and research uses; the monomeric form is a neurotoxin. , downtime at the acrylonitrile plant, and other operating difficulties led to a small fourth quarter operating loss in the Building Blocks segment. Also, during the fourth quarter we completed the sale of our 30% interest in the methanol manufacturing joint venture.&uot; Associated Companies associated company associate n → Partnerfirma f associated company n → società collegata Fourth Quarter Results 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
n. Abbr. VP 1. An officer ranking next below a president, usually empowered to assume the president's duties under conditions such as absence, illness, or death. 2. and Chief Financial Officer commented, &uot;Equity in earnings of associated companies declined $5 million in the fourth quarter. Criterion Catalyst catalyst, substance that can cause a change in the rate of a chemical reaction without itself being consumed in the reaction; the changing of the reaction rate by use of a catalyst is called catalysis. continues to be affected by industry over-capacity which has reduced hydrotreating catalyst selling prices. During the fourth quarter, Criterion's operating losses moderated and significant efforts continue to be focused on improving Criterion's results. CYRO Industries earnings were also down as selling prices and margins for certain of its products remain low.&uot; Cash Flow Mr. Cronin added, &uot;Our cash flow for the quarter continued to be strong, yielding operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of almost $200 million in 1999. This quarter we repurchased 635 thousand shares at a cost of $15 million. To date, we have repurchased $42.4 million of stock under our current $100 million authorization The right or permission to use a system resource; the process of granting access. See access control. . At the same time, during 1999, we grew the earnings power of Cytec with strategic ` bolt-on' acquisitions with an acquisition cost of $70 million, and we invested $77 million in our plants to selectively increase capacity and improve plant efficiency. Importantly, our net debt decreased by almost $18 million. Our debt capacity and ability to generate operating cash flow support our plan to grow Cytec as we explore opportunities to enhance shareholder value.&uot; 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& 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements Except for the historical information and discussions contained herein, statements contained in this release may constitute &uot;forward-looking statements&uot; 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.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except share and per share amounts)
Three Months Ended Year Ended
December, 31 December 31,
-------------------------------------------
1999 1998 1999 1998
-------------------------------------------
Net sales $ 354.1 $ 352.4 $1,412.5 $1,444.5
Manufacturing
cost of sales 237.5 244.4 970.8 1,006.6
Selling and
technical services 39.9 38.7 150.0 153.4
Research and
process development 13.3 11.2 43.8 42.9
Administrative and general 12.7 10.5 51.7 46.6
Amortization of
acquisition intangibles 3.2 2.8 11.2 9.5
-------------------------------------------
Earnings from operations 47.5 44.8 185.0 185.5
Other income
(expense), net 2.5 5.3 9.3 14.5
Equity in earnings
of associated companies 2.3 6.9 5.6 20.3
Interest expense, net 6.7 6.2 26.9 22.4
-------------------------------------------
Earnings before
income taxes 45.6 50.8 173.0 197.9
Income tax provision 15.7 18.8 51.7 73.2
-------------------------------------------
Net earnings $ 29.9 $ 32.0 $ 121.3 $ 124.7
===========================================
Earnings per
common share
Basic $0.71 $0.73 $2.83 $2.79
Diluted $0.68 $0.71 $2.73 $2.68
Weighted average
shares outstanding
Basic 42,207,000 43,733,000 42,889,000 44,715,000
Diluted 43,782,000 45,176,000 44,504,000 46,480,000
See accompanying Notes to Consolidated Statements of Income
Cytec Industries Inc. and Subsidiaries
Consolidated Balance Sheets
(Millions of dollars, except share and per share amounts)
December 31, December 31,
1999 1998
---- ----
ASSETS
Current assets
Cash and cash
equivalents $ 12.0 $ 1.7
Accounts receivable,
less allowance for doubtful
accounts
of $9.3 and $9.2 in 1999
and 1998, respectively 248.5 241.3
Inventories 139.5 140.5
Deferred income taxes 61.7 72.9
Other current assets 29.4 21.2
---------- --------
Total current assets 491.1 477.6
Investment in associated
companies 146.4 147.4
Plants, equipment and facilities,
at cost 1,352.6 1,363.0
Less: accumulated
depreciation (696.9) (695.5)
---------- --------
Net plant investment 655.7 667.5
Acquisition intangibles, net
of accumulated amortization 395.2 349.5
Deferred income taxes 48.8 62.6
Other assets 22.7 26.0
------------- -----------
Total assets $ 1,759.9 $ 1,730.6
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ - $ 10.3
Accounts payable 118.5 99.9
Accrued expenses 198.4 243.9
Income taxes payable 49.2 40.3
------------- -----------
Total current liabilities 366.1 394.4
Long-term debt 422.5 419.5
Other noncurrent liabilities 465.5 485.7
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
in 1999 and 48,142,961 in 1998 0.5 0.5
Additional paid-in capital 159.8 162.4
Retained earnings 577.5 456.2
Unearned compensation (1.9) (1.7)
Accumulated translation
adjustments (14.3) (5.1)
Treasury stock, at cost,
6,522,967 shares in 1999, and
4,952,881 shares in 1998 (215.9) (181.4)
------------- -----------
Total stockholders' equity 505.8 431.0
------------- -----------
Total liabilities and
stockholders' equity $ 1,759.9 $ 1,730.6
============= ===========
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Year Ended
December 31,
----------------------
1999 1998
Cash flows provided by
(used for) operating activities
Net earnings $ 121.3 $ 124.7
Noncash items included
in earnings:
Dividends from associated
companies greater
(less) than earnings 0.2 (13.8)
Depreciation 81.9 78.0
Amortization 13.2 9.2
Deferred income taxes 24.3 19.2
Gain on sale of assets (4.2) (6.9)
Other (0.5) (0.2)
Changes in operating
assets and liabilities:
Accounts receivable (8.7) 3.9
Inventories 3.3 1.1
Accounts payable 19.9 (25.2)
Accrued expenses (29.0) (19.5)
Income taxes payable 9.8 26.1
Other assets (0.6) (8.6)
Other liabilities (31.7) (35.7)
--------- ----------
Net cash flows provided
by operating activities 199.2 152.3
--------- ----------
Cash flows provided by
(used for) investing activities
Additions to plants,
equipment and facilities (77.4) (103.8)
Proceeds received on sale of assets 11.8 25.9
Acquisition of business,
net of cash received (69.8) (73.8)
Change in other assets (5.0) 4.8
--------- ----------
Net cash flows used for
investing activities (140.4) (146.9)
--------- ----------
Cash flows provided by
(used for) financing activities
Proceeds from the exercise of
stock options and warrants 1.1 3.3
Purchase of treasury stock (42.5) (113.4)
Change in short term borrowings (10.3) 10.3
Change in long term debt 3.0 97.7
Debt issuance costs - (9.4)
Proceeds received on
sale of put options 1.2 1.0
--------- ----------
Net cash flows used
for financing activities (47.5) (10.5)
--------- ----------
Effect of exchange rate
changes on cash and
cash equivalents (1.0) 0.4
--------- ----------
Increase (decrease) in
cash and cash equivalents 10.3 (4.7)
Cash and cash equivalents,
beginning of period 1.7 6.4
========= ==========
Cash and cash equivalents,
end of period $ 12.0 $ 1.7
========= ==========
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NET SALES AND EARNINGS FROM OPERATIONS BY BUSINESS SEGMENT
(Millions of dollars)
Three Months Ended
December 31,
---------------------------------
1999 1998
---------------- ----------------
Net sales
Water and Industrial
Process Chemicals $ 98.5 $89.6
Performance Products 114.9 102.8
Specialty Materials 94.5 115.2
Building Block Chemicals
Sales to external customers 46.2 44.9
Intersegment sales 12.6 8.3
----- ----
Net sales from segments 366.7 360.8
Other revenues - (0.1)
Elimination of
intersegment revenue (12.6) (8.3)
------ -----
Total consolidated net sales $ 354.1 $352.4
====== =====
Earnings from operations %of Sales %of Sales
------------------------ ------- ------
Water and Industrial
Process Chemicals $10.0 10% $ 9.5 11%
Performance Products 15.5 13% 9.4 9%
Specialty Materials 20.8 22% 18.6 16%
Building Block Chemicals (0.9) -2% 8.3 16%
---- ----
Earnings from segments 45.4 12% 45.8 13%
Corporate and Unallocated 2.1 (1.0)
---- ----
Total consolidated
earnings from operations $ 47.5 13% $44.8 13%
===== =====
Year Ended
December 31,
---------------------------------
1999 1998
---------------- ----------------
Net sales
Water and Industrial
Process Chemicals $ 372.8 349.4
Performance Products 442.4 403.4
Specialty Materials 434.5 492.2
Building Block Chemicals
Sales to external customers 162.8 199.3
Intersegment sales 42.0 38.4
----- ----
Net sales from segments 1,454.5 1,482.7
Other revenues - 0.2
Elimination of
intersegment revenue (42.0) (38.4)
------ ------
Total consolidated net sales $ 1,412.5 1,444.5
======= =======
Earnings from operations %of Sales %of Sales
------------------------ ------- ------
Water and Industrial
Process Chemicals $ 44.0 12% $34.1 10%
Performance Products 54.9 12% 44.2 11%
Specialty Materials 85.3 20% 81.0 16%
Building Block Chemicals 6.8 3% 35.7 15%
---- ----
Earnings from segments 191.0 13% 195.0 13%
Corporate and Unallocated (6.0) (9.5)
---- ----
Total consolidated
earnings from operations $ 185.0 13% $ 185.5 13%
===== =====
Notes to Consolidated Statements of Income: The Consolidated Statements of Income for the three months and full year ended December 31, 1999 reflect the reported results including items as detailed below. -- Included in Manufacturing Cost of Sales for the fourth quarter and full year 1999 is a net restructuring credit of $1.5 million. -- Included in Selling and Technical Services for the fourth quarter and full year 1999 is a net restructuring charge of $0.3 million. -- Included in Research and Process Development for the fourth quarter and full year 1999 is a net restructuring charge of $1.7 million. -- Included in Administrative and General for the fourth quarter and full year 1999 is a net restructuring charge of $0.1 million. Also, included in Administrative and General for the full year 1999 is a charge of $2.5 million for external costs associated with tax planning. -- Included in Income Tax Expense for the full year ended December 31, 1999 is a reduction of $8.0 million related to the utilization of additional prior year tax credits. The Consolidated Statements of Income for the three months and full year ended December 31, 1998 reflect the reported results including the item as detailed below. -- Included in the Consolidated Statement of Income under Other Income (Expense), net for the fourth quarter and full year 1998 is a gain of $4.4 million relating to the sale of the bulk molding compounds product line. |
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