UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Initial Period Ended December 31, 2007 (April 1, 2007 through
December 31, 2007)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-12372
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Cytec Employees' Savings Plan.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Cytec Industries Inc.
Five Garret Mountain Plaza
West Paterson, New Jersey 07424
This Annual Report, including exhibits, contains 17 pages, numbered
sequentially, including this cover page. The exhibit index is on page 16.
Item 4. Required Information
Page
----
Report of Independent Registered Public Accounting Firm 3
Financial Statements
Statement of Net Assets Available for Benefits
as of December 31, 2007 4
Statement of Changes in Net Assets Available for Benefits
for the Initial Period Ended December 31, 2007 (April 1, 2007
through December 31, 2007) 5
Notes to Financial Statements 6 - 14
2
Report of Independent Registered Public Accounting Firm
To Members and Plan Administrator of
Cytec Employees' Savings Plan
We have audited the accompanying statement of net assets available for benefits
of Cytec Employees' Savings Plan (the "Plan") as of December 31, 2007, and the
related statement of changes in net assets available for benefits for the
initial period then ended (April 1, 2007 through December 31, 2007). These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Cytec Employees'
Savings Plan as of December 31, 2007, and the changes in net assets available
for benefits for the initial period then ended (April 1, 2007 through December
31, 2007), in conformity with accounting principles generally accepted in the
United States of America.
AMPER, POLITZINER & MATTIA, P.C.
June 12, 2008
Bridgewater, New Jersey
3
CYTEC EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2007
Plan's investment in Master Trust, at fair value $ 253,883,000
Loans to members 3,218,904
Company contribution receivable 5,314,829
---------------------
Net assets available for benefits at fair value 262,416,733
---------------------
Adjustment from fair value to contract value for interest in Master Trust
related to fully benefit-responsive investment contract (339,100)
---------------------
Total net assets available for benefits $ 262,077,633
=====================
The accompanying Notes are an integral part of these statements.
4
CYTEC EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the Initial Period Ended December 31, 2007
(April 1, 2007 through December 31, 2007)
Additions:
Members contributions $ 210,605
Company contributions 5,566,505
Rollover contributions from members 169,079
Interest on loans to members 18,471
Plan's interest in Master Trust investment loss (3,403)
---------------------
Total additions 5,961,257
---------------------
Net increase prior to transfer 5,961,257
Assets transferred in from Cytec Employees' Savings and Profit Sharing Plan 256,116,376
---------------------
Net increase 262,077,633
Net assets available for benefits:
Beginning of year -
---------------------
End of year $ 262,077,633
=====================
The accompanying Notes are an integral part of these statements.
5
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentation and Accounting Estimates
----------------------------------------------
The accompanying financial statements have been prepared on the accrual
basis in conformity with accounting principles generally accepted in the
United States of America ("GAAP") as applied to defined contribution plans
and in accordance with the terms of the trust agreement. GAAP requires
management to make significant estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities as of the date of the financial statements and the
reported amounts of additions and deductions during the reporting periods.
Actual results could materially differ from those estimates.
(b) New Pronouncements
------------------
As described in Financial Accounting Standards Board Staff Position, FSP
AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment
Contracts Held By certain Investment Companies Subject to the AICPA
Investment Company Guide and Defined Contribution Health and Welfare and
Pension Plans (the FSP), investment contracts held by a defined
contribution plan are required to be reported at fair value. However,
contract value is the relevant measurement attribute for that portion of
the net assets available for benefits of a defined contribution plan
attributable to fully benefit-responsive investment contracts because
contract value is the amount participants would receive if they were to
initiate permitted transactions under the terms of the Plan. The Plan
invests in investment contracts through the Master Trust. As required by
the FSP, the Statement of Net Assets Available for Benefits presents the
fair value of the investment contract as well as the adjustment of the
fully benefit-responsive investment contract from fair value to contract
value. The Statement of Changes in Net Assets Available for Benefits is
prepared on a contract value basis.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 establishes
a single authoritative definition of fair value, sets out a framework for
measuring fair value, and requires additional disclosures about fair value
measurements. SFAS 157 applies only to fair value measurements that are
already required or permitted by other accounting standards (except for
measurements of share-based payments) and is intended to increase the
consistency of those measurements. Accordingly, SFAS 157 does not require
any new fair value measurements. SFAS 157 is effective January 1, 2008 for
the Plan. The adoption of the statement is expected to have no material
impact on the financial statements of the Cytec Employees' Savings Plan.
6
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(c) Investment Valuation and Income Recognition
-------------------------------------------
As discussed in footnote ("Note") 2(a), the Master Trust Agreement for
Cytec Industries Inc. Savings Plans (the "Master Trust") was established
for the Cytec Employees' Savings and Profit Sharing Plan (the "Existing
Savings Plan") and the Cytec Employees' Savings Plan (the "Plan") on April
2, 2007. Investments of the Plan consist of the Plan's interest in the
Master Trust's investments.
Quoted market prices are used to value investments in the Master Trust.
Investments, with the exception of investments in the Vanguard Retirement
Savings Trust as discussed in Note 7, are stated at fair value. The fair
value of the Plan's interest in the Master Trust is based on the underlying
fair values of the specific investments held by the Master Trust and
allocated using the Plan's interest in the Master Trust plus actual
contributions and allocated investment income less actual distributions.
The fair value of cash equivalents approximates cost.
The Cytec Stock Fund is valued at its year-end unit closing price. The
year-end unit closing price is comprised of the year-end market price of
shares of Cytec common stock owned by the Cytec Stock Fund, plus a small
amount invested in a money market fund for purposes of liquidity (the money
market fund represents 0.56% of total value of the Cytec Stock Fund as of
December 31, 2007). Loans are valued at cost which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis.
Related realized gains and losses on securities transactions are calculated
based upon the average cost of securities sold. Interest income is accrued
when earned. Dividend income is recorded on the ex-dividend date. Capital
gain distributions are included in dividend income.
(d) Payment of Benefits
-------------------
Benefit payments are recorded when paid.
(2) Plan Description
----------------
(a) Organization
------------
The Plan is a defined contribution plan and was established effective April
1, 2007 (the "Effective Date"). All qualifying U.S. salaried and
nonbargaining employees hired on or after the Effective Date are eligible
to participate in the Plan.
7
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(a) Organization (cont'd)
---------------------
Cytec Industries Inc. ("Cytec" or "the Company") froze certain of its
existing U.S. pension plans effective December 31, 2007 (the "Frozen
Date"). In conjunction with this, all salaried and nonbargaining unit
employees who participated in the Existing Savings Plan were entered into
the Plan on the Frozen Date, on which date the account balances of these
participants were transferred to the Plan from the Existing Savings Plan.
The following is some general information regarding the Plan:
The purpose of the Plan is to provide eligible employees with the
opportunity to accumulate personal savings and share in the growth and
ownership of Cytec through the Company's contribution of Cytec common
stock. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
Pursuant to the above changes, on April 2, 2007, the Company established
the Master Trust in the custody of Vanguard Fiduciary Trust Company (the
"Trustee"). The Master Trust consists of the assets of Cytec Employees'
Savings and Profit Sharing Plan and Cytec Employees' Savings Plan.
For a more complete description of the Plan provisions, refer to the Plan
document, which was filed on June 13, 2008, with the Securities and
Exchange Commission as Exhibit 4.3 to Registration Statement on Form S-8.
(b) Members' Contributions
----------------------
Participating employees ("Members") may contribute to the Plan after the
first of the month following their one month anniversary (as defined in the
Plan). Contributions are made through payroll deductions (subject to IRS
limitations) which may range from 1% to 50% of such Member's Earnings (as
defined), on a before-tax basis, an after-tax basis or a combination
thereof. Members who are at least age 50 or older during a Plan year may
make an additional "catch-up contribution" equal to a specified dollar
amount on a before tax basis. Pursuant to an automatic enrollment
provision, a Member's earnings are automatically reduced and contributed to
the plan as of the enrollment date by at least 3% per year (subsequently
increasing annually by 1% per year in subsequent Plan Years until reaching
6%).
Members may elect to make before-tax contributions which defers federal
income taxes (and, generally, local and/or state income taxes) on their
contributions (subject to IRS limitations) until the withdrawal or
distribution of those contributions from the Plan.
8
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(b) Members' Contributions (cont'd)
-------------------------------
The Plan accepts eligible rollover contributions from Members. If a Member
has been a participant in a plan subject to the provisions of Section 403
(b), 457 or 401(a) of the Internal Revenue Code of 1986, as amended, such
Member may, within sixty days of receiving a distribution from that
previous employer's plan, transfer such Member's eligible account balance
into the Plan without tax implications.
(c) Company Contributions
---------------------
The Plan provides for a Company non-discretionary profit sharing
contribution of 3% of a Member's Earnings. Also, matching contributions are
made by the Company equal to 100% of such Member's contributions up to the
first 6% of the Member's Earnings. To be eligible for a Company matching
contribution, a Member must have completed one month of service, as defined
in the Plan.
The Plan will also provide for a ten year transition benefit ranging from
1.0% to 10.0% of an employee's annual pay per year for all employees with
more than 10 years of service at the Frozen Date. The transition benefit to
be contributed by the Company in future years is intended to compensate
long service employees for a limited period for the loss of the accrual of
future benefits under the Company's defined benefit pension plans.
All Company matching contributions for Members are invested in the Cytec
Stock Fund, which invests in the common stock of Cytec Industries Inc.
Pursuant to the Plan changes as discussed in Note 2(a), $5,314,829 of the
2007 profit sharing contribution earned through the Existing Savings Plan
was received by the Plan in 2008 on behalf of the participants whose
account balances were transferred to the Plan from the Existing Savings
Plan on December 31, 2007, and thus shown by the Plan as a receivable at
December 31, 2007.
The Pension Protection Act of 2006 mandates that employers provide
retirement plan participants with greater flexibility for investing in
company stock, for selling it and for investing the proceeds from the sale
of company stock in other assets. The Plan allows participants with three
or more years of service to immediately diversify the portion of their
accounts that are invested in company stock obtained as a result of
employer matching contribution.
9
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(d) Vesting
-------
All units representing employee contributions, and earnings or losses
thereon are fully vested at all times. All Company match and profit sharing
contributions become 100% vested after two years of service. Forfeitures
are used to reduce company matching contributions.
(e) Withdrawals
-----------
During employment, a Member may make withdrawals in cash (or common stock
of the Company in the case of withdrawals from the Cytec Stock Fund) of
amounts applicable to employee and employer contributions and earnings or
losses thereon, subject to certain restrictions.
A Member can make hardship withdrawals of employee before-tax contributions
which will preclude the Member from making additional employee before-tax
contributions to the Plan for a six-month period. Employee before-tax
contributions and matching contributions can be withdrawn after attainment
of age 59 1/2.
(f) Benefit Payments
----------------
A Member's account balance under the Plan may be distributed in any one of
two ways: lump-sum distribution, or in monthly installments over a period
of 60, 120, 180, 240, 300, or 360 months, as elected (subject to limits
imposed by the Internal Revenue Code).
Minimum distributions are required to begin by April 1 of the calendar year
following the later of:
o The calendar year in which the Member attains 70 1/2 years of age; or
o The calendar year in which the Member terminates employment from the
Company.
(g) Loan Provision
--------------
A Member may borrow up to fifty percent of the value of such Member's
before-tax and after-tax account balance, subject to a minimum of $1,000
and a maximum of $50,000 reduced by the highest loan balance outstanding
during the prior twelve months. Loans for the purchase of a "principal
residence" must be repaid in one to fifteen years, at the Member's option.
Loans for all other purposes must be repaid in one to five years, at the
Member's option. These loans are made at the prevailing market interest
rates equal to prime rate plus one percent with such rate fixed for the
term of the loan at the time the loan is approved. In 2007, the applicable
loan rates ranged from 4.75% to 10.50%. No more than one loan from the Plan
to a Member shall be permitted at any time. All principal and interest
payments made by the Member are credited back to the Member's account.
10
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(3) Fund Management
---------------
Under the terms of a trust agreement, the Plan assets are held and managed
by the Trustee, which has full discretionary power over investments in the
Funds subject to the limitations thereon imposed by the investment
objectives of the various funds and the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
The Plan Administrator, who is an officer of the Company and the Named
Fiduciary, has full authority to control and manage the operation and
administration of the Plan.
(4) Party-in-Interest Transactions
------------------------------
The Plan invests in mutual funds managed by an affiliate of Vanguard
Fiduciary Trust Company. Vanguard Fiduciary Trust Company is a trustee, and
thus these transactions qualify as party-in-interest transactions.
(5) Interest in Master Trust
------------------------
Plan investments are in the Master Trust, which was established for the
investment of assets of the Existing Savings Plan and the Plan. Each
participating savings plan has an undivided interest in the Master Trust.
The assets of the Master Trust are held by the Trustee. At December 31,
2007, the Plan's interest in the net assets of the Master Trust was
approximately 49.9%. Investment income or loss related to the Master Trust
is allocated to each plan based upon the individual plan's interest in the
Master Trust. Below are the fair values of investments for the Master Trust
and investment income and related activity of the Master Trust:
For the Initial Period Ended December 31, 2007
(April 1, 2007 through December 31, 2007)
------------------------------------------------------------------
Net Realized
and Total
Unrealized Interest and Investment
Investments Appreciation Dividends Income
--------------- --------------- --------------- ---------------
Cytec Stock Fund, at fair value $ 133,909,099 $ 12,741,661 $ 13,338 $ 12,754,999
Common/Collective Trust, at fair value 127,773,936 10,665 4,373,416 4,384,081
Mutual Funds, at fair value 247,154,217 3,594,434 10,616,869 14,211,303
--------------- --------------- --------------- ---------------
Total Master Trust 508,837,252 $ 16,346,760 $ 15,003,623 $ 31,350,383
=============== =============== ===============
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts (965,088)
---------------
Total Master Trust, net $ 507,872,164
===============
11
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(6) Non-Participant Directed Funds
------------------------------
All funds under the Master Trust are Member directed with the exception of
Cytec matching contributions which are solely invested in, and remain in,
the Cytec Stock Fund; provided, however, those Members who are at least age
55 may elect an investment change with regards to their ESOP account (which
includes all matching contributions), subject to certain restrictions (see
Note 2(c)).
Additionally, 2007 profit sharing contributions are invested in the
Vanguard Retirement Savings Trust in the event that a Member has not
specified into which fund the contribution should be directed.
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows for the initial period ended December 31, 2007 (April 1, 2007
through December 31, 2007):
Beginning balance $ -
Changes in net assets available for benefits:
Contributions 139,741
Net depreciation on current year contributions (4,537)
Transfer from Cytec Employees' Savings and
Profit Sharing Plan 41,185,744
-----------------
Ending balance $ 41,320,948
=================
(7) Investments
-----------
The Master Trust invests in the Vanguard Retirement Savings Trust (the
"VRST"). The VRST is intended to provide fixed income with minimal risk.
The VRST invests solely in the Vanguard Retirement Savings Master Trust,
which invests primarily in a pool of investment contracts issued by
insurance companies and commercial banks, and in contracts backed by high
quality bonds, bond trusts and bond mutual funds. Investment in the VRST
Master Trust is valued at the unit value of the VRST. The investment is a
fully benefit-responsive investment, and therefore valued at fair value
with an adjustment to contract value as required by the new disclosure
guideline (refer to the previous New Pronouncement section). Contract value
represents contributions made plus interest accrued at the respective
contract rate, less withdrawals. The underlying contracts are
nontransferable, but provide for benefit responsive withdrawals.
The Plan's proportional share of investments, at contract value, in the
VRST at December 31, 2007 was $44,554,026. The average yield was 4.54% for
the year.
12
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(7) Investments (cont'd)
--------------------
Events that limit the ability of the VRST to transact at contract value
with the issuer include premature termination of the contracts by the VRST,
plant closings, layoffs, plan termination, bankruptcy, mergers and early
retirement incentives. The Company does not believe that the occurrence of
any such event which would limit the Plan's ability to transact at contract
value with participants is probable.
(8) Plan Expenses
-------------
Administrative expenses of the Plan are currently paid by the Company.
However, the Company has the right to charge future expenses to the Trust.
Investment advisory fees for portfolio management of Vanguard funds are
charged to the Master Trust and subsequently allocated to the Plan.
Investment expenses related to the investment contracts in the Vanguard
Retirement Savings Trust and Interest Income Fund are deducted from the
assets in the fund.
(9) Plan Termination
----------------
The Plan has no termination date and it is the Company's current intention
to continue the Plan indefinitely. However, the Company may terminate,
amend, modify or suspend the Plan at any time.
(10) Tax Status of the Plan
----------------------
The Company is in the process of obtaining a determination of the tax
exemption status for the Plan from the Internal Revenue Service. The
Company believes the Plan and its underlying Trust qualify under the
provisions of Section 401(a) of the Internal Revenue Code and therefore,
are exempt from the federal income taxes under provisions of Section 501(a)
of the Internal Revenue Code.
(11) Risks and Uncertainties
-----------------------
The Plan provides for investments in various investment securities, which
in general, investment securities are exposed to various risks, such as
interest rate, credit, and overall market volatility risks. Due to the
level of risk associated with certain investment securities, it is
reasonably possible that changes in the value of investment securities will
occur in the near term and that such changes could materially affect the
amounts reported in the statements of net assets available for benefits and
participant account balances.
13
CYTEC EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(Continued)
(12) Mutual Fund Fees
----------------
Underlying investments in mutual funds are subject to sales charges in the
form of front-end loads, back-end loads or 12b-1 fees, which are allowable
under Section 12b-1 of the Investment Company Act of 1940 and which may be
deducted annually to pay marketing and distribution costs of mutual funds.
These fees are deducted prior to the allocation of the Plan's investment
earnings activity and thus not separately identifiable as an expense.
(13) Plan Asset Transfers
--------------------
In accordance with the plan changes as discussed in Note 2(a), the Plan
received transfers of eligible participant accounts in the amount of
$256,116,376 from the Existing Savings Plan on December 31, 2007. As
discussed in Note 2(c), a 2007 profit sharing contribution of $5,314,829
was accrued, representing the profit sharing contributions earned under the
Existing Savings Plan by the participants whose accounts were transferred
to the Plan from the Existing Savings Plan on December 31, 2007.
14
Signature
---------
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cytec Employees' Savings Plan
By: /s/ Marilyn R. Charles
----------------------
Marilyn R. Charles
Plan Administrator
June 13, 2008
15
EXHIBIT INDEX
-------------
23.1 Consent of Amper, Politziner & Mattia, P.C.
16