The new accounting method, referred to as mark-to-market (MTM), was adopted in the second quarter of 2013, and will be retrospectively applied to the Company's financial results for all periods. See the adjusted statements of income on pages 4, 6-10, and 13-17 in the accompanying Schedules providing for the effect of the accounting change on the statements of income for the first quarter of 2013, and for the full year and each quarter of 2012 and 2011, respectively.Under the newly adopted method of accounting for actuarial gains and losses for its pension and OPEB plans, the Company expects its 2013 pension and OPEB costs to be lower than previously anticipated by approximately $30 million, pre-tax, excluding any potential MTM adjustment.David Drillock, Vice President and Chief Financial Officer said, "With the excellent funding status of our global pension plans and our successful Liability Driven Investment strategy, we believe this accounting change is more appropriate and will provide greater transparency that will allow investors to more clearly evaluate the Company's operating performance by recognizing actuarial gains and losses in its operating results in the year in which the gains and losses occur, rather than amortizing them over future periods. This accounting change has no impact on benefits received by participants of the pension and OPEB plans. Additionally, there is no impact on pension and OPEB plan funding or Cytec's cash flow."Historically, Cytec has recognized pension and OPEB actuarial gains and losses annually in its Consolidated Balance Sheets as Accumulated Other Comprehensive Income (Loss) as a component of Stockholders' Equity, and then amortized these gains and losses each quarter in its Statements of Income. The expected return on assets component of Cytec's pension expense had been calculated using a five-year smoothing of asset gains and losses. In addition, the gain or loss component of pension and OPEB expense had historically been based on amortization of actuarial gains and losses that exceed 10 percent of the greater of plan assets or projected benefit obligations over the average future service period of active employees.Under the new method of accounting, Cytec's pension and OPEB costs consist of two elements: 1) ongoing costs recognized quarterly, which are comprised of service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits; and 2) MTM gains and losses recognized annually, in the fourth quarter of each year, resulting from changes in actuarial assumptions, such as discount rates, and the differences between actual and expected returns on plan assets. Any interim remeasurements triggered by a curtailment, settlement, or significant plan changes will be recognized as MTM adjustments in the quarter in which such remeasurement event occurs. MTM adjustments will be recognized as "special items" and included in the reconciliation of GAAP to Non-GAAP reported earnings as the company believes this presentation provides investors with a view of operations consistent with managements internal reporting.As a result of the retrospective application of this change, Cytec's diluted earnings per share from continuing operations for the quarter ended March 31, 2013 changed from $0.17 to $0.19. Excluding the impact of MTM adjustments and other special items, net, diluted earnings per share from continuing operations for the first quarter of 2013 would have increased from $0.75 to $0.85. For the year ended December 31, 2012, Cytec's diluted earnings per share from continuingMedia Contacts
Jodi Allen
Investor Relations
Tel: 1.973.357.3283
jodi.allen@cytec.com
Tara Tepp
In Process Separation Marketing Communications
Tel: 1.973.357.3347
tara.tepp@cytec.com
Katherine Vaiente
Global Marketing Communications Manager
Tel: 1.480.730.2310
Katherine.Vaiente@cytec.com
Claire Michel
Industrial Materials Marketing Communications
Tel: 44.1773.766200
claire.michel@cytec.com
Katherine Vaiente
Global Marketing Communications Manager
Tel: 1.480.730.2310
Katherine.Vaiente@cytec.com
