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Cytec Announces First Quarter 2011 Results

Stocks in this article: CYT

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform 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.

Corporate Profile

Cytec’s vision is to deliver specialty chemicals and materials technologies beyond our customers’ imagination. Our focus on innovation, advanced technology and application expertise enables us to develop, manufacture and sell products that change the way our customers do business. Our pioneering products perform specific and important functions for our customers, enabling them to offer innovative solutions to the industries that they serve. Our products serve a diverse range of end markets including aerospace composites, structural adhesives, automotive and industrial coatings, electronics, inks, mining and plastics.

CYTEC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share amounts)

(Unaudited)

  Three Months Ended
March 31
2011     2010
Net sales $ 766.0     $ 646.5
Manufacturing cost of sales 585.6 488.7
Selling and technical services 54.7 48.2
Research and process development 19.2 17.6
Administrative and general 32.3 28.8
Amortization of acquisition intangibles 9.5 9.5
Gain on sale of assets   3.3         -  
Earnings from operations 68.0 53.7
Other expense, net 4.0 0.3
Net loss on early extinguishment of debt 0.1 0.7
Equity in earnings of associated companies 0.6 0.1
Interest expense, net   9.2         8.2  
Earnings from continuing operations before income taxes 55.3 44.6
Income tax provision   15.0         22.6  
Earnings from continuing operations   40.3         22.0  
Earnings from operations of discontinued business, net of tax (1) 6.8 3.8
Gain on sale of discontinued operations, net of tax   36.8         -  
Earnings from discontinued operations, net of tax   43.6         3.8  
Net earnings 83.9 25.8
Less: Net earnings attributable to noncontrolling interests   (0.7 )       (1.0 )
Net earnings attributable to Cytec Industries Inc. $ 83.2       $ 24.8  
 
Earnings per share attributable to Cytec Industries Inc.
Basic earnings per common share
Continuing operations $ 0.80 $ 0.43
Discontinued operations   0.88         0.08  
$ 1.68       $ 0.51  
 
Diluted earnings per common share
Continuing operations $ 0.79 $ 0.42
Discontinued operations   0.87         0.08  
$ 1.66       $ 0.50  
 
Dividends per common share $ 0.125       $ 0.0125  
 
Shares used in calculating earnings per common share (in 000s)
Basic 49,622 49,078
Diluted 50,260 49,510

(1)

 

We committed to a plan to sell the assets and liabilities of our Building Blocks segment and the business was subsequently sold in February 2011. Accordingly, the results of operations of the Building Blocks business are reported as discontinued operations. All previously reported financial information has been revised to conform to the current presentation.

 
 

CYTEC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED NET SALES AND EARNINGS FROM OPERATIONS BY BUSINESS SEGMENT

(Millions of Dollars)

(unaudited)

  Three months ended
March 31
    2011     2010
Net Sales:    
Coating Resins $ 403.6 $ 341.4
Additive Technologies
Sales to external customers 67.4 62.3
Intersegment sales 0.3 0.3
In Process Separation 78.4 65.1
Engineered Materials     216.6         177.7  
Net sales from segments 766.3 646.8
Elimination of intersegment revenue     (0.3 )       (0.3 )
Total consolidated net sales   $ 766.0       $ 646.5  
 
    Three months ended

March 31,

    % of       % of
      2011     Sales   2010     Sales
Earnings from operations:
Coating Resins $ 18.8 5 % $ 16.8 5 %
Additive Technologies 8.0 12 % 8.4 13 %
In Process Separation 16.4 21 % 14.9 23 %
Engineered Materials   26.7   12 %   21.0   12 %
Earnings from segments 69.9 9 % 61.1 9 %
Corporate and Unallocated, net (1)   (1.9 )   (7.4 )
Total earnings from operations     $ 68.0       9 %   $ 53.7       8 %

(1) 2011 includes a net favorable adjustment of $0.7 related primarily to previously recorded restructuring liabilities and includes a $3.3 gain related to a sale of a former manufacturing site. 2010 includes a net favorable adjustment of $0.4 related primarily to previously recorded restructuring liabilities. Corporate and unallocated also includes costs previously allocated to the operations of our discontinued Building Block Chemicals Segment of $1.0 and $1.4 for three months ended March 31, 2011 and 2010, respectively.

 

CYTEC INDUSTRIES INC. AND SUBSIDIARIES

PERCENT CHANGE IN SALES ANALYSIS BY SEGMENT VERSUS PRIOR YEAR PERIOD

 
  Three Months Ended March 31, 2011
% Variance Due To
Segment

Volume

   

Price

   

FX

Coating Resins 5% 12% 1%
Additive Technologies 3% 4% 1%
In-Process Separation 16% 3% 1%
Engineered Materials 21% 1% 0%
Total Cytec 9% 8% 1%
 

CYTEC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

(Unaudited)

    March 31,     December 31,
2011 2010
Assets
Current assets
Cash and cash equivalents $ 522.0 $ 383.3
Trade accounts receivable, less allowance for doubtful accounts of $4.4 and $4.2 in 2011 and 2010, respectively 447.5 370.6
Other accounts receivable 56.0 51.4
Inventories 406.4 350.0
Deferred income taxes 44.5 40.6
Other current assets 27.0 22.4
Current assets held for sale       -         93.1  
Total current assets       1,503.4         1,311.4  
Investment in associated companies 21.5 19.7
Plants, equipment and facilities, at cost 1,983.0 1,937.5
Less: accumulated depreciation       (859.1 )       (811.3 )
Net plant investment       1,123.9         1,126.2  
Acquisition intangibles, net of accumulated amortization of $263.7 and $245.9 in 2011 and 2010, respectively 350.1 347.0
Goodwill 700.3 685.7
Deferred income taxes 23.5 24.1
Other assets 103.8 88.5
Non-current assets held for sale       -         71.3  
Total assets     $ 3,826.5       $ 3,673.9  
 
Liabilities
Current liabilities
Accounts payable $ 380.5 $ 263.6
Short-term borrowings 6.3 6.1
Accrued expenses 191.8 223.2
Income taxes payable 55.8 19.7
Deferred income taxes 2.7 3.1
Current liabilities held for sale       -         63.9  
Total current liabilities       637.1         579.6  
Long-term debt 639.9 641.5
Pension and other postretirement benefit liabilities 341.6 364.2
Other noncurrent liabilities 289.7 272.8
Deferred income taxes 69.1 71.3
Non-current liabilities held for sale - 7.6
Stockholders' equity

Preferred stock, 20,000,000 shares authorized; none issued and outstanding

- -
Common stock, $.01 par value per share, 150,000,000 shares authorized; issued 49,575,035 in 2011 and 49,445,350 in 2010 0.5 0.5
Additional paid-in capital 459.0 451.5
Retained earnings 1,370.0 1,293.0
Accumulated other comprehensive gain 39.2 (14.4 )
Treasury stock, at cost, 440,026 shares in 2011 and 767 shares in 2010       (23.8 )       -  
Total Cytec Industries Inc. stockholders’ equity       1,844.9         1,730.6  
Noncontrolling interests 4.2 6.3
Total equity       1,849.1         1,736.9  
Total liabilities and stockholders' equity     $ 3,826.5       $ 3,673.9  
 

CYTEC INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Dollars in millions)

(Unaudited)

Three months ended March 31,     2011     2010
Cash flows provided by (used in) operating activities        
Net earnings $ 83.9 $ 25.8
Earnings from discontinued operations   (43.6 )       (3.8 )
Earnings from continuing operations   40.3         22.0  
Noncash items included in earnings from continuing operations:
Depreciation 23.2 21.9
Amortization 11.3 11.3
Share-based compensation 3.9 2.9
Deferred income taxes 2.8 13.3
Gain on sale of assets (3.3 ) (2.3 )
Loss on early extinguishment of debt 0.1 0.7
Unrealized gain on derivative instruments (4.2 ) -
Other (0.6 ) (0.1 )
Changes in operating assets and liabilities (excluding effects of divestiture):
Trade accounts receivable (59.6 ) (51.0 )
Other receivables (3.7 ) 8.3
Inventories (49.4 ) (31.1 )
Other assets (2.3 ) (4.8 )
Accounts payable 114.6 76.1
Accrued expenses (39.1 ) (18.5 )
Income taxes payable 4.5 (1.4 )
Other liabilities   (17.0 )       (15.1 )
Net cash provided by operating activities of continuing operations 21.5 32.2
Net cash provided by operating activities of discontinued operations   5.0         5.9  
Net cash provided by operating activities   26.5         38.1  
 
Cash flows provided by (used in) investing activities:
Additions to plants, equipment and facilities (26.4 ) (27.9 )
Net proceeds received on sale of assets   3.4         1.7  
Net cash used in investing activities of continuing operations (23.0 ) (26.2 )
Net cash provided by (used in) investing activities of discontinued operations   156.5         (1.1 )
Net cash provided by (used in) investing activities   133.5         (27.3 )
 
Cash flows provided by (used in) financing activities:
Payments on long-term debt (1.8 ) (15.2 )
Change in short-term borrowings 0.3 1.2
Cash dividends (9.0 ) (1.9 )
Proceeds from the exercise of stock options 3.3 6.7
Purchase of treasury stock (23.8 ) -
Excess tax benefits from share-based payment arrangements   0.4         0.8  
Net cash used in financing activities   (30.6 )       (8.4 )
 
Effect of currency rate changes on cash and cash equivalents   9.3         (2.2 )
Increase in cash and cash equivalents   138.7         0.2  
 
Cash and cash equivalents, beginning of period   383.3         261.7  
Cash and cash equivalents, end of period $ 522.0       $ 261.9  
 

Reconciliation of GAAP and Non-GAAP Measures Amounts in millions except per share amounts

Management believes that net earnings, basic and diluted earnings per share before special items, which are non-GAAP measurements, are meaningful to investors because they provide a view of the Company with respect to ongoing operating results. Special items represent significant charges or credits that are important to an understanding of the Company's overall operating results in the periods presented. Such non-GAAP measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.

Three Months Ended March 31, 2011        

Net

Earnings

EPS

GAAP earnings from continuing operations $ 40.3 $ 0.80
Less: Net earnings attributable to noncontrolling interests   (0.7 )   (0.01 )
Net earnings from continuing operations attributable to Cytec Industries Inc. 39.6 0.79
- Net restructuring adjustments (0.5 ) (0.01 )
- Gain on sale of land (2.0 ) (0.04 )
- Environmental liability adjustment   2.0     0.04  
Non-GAAP net earnings from continuing operations attributable to Cytec Industries Inc. $ 39.1   $ 0.78  
 
 
Three Months Ended March 31, 2010

Net

Earnings

EPS

GAAP earnings from continuing operations $ 22.0 $ 0.44
Less: Net earnings attributable to noncontrolling interests   (1.0 )   (0.02 )
Net earnings from continuing operations attributable to Cytec Industries Inc. 21.0 0.42
- Net restructuring adjustments (0.4 ) (0.01 )
- Effect of Health Care Legislation on tax   8.3     0.17  
Non-GAAP net earnings from continuing operations attributable to Cytec Industries Inc. $ 28.9   $ 0.58  




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