Cytec Reports First Quarter EPS of $0.78; Quarter Sales a Record for Cytec.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. , N.J.--(BUSINESS WIRE)--April 22, 2004 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 2004 were $31.3 million or $0.78 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 $415 million. Net earnings for the comparable period of 2003 were $28.9 million or $0.73 per diluted share, on sales of $367 million, before a cumulative effect of a change in accounting principle of $13.6 million after tax ($0.34 per diluted share) for the adoption of Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. ." 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, "Our two Specialty Chemical 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 benefited from the acquisitions completed in 2003 and our 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. Materials segment displayed strong volume growth. Our Building Block Chemicals sales increased in line with higher input costs. Exchange rate changes also favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted sales for the quarter. "In the quarter we experienced shortages of 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. causing our Building Block Chemicals 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 plant to run at less than capacity. Natural gas prices remained high, and we were impacted by a rapid escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. in the price of propylene. Despite these significant issues, we delivered increased earnings and respectable margins to begin 2004." Water and Industrial Process Chemicals Sales increased 8%; 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 decrease to $4 million Mr. Lilley Lilley is a surname, and may refer to:
"The decrease in operating earnings was principally the result of the lower selling volumes, higher raw material costs, primarily propylene and ammonia ammonia, chemical compound, NH3, colorless gas that is about one half as dense as air at ordinary temperatures and pressures. It has a characteristic pungent, penetrating odor. , and energy costs which more than offset the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact from acquisitions. Performance Products Sales increased 17%; Operating Earnings improve to $14 million "For Performance Products, selling volumes increased 2%, acquisitions added 11%, exchange rate changes increased sales by 4% and selling prices were flat. Demand was generally up in all regions except Asia Pacific. "Operating earnings increased principally due to the favorable impact from acquisitions and higher base sales volumes offset somewhat by increased raw material costs, primarily ammonia and 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. derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , and energy costs. Specialty Materials Sales increased 11%; Operating Earnings improve to $23 million "In Specialty Materials, selling volumes improved 11%, exchange rate changes increased sales by 1% and selling prices were down 1%. Demand increased for military applications, rotorcraft ro·tor·craft n. An aircraft, especially a helicopter, that is kept partially or completely airborne by airfoils rotating around a vertical axis. and high performance automotive applications. Sales in the large commercial aircraft sector were up due to increased sales to Airbus partially offset by reduced sales to the regional and business jet sectors. "The increase in operating earnings primarily reflects the higher sales volume and the resulting leverage impact on our production costs partially offset by increased selling and technical costs for our growth initiatives. Building Block Chemicals Sales increase 17%; Operating Earnings improve to $5 million "Building Block Chemicals selling volumes increased 3%, selling prices increased 12% and exchange rate changes increased sales by 2%. The acrylonitrile plant ran at reduced rates in the quarter due to short supply of propylene. This affected most acrylonitrile producers in the U.S., and as a result acrylonitrile selling prices have increased consistent with continued strong demand. "Raw material and energy costs, primarily propylene, ammonia and natural gas, were higher in the quarter but these costs were mostly recovered through higher selling prices. In addition, a favorable product mix and improved plant operations more than offset the impact of running our acrylonitrile plant at reduced rates. After taking into account all of the above, operating earnings improved over the prior year period." Earnings in Associated Companies associated company associate n → Partnerfirma f associated company n → società collegata 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
Effective Tax Rate Mr. Cronin continued, "Our effective tax rate was lowered to 24%, down from the 28% effective tax rate used for the full year of 2003. This reduction reflected our continued growth of earnings in lower tax jurisdictions and, to a lesser extent, a favorable international tax ruling." Cash Flow Mr. Cronin added, "First quarter cash flow generated by operations was $23 million. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying are up in line with the increased sales and inventory levels reflecting the higher demand. Accounts payable are higher due to an increase in purchasing volumes towards the end of the quarter and timing of payments versus year end 2003. Capital expenditures of $17 million reflect the work being done on the renovation of our Specialty Chemical research facility and the expansion of our Specialty Materials' advanced composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate manufacturing facility in 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). . During the first quarter we repurchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 388 thousand shares of stock at a cost of $13.2 million which favorably impacted earnings per share. We issued our first quarterly dividend of $0.10 per share which aggregated $3.9 million." Update on 2004 Outlook Mr. Lilley commented, "We are pleased with our strong start for 2004 and we continue to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution on the factors we can control. However, our last forecast which was provided in January January: see month. 2004 assumed a moderation of raw material and energy costs. We now expect the trend of higher raw material costs to continue and this will have an adverse effect on our two Specialty Chemical segments. Somewhat offsetting the higher than anticipated raw material and energy costs, we did see encouraging signs of a pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their in demand during the course of the first quarter. In addition, we have lowered our effective tax rate estimate for 2004 to 24%." Our revised full year expectation by segment follows: "In Water and Industrial Process, we now forecast sales growth of about 8% with about 5% of that coming from acquisitions. Due to high raw material and energy costs, operating earnings are now forecast to be flat with 2003. Our previous forecast was for sales to be up 10% and operating earnings up 30%. "In Performance Products, we now forecast sales growth of about 10% with about 5% of that coming from acquisitions. Raw material and energy costs are also impacting this segment and we now see operating earnings to be up 40% from 2003 which is a slight reduction from our previous forecast. "In Building Block Chemicals, we now forecast sales to be up 10-15% due to higher selling prices and operating earnings to be down 15-20%. This segment is also seeing significantly higher raw material and energy costs but higher selling prices are mostly compensating for this. Our previous forecast was for sales to be flat and operating earnings to be down 20%. During 2004, we have regular maintenance turnarounds scheduled for our acrylonitrile and 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. facilities which will reduce the amount of production available for sale. The melamine maintenance 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. occurred late in the first quarter and the acrylonitrile turnaround is scheduled for the second quarter. The corresponding sales decrease during the year will primarily impact the second quarter. "In Specialty Materials, we now forecast sales to be up about 7% primarily due to continued growth in the military and high performance automotive markets and modest growth in the large commercial aircraft sector and operating earnings to be up 15%. Our previous forecast was for sales to be up 5% and operating earnings to be up 10%. "We had forecast our earnings from associated companies to be flat year on year. However, high raw material and energy costs are also impacting our Cyro joint venture. We now expect full year earnings from associated companies to be down approximately 30% from 2003. We forecast Corporate and Unallocated to be slightly more unfavorable than last year. Our interest costs will be up approximately 15% due to higher levels of debt outstanding compared to 2003. "The net of the above is a revised diluted 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. range of $2.65-$2.75 up from $2.55-$2.65. While we are cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the demand situation is improving, we believe raw materials and energy costs will not decline as we had previously anticipated. Our diluted EPS estimate for the second quarter is a range of $0.60-$0.65 with a major factor in the quarter being the scheduled Building Block Chemicals' maintenance work. We will next update the 2004 outlook when we report our second quarter 2004 operating results. "We have a strong start and good momentum as we move further into 2004. We will remain focused on new product development, execution of our operational excellence initiatives and staying flexible enough to react to the challenges and changes of the global economy." Investor Conference Call to be Held on April 23, 2004, 11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT Cytec will host their first quarter earnings release conference call on April 23, 2004 at 11:00 a.m. EDT. The conference call will also be simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics webcast for all investors from Cytec's Web site www.cytec.com. Select the Investor Relations Investor relations The process by which the corporation communicates with its investors. page to access the live conference call. A recording of the conference call may be accessed by telephone from 2:00 p.m. EDT on April 23, 2004 until April 29, 2004 at 11:00 p.m. EDT by calling 888-203-1112 (U.S.) or 719-457-0820 (International) and entering access code 701445. The conference call recording will also be accessible on Cytec's Web site for 3 weeks after the conference call. 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 "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. Corporate Profile Cytec Industries is a specialty chemicals and materials technology company with sales in 2003 of $1.5 billion. Its growth strategies are based on developing technologically advanced customer solutions for global markets including: 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, and water treatment.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except share and per share amounts)
Quarter
Ended
March 31,
------------------------
2004 2003
---------- ----------
Net sales $ 415.2 $ 367.4
Manufacturing cost of sales 312.7 272.4
Selling and technical services 34.9 30.1
Research and process development 9.1 8.2
Administrative and general 13.3 11.8
Amortization of acquisition intangibles 1.4 0.8
---------- ----------
Earnings from operations 43.8 44.1
Other income (expense), net 0.9 (1.2)
Equity in earnings of associated companies 0.3 2.5
Interest expense, net 3.8 4.1
---------- ----------
Earnings before income taxes and cumulative
effect of accounting change 41.2 41.3
Income tax provision 9.9 12.4
---------- ----------
Earnings before cumulative effect of
accounting change 31.3 28.9
---------- ----------
Cumulative effect of accounting change, net of
tax - (13.6)
Net earnings $ 31.3 $ 15.3
========== ==========
Earnings before cumulative effect of
accounting change per common share
Basic $0.80 $0.75
Diluted $0.78 $0.73
Cumulative effect of accounting change, net of
tax, per common share
Basic - $(0.35)
Diluted - $(0.34)
Earnings per common share
Basic $0.80 $0.39
Diluted $0.78 $0.38
Weighted average shares outstanding
(000 omitted)
Basic 39,099 38,735
Diluted 40,100 39,764
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED NET SALES AND EARNINGS FROM OPERATIONS
BY BUSINESS SEGMENT
(Millions of dollars)
Quarter Ended March 31,
----------------------------
2004 2003
---- ----
Net sales
---------
Water and Industrial Process
Chemicals $ 92.4 $ 85.8
Performance Products
Sales to external customers 139.9 119.8
Intersegment sales 1.3 -
Specialty Materials 120.3 108.1
Building Block Chemicals
Sales to external customers 62.6 53.7
Intersegment sales 19.3 16.4
-------- --------
Net sales from segments 435.8 383.8
Elimination of intersegment
revenue (20.6) (16.4)
-------- --------
Total consolidated net sales $ 415.2 $ 367.4
======== ========
% of % of
Earnings (loss) from operations sales sales
----- -----
Water and Industrial Process
Chemicals $ 3.6 4% $ 6.9 8%
Performance Products 13.5 10% 11.8 10%
Specialty Materials 23.2 19% 22.3 21%
Building Block Chemicals 5.3 6% 4.3 6%
-------- --------
Earnings from segments 45.6 10% 45.3 12%
Corporate and Unallocated (1.8) (1.2)
-------- --------
Total consolidated earnings
from operations $ 43.8 11% $ 44.1 12%
======== ========
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share and per share amounts)
March 31, Dec. 31,
2004 2003
---------- ----------
ASSETS
Current assets
Cash and cash equivalents $ 251.6 $ 251.1
Accounts receivable, less allowance for
doubtful accounts of $7.2 and $7.6 in 2004
and 2003, respectively 242.1 217.1
Other accounts receivable 52.9 50.2
Inventories 183.6 176.0
Deferred income taxes 0.1 8.2
Other current assets 17.7 8.8
---------- ----------
Total current assets 748.0 711.4
Investment in associated companies 81.5 82.1
Plants, equipment and facilities, at cost 1,542.5 1,538.3
Less: accumulated depreciation (886.3) (875.4)
---------- ----------
Net plant investment 656.2 662.9
Acquisition intangibles, net of accumulated
amortization 67.9 69.9
Goodwill 339.1 339.7
Deferred income taxes 86.5 85.7
Other assets 73.6 74.2
---------- ----------
Total assets $ 2,052.8 $ 2,025.9
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 9.2 $ 9.3
Accounts payable 140.7 93.5
Accrued expense 137.4 170.5
Income taxes payable 60.4 63.2
---------- ----------
Total current liabilities 347.7 336.5
Long-term debt 418.6 416.2
Pension and other postretirement benefit
liabilities 334.6 346.0
Other noncurrent liabilities 183.6 171.8
Stockholders' equity
Preferred stock, 20,000,000 shares
authorized, issued and outstanding 4,000
shares, Series C Cumulative $0.1 par value
at liquidation value of $25 per share 0.1 0.1
Common stock, $0.1 par value per share,
150,000,000 shares authorized, issued
48,132,640 shares 0.5 0.5
Additional paid-in capital 118.1 122.2
Retained earnings 1,010.1 982.9
Unearned compensation (3.0) (5.3)
Minimum pension liability adjustment (96.8) (96.8)
Unrealized gain on derivative instruments 0.5 0.3
Accumulated translation adjustments 29.8 38.0
Treasury stock, at cost, 9,251,492 shares
in 2004 and 9,139,897 shares in 2003 (291.0) (286.5)
---------- ----------
Total stockholders' equity 768.3 755.4
---------- ----------
Total liabilities and stockholders' equity $ 2,052.8 $ 2,025.9
========== ==========
CYTEC INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Quarter Ended March 31,
------------------------
2004 2003
---------- ----------
Cash flows provided by (used for) operating
activities
Net earnings $ 31.3 $ 15.3
Noncash items included in earnings:
Dividends from associated companies
greater than earnings 0.8 0.6
Depreciation 21.6 21.6
Amortization 2.7 1.2
Deferred income taxes 7.3 (10.3)
Gain on sale of assets (0.6) -
Cumulative effect of change in accounting
principle, net of tax - 13.6
Other (0.3) -
Changes in operating assets and liabilities
Trade accounts receivable (28.9) (16.6)
Other receivables (3.8) (2.4)
Inventories (9.0) (19.5)
Accounts payable 44.0 12.3
Accrued expenses (24.6) (9.2)
Income taxes payable - 17.7
Other assets (8.0) (2.7)
Other liabilities (9.8) (11.5)
---------- ----------
Net cash flows provided by operating
activities 22.7 10.1
---------- ----------
Cash flows provided by (used for) investing
activities
Additions to plants, equipment and
facilities (16.9) (18.9)
Proceeds received on sale of assets 0.7 0.1
Advance payment received on land lease 9.1 -
---------- ----------
Net cash flows used for investing activities (7.1) (18.8)
---------- ----------
Cash flows provided by (used for) financing
activities
Proceeds from the exercise of stock options 2.9 1.7
Purchase of treasury stock (13.2) (11.3)
Change in short-term borrowings (0.1) -
Payments of long term debt - (100.0)
Proceeds from termination of interest rate
swap 2.7 -
Cash dividends (3.9) -
---------- ----------
Net cash flows used for financing activities (11.6) (109.6)
---------- ----------
Effect of exchange rate changes on cash and
cash equivalents (3.5) 1.1
---------- ----------
Increase (decrease) in cash and cash
equivalents 0.5 (117.2)
Cash and cash equivalents, beginning of period 251.1 210.0
---------- ----------
Cash and cash equivalents, end of period $ 251.6 $ 92.8
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