Cytec Third Quarter Reported EPS of $0.79; Normalized EPS of $0.64 or 8% over 1998.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)--Oct. 14, 1999-- 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 third quarter of 1999 were $35 million or $0.79 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 $344 million. Included in results for the quarter is a reduction of $8.0 million ($0.18 per diluted share) in income tax expense related to the utilization of additional prior years' tax credits. Partially offsetting this was a charge of $2.5 million ($1.6 million after tax or $0.04 per diluted share) in administrative expense for external costs associated with such 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. . Additionally, during the quarter, based on the most recent year end projections, the Company reduced its underlying effective tax rate for the nine months ended September September: see month. 30, 1999 to 34.5%, down from 35.0% utilized for the six months ended June June: see month. 30, 1999. This reduced the third quarter effective tax rate to 33.5% resulting in increased third quarter earnings of $0.01 per diluted share when compared with what would have been recorded at 34.5%. Excluding the above three 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 for the quarter were $0.64. Net earnings for the comparable period of 1998 were $27 million, or $0.59 per diluted share on sales of $358 million. 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 commented: "We achieved $0.64 per diluted share or 8% growth compared to the third quarter of 1998, excluding $0.15 per share in net tax benefits. Highlights of these earnings are higher unit selling volumes in our two 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 and improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . We increased Cytec's consolidated gross margin by 200 basis points to over 31% and our operating margin increased 120 basis points to 13.6%, excluding the increase in administrative expense for the outside fees for tax planning." Segment Results "Water and Industrial Process Chemicals sales increased 4% to $92 million and 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 increased 41% to $12 million. The increased sales were in paper, water treatment and mining chemicals. Selling volumes were up 7%, of which 2% is from the recent acquisitions of the Inspec and Nottingham Nottingham, city (1991 pop. 273,300) and district, county seat of Nottinghamshire, central England, on the Trent River. A center of rail and road transportation, the city's most important industries are the manufacture of lace, hosiery, cotton, and silk. industrial minerals product lines. Selling prices were down approximately 2% and unfavorable exchange rates decreased sales another 1%. Operating earnings are up as a result of the leverage from the higher sales, lower raw material prices and reduced operating costs operating costs npl → gastos mpl operacionales ." "Performance Products sales increased 5% to $108 million and operating earnings increased 5% to $12 million. Overall, selling volumes were up 7% of which 2% is due to the acquisition of the remaining 50% of our former Dyno-Cytec joint venture in late July July: see month. of last year. Selling prices for the segment declined 2% with decreases in the three businesses, although the decreases have recently moderated. Polymer additives, along with surfactants and specialty monomers, had strong sales volumes during the quarter. 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. sales volumes, excluding the acquisition, were down modestly as a result of lower sales in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and 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). .""Specialty Materials sales were $105 million, a decrease of 10%, although operating earnings were flat at $20 million. Approximately 8% 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 and certain other product lines while the acquisition of The 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 Materials & Technologies Corporation in the fourth quarter of last year added approximately 4% to sales. Excluding the effect of acquisitions and divestitures, selling volumes were down 4% as a result of reduced commercial aircraft build rates, partially offset by new product introductions, new applications and new qualifications for our products. Selling prices decreased 2% but this was largely offset by lower raw material costs. Operating earnings benefited from the rationalization rationalization, in psychology: see defense mechanism. of manufacturing consistent with reduced commercial aircraft build rates." Lilley Lilley is a surname, and may refer to:
propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. , the key raw material for acrylonitrile, increased at a faster rate, and as a result, acrylonitrile margins remained low. The selling prices and volumes of 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. 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. in both markets have been negatively impacted by new capacity. Due to poor economics, the 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. plant remained shut down for the quarter, and it is expected to remain down for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. For the segment overall, selling prices were down 9% and selling volumes declined 13%. Operationally, the Building Block facilities ran well during the quarter." Associated Companies associated company associate n → Partnerfirma f associated company n → società collegata Results Third quarter equity in earnings of associated companies declined $3 million. Lower selling prices as a result of increased industry capacity continues to affect results at 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. . CYRO Industries earnings were also down, primarily as a result of lower selling prices. Effective Tax Rate 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, "An important part of Cytec's performance is tax planning and strategy. Our efforts have enabled us to lower our effective tax rate again, to a normalized and, we believe, sustainable 34.5%. Our goal had been to achieve a 35% effective tax rate in 1999. Having surpassed our goal, we will continue our efforts to reduce this rate further. Additionally, we have lowered income tax expense for the period by a further $8 million due to the improved utilization of tax credits." Cash Flow Mr. Cronin continued, "Our continued strong cash flow has enabled us to continue our stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. program; this quarter we repurchased 631,000 shares at a cost of $14.5 million which enhanced our earnings per share. To date, we have repurchased $27.5 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. . Our opportunities for allocating capital include investing internally for growth, acquisitions and returning cash to our shareholders through stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. . Our strong cash flow gives us the capability to do all three while maintaining appropriate debt levels." Mr. Lilley then added, "The Company and Cytec people globally are really performing in a challenging time for the chemical industry. Our focus is to continue striving for top quartile Quartile A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations. Notes: Each quartile contains 25% of the total observations. performance in profitability and returns." Mr. Lilley concluded, "I expect Cytec's results to continue reflecting our commitment to performance -- through our strategy of focused growth. Our success in new products, global expansion, operational excellence, and strategic acquisitions are producing solid results. At a time of industry tumult, we are delivering excellent results, striving for top quartile performance -- and remain committed to delivering shareholder value." Nine Month Results Net earnings for the nine months ended September 30, 1999 were $91 million or $2.05 per diluted common share on net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $1,058 million. Net earnings were $93 million or $1.98 per diluted common share on net sales of $1,092 million for the comparable period of 1998. Company Profile Cytec Industries Inc. is a specialty chemicals and materials technology company with 1998 sales of $1.4 billion and diluted earnings per share of $2.68. Its growth strategies are based on developing technologically advanced customer solutions for global 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Act of 1995. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in Cytec's filings with the Securities and Exchange Commission. -0-
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1999 1998 1999 1998
----- ----- ----- -----
Net sales $ 344.1 $ 358.1 $ 1,058.4 $ 1,092.1
Manufacturing
cost of sales 236.4 253.1 733.3 762.2
Selling and
technical services 35.7 37.6 110.1 114.8
Research and
process development 10.7 9.4 30.5 31.7
Administrative and
general 14.4 11.3 39.0 36.0
Amortization of
acquisition
intangibles 2.7 2.4 8.0 6.7
------ ------ ------ ------
Earnings from
operations 44.2 44.3 137.5 140.7
Other income, net 3.9 2.9 6.8 9.3
Equity in earnings
(losses) of
associated companies (0.8) 2.1 3.2 13.3
Interest expense, net 6.5 6.5 20.1 16.2
------ ------ ------ ------
Earnings before
income taxes 40.8 42.8 127.4 147.1
Income tax provision 5.6 15.8 36.0 54.4
------ ------ ------ ------
Net earnings $ 35.2 $ 27.0 $ 91.4 $ 92.7
====== ====== ====== ======
Earnings per
common share
Basic $ 0.82 $ 0.61 $ 2.12 $ 2.06
Diluted $ 0.79 $ 0.59 $ 2.05 $ 1.98
Weighted average
shares outstanding
Basic 42,904,000 44,244,000 43,042,000 45,044,000
Diluted 44,533,000 45,828,000 44,671,000 46,916,000
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share and per share amounts)
September 30, December 31,
1999 1998
---- ----
ASSETS
Current assets
Cash and cash equivalents $ 14.1 $ 1.7
Accounts receivable, less
allowance for doubtful accounts
of $9.6 and $9.2 in 1999 and 1998,
respectively 244.8 241.3
Inventories 130.9 140.5
Deferred income taxes 65.3 72.9
Other current assets 25.0 21.2
---------- ----------
Total current assets 480.1 477.6
Equity in net assets of and advances
to associated companies 142.9 147.4
Plants, equipment and facilities,
at cost 1,374.1 1,363.0
Less: accumulated depreciation (714.6) (695.5)
---------- ----------
Net plant investment 659.5 667.5
Acquisition intangibles, net of
accumulated amortization 361.5 349.5
Deferred income taxes 57.6 62.6
Other assets 26.7 26.0
--------- ---------
Total assets $ 1,728.3 $ 1,730.6
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ - $ 10.3
Accounts payable 102.3 99.9
Accrued expenses 216.0 243.9
Income taxes payable 42.5 40.3
----------- -----------
Total current liabilities 360.8 394.4
Long-term debt 415.1 419.5
Other noncurrent liabilities 458.7 485.7
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 160.0 162.4
Retained earnings 547.6 456.2
Unearned compensation (2.3) (1.7)
Accumulated translation adjustments (10.6) (5.1)
Treasury stock, at cost,
5,908,245 shares in 1999, and
4,952,881 shares in 1998 (201.6) (181.4)
------------- -----------
Total stockholders' equity 493.7 431.0
------------- -----------
Total liabilities and stockholders'
equity $ 1,728.3 $ 1,730.6
============ ===========
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Nine Months Ended
September 30,
--------------------
1999 1998
---- ----
Cash flows provided by
(used for) operating
activities
Net earnings $ 91.4 $ 92.7
Noncash items included
in earnings:
Equity in undistributed
earnings of associated
companies 3.8 (9.3)
Depreciation 60.5 57.9
Amortization 9.5 6.6
Deferred income taxes 11.9 3.6
Gain on sale of assets (4.1) (2.5)
Other 0.3 (0.4)
Changes in operating assets
and liabilities
Accounts receivable (7.8) (23.2)
Inventories 10.2 11.8
Accounts payable 3.0 (14.4)
Accrued expenses (23.0) (8.4)
Income taxes payable 2.2 32.1
Other assets (5.2) (10.3)
Other liabilities (22.5) (22.5)
--------- ----------
Net cash flows provided
by operating activities 130.2 113.7
--------- ----------
Cash flows provided by (used for)
investing activities
Additions to plants,
equipment and facilities (54.4) (77.0)
Proceeds received on sale of assets 9.4 2.7
Acquisition of business (32.3) (64.7)
Change in other assets - 1.6
--------- ---------
Net cash flows used for
investing activities (77.3) (137.4)
--------- ---------
Cash flows provided by (used for)
financing activities
Proceeds from the exercise of
stock options and warrants 1.1 2.9
Purchase of treasury stock (27.5) (80.0)
Change in short term borrowings (10.3) -
Change in long term debt (4.4) 130.2
Debt issuance costs - (6.9)
Proceeds received on sale of
put options 1.0 1.0
-------- ---------
Net cash flows provided by (used for)
financing activities (40.1) 47.2
-------- ---------
Effect of exchange rate changes
on cash and cash equivalents (0.4) 0.2
-------- ---------
Increase in cash and cash equivalents 12.4 23.7
Cash and cash equivalents,
beginning of period 1.7 6.4
======== =========
Cash and cash equivalents,
end of period $ 14.1 $ 30.1
======== =========
CYTEC INDUSTRIES INC. AND SUBSIDIARIES
NET SALES AND EARNINGS FROM OPERATIONS BY BUSINESS SEGMENT
(Millions of dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------
1999 1998 1999 1998
--------------------------------------
Net sales
Water and Industrial
Process Chemicals $ 92.4 $ 89.2 $ 274.3 $ 259.8
Performance Products 108.1 102.9 327.5 300.6
Specialty Materials 105.3 116.6 340.0 377.0
Building Block Chemicals
Sales to external customers 38.3 49.4 116.6 154.5
Intersegment sales 8.9 9.2 29.5 30.1
----- ----- ------- -------
Net sales from segments 353.0 367.3 1,087.9 1,122.0
Other revenues - - - 0.2
Elimination of intersegment
revenue (8.9) (9.2) (29.5) (30.1)
----- ----- ------- -------
Total consolidated net sales $344.1 $ 358.1 $1,058.4 $1,092.1
===== ===== ======= =======
Earnings from operations % of % of % of % of
Sales Sales Sales Sales
-- -- -- --
Water and Industrial
Process Chemicals $ 12.2 13% $ 8.7 10% $ 34.0 12% $24.6 9%
Performance Products 12.4 11% 11.8 11% 39.4 12% 34.9 12%
Specialty Materials 20.2 19% 20.0 17% 64.5 19% 62.4 17%
Building Block Chemicals 2.6 6% 7.3 12% 7.7 5% 27.4 15%
Earnings from segments 47.4 13% 47.8 13% 145.6 13% 149.3 13%
Corporate and Unallocated (3.2) (3.5) (8.1) (8.6)
---- ---- ---- ----
Total consolidated earnings
from operations $ 44.2 13% $44.3 12% $137.5 13% $140.7 13%
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