Cytec Announces First Quarter 2011 Results

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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