-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IPxwUmn1Bm8JrXwcvXV+2hyNynaIaI6nnQrO2F5ibYbvgI2xdE80uuiizFKZIZjF ZmIchVuMWKLvZ3FKzu753A== 0000950157-05-000595.txt : 20050819 0000950157-05-000595.hdr.sgml : 20050819 20050818192941 ACCESSION NUMBER: 0000950157-05-000595 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050818 FILED AS OF DATE: 20050819 DATE AS OF CHANGE: 20050818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIBA SPECIALTY CHEMICALS HOLDING INC /FI/ CENTRAL INDEX KEY: 0001035497 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-56040 FILM NUMBER: 051036852 BUSINESS ADDRESS: STREET 1: KLYBECKSTRASSE 141 CITY: CH 4002 BASEL BUSINESS PHONE: 4161696341 MAIL ADDRESS: STREET 1: KLYBECKSTRASSE 141 CITY: CH 4002 BASEL 6-K 1 form6k.htm CURRENT REPORT OF FOREIGN ISSUER Current Report of Foreign Issuer
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
Form 6-K
 
Report of Foreign Issuer
 
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 
For the month of August, 2005
 
CIBA SPECIALTY CHEMICALS HOLDING INC.
 
(Exact name of Registrant as specified in its charter)
 
Klybeckstrasse 141
4002 Basel
Switzerland
 
(Address of principal executive offices)
 
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F   x  
 
Form 40-F     
 

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes     
 
No   x  
 

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b))



CIBA SPECIALTY CHEMICALS HOLDING INC.
 
On August 18, 2005, Ciba Specialty Chemicals Holding Inc., a stock corporation, (the "Company") issued a News Release regarding its half year (or first six months) results of 2005 and a News Release regarding its appointment of Brendan Cummins to the newly-created position of Chief Operating Officer of the Company. A copy of the earnings News Release is attached hereto as Exhibit 99.1 and a copy of the Chief Operating Officer News Release is attached hereto as Exhibit 99.2, both of which are incorporated by reference herein.
 

2


EXHIBIT INDEX

Exhibit
 
Description
 
99.1
 
News Release: Half Year Results 2005, dated August 18, 2005
99.2
 
News Release: Ciba Specialty Chemicals Appoints Chief Operating Officer, dated August 18, 2005


3


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 

 
Ciba Specialty Chemicals Holding Inc. 
(Registrant) 
 
 
     
     
Date August 18, 2005
By /s/ Oliver Strub
/s/ Max Dettwiler
 
Oliver Strub
Max Dettwiler
 
Head Corporate Law
Head, Taxes, Corporate Law & Insurance
     

4
 

 

 

EX-99.1 2 ex99-1.htm NEWS RELEASE News Release
Exhibit 99.1
 
 
Ciba Specialty Chemicals Inc.
Switzerland
Ciba Spezialitätenchemie AG
Schweiz
Ciba Spécialités Chimiques SA
Suisse
CIBA Logo

Page 1 of 10
August 18, 2005
Basel, Switzerland
 
News Release
 
Ciba Specialty Chemicals Half Year Results 2005
 
Strategic Repositioning of Textile Effects Business
 
·  
Sales up 9% in local currencies, 7% in Swiss francs
 
·  
Further increases in sales prices, with raw material costs stabilizing
 
·  
Project Shape accelerated, savings now coming through
 
·  
Strategic repositioning of Textile Effects business
 
·  
Ciba Specialty Chemicals appoints Chief Operating Officer
 
·  
Mixed business conditions reflected in outlook
 
Financial highlights (in millions of Swiss francs, except per share data and percentages)

 
First half year to first half year comparison (unaudited)
 
 
Excluding restructuring
Including restructuring
       
Change in %
 
Six months ended June 30,
2005
2004
 
CHF
Local
curr.(a) 
2005
2004
Net sales
 
3 649
 
3 405
 
+7
+9
   
Gross profit
 
1 062
 
1 114
 
-5
-3
   
Operating income
 
272
 
330
 
-18
-14
222
330
Net income
 
182
 
201
 
-10
 
146
201
Earnings per share, basic and diluted
 
2.77
 
3.03
 
-9
 
2.22
3.03
Adjusted EBITDA(1)
 
480
 
513
 
-6
     
Adjusted EBITDA(1) margin
 
13.2
%
15.1
%
       
Free cash flow(2)
 
(178
)
10
     
(200)
10
 
(1)   Adjusted EBITDA is calculated as operating income plus depreciation and amortization. In financial statements published prior to June 30, 2005, the Company referred to adjusted EBITDA as EBITDA.
 
(2)   Free cash flow is calculated as cash flows from operating activities from continuing operations less net cash from investing activities before sale (acquisition) of businesses, net of cash. In financial statements published prior to June 30, 2005, the Company also deducted a pro-forma CHF 2 per share dividend from the calculation of free cash flow. The 2004 free cash flow figures presented here have been adjusted accordingly.
 
In addition, please see consolidated financial highlights and notes to news release at the end of this document.
 
“Overall, the business environment was mixed,” said Armin Meyer, Chairman of the Board and CEO, commenting on the results, “however, we made progress in the second quarter of 2005, with several areas of the business
 
 

Page 2 of 10
 
 
developing well and further sales price increases being pushed through. Project Shape is on track, with the integration of Raisio Chemicals moving ahead rapidly and measures in Textile Effects being accelerated. We will implement further measures in the second half to enhance margins, with a continued drive to increase sales prices and realize cost savings. Cash flow will be improved with a strong focus on profitability and the reduction of current assets. In addition, we are well advanced with the evaluation of strategic options to reposition the Textile Effects business. These range from internal solutions to a divestment.”
 
Half Year Results Overview
 
The development of the business overall was mixed, with good growth in Asia, especially China and India, as well as in South America, while Europe and NAFTA were flat. Demand in some customer industries, notably personal care and packaging, was strong; while in others, like the automotive industry, demand was lower than the first half of 2004. The lockout of the paper industry in Finland also resulted in a loss of sales of CHF 30-40 million. This is a shortfall of around 2 percent of sales growth in the second quarter.
 
Currency exchange rates developed favorably in the second quarter, almost reaching 2004 levels for the same period. The overall currency impact for the first half of 2005, however, was negative over the same period in 2004, with the US dollar 5 percent weaker against the Swiss franc.
 
Sales up 9 percent in local currencies - price increases pushed through
 
Sales for the period were up 9 percent in local currencies and 7 percent in Swiss francs. Sales prices were 2 percent higher than the first half of 2004 and were continually increased throughout the period. Volumes were up 7 percent over the first half of 2004. Estimated within this increase is an acquisition effect of approximately 10 percent, relating to Raisio Chemicals.
 
In local currencies, sales in Europe were up 14 percent; sales in the Americas increased 1 percent and in Asia Pacific, 10 percent. Growth in China and India was particularly strong.
 
Profitability improved from first to second quarter
 
Gross profit margin was 29.1 percent of sales, compared with 32.7 percent in the first half of 2004. This decline is partly due to the different cost structure of Raisio Chemicals, acquired in June 2004, as well as the strong increase in raw material costs, estimated at 9 percent between the first half of 2004 and the first half of 2005, as well as higher utility costs. Capacity utilization was slightly lower than the first half of 2004, due to lower demand in the automotive industry and with the impact of the lockout in the paper industry in Finland.
 
Selling, general and administrative expenses were below the levels of 2004. This improvement was despite acquisition effect and reflects savings from Project Shape, along with general cost saving measures. R&D investment remained at 4.1 percent of sales.
 
Operating income before restructuring was 18 percent lower than 2004 at CHF 272 million and adjusted EBITDA, operating income plus depreciation and amortization, was down 6 percent to CHF 480 million, before restructuring. Adjusted EBITDA margin before restructuring, of 13.2 percent of sales, showed an improvement from the first to the second quarter, although it is lower than the 15.1 percent of the previous year.
 
Savings of approximately CHF 20 million were realized in the first half of 2005, from Project Shape, the integration of Raisio Chemicals and the realignment
 
 

Page 3 of 10
 
measures in Textile Effects. Approximately 200 positions globally were reduced as part of Project Shape, during the first half of the year.
 
Net interest remained at 2004 levels and other financial expenses were almost nil, indicating that hedging activities had successfully offset the impact of swings in currency movements on the transactional exposure of the Company. Income taxes were at 28 percent of pre tax profit, while the tax charge in 2004 reflected one-time gains.
 
Net income for the first half of the year was CHF 146 million, compared with CHF 201 million for the first half of 2004. Included in net income for the first half is CHF 36 million of restructuring charges, as well as CHF 30 million of income from discontinued operations. This income relates to the final court decision in June 2005, of an outstanding lawsuit still pending from the divestment of the Performance Polymers business in 2000, which found in the Company’s favor. Comparable net income for the first half of 2005 - excluding restructuring charges from Project Shape, income from discontinued operations and the 2004 one time tax benefit - was 18 percent lower at CHF 152 million, (CHF 186 million in the first half of 2004).
 
Free cash flow impacted by higher inventory value
 
Free cash flow was a negative CHF 200 million, compared with CHF 10 million during the first half of 2004. Free cash flow during the first half of the year is traditionally substantially weaker than the second half, with a seasonal, mid-year build-up of inventories, interest payments on the debt, as well as most income tax payments for the Company, occurring during this period. This usually leads to a higher cash-out of CHF 150-180 million during the first six months of the year.
 
The lower free cash flow in the first half of 2005 compared with 2004, reflects the increased inventory value, relating to higher raw material costs, as well as a lower operating income. There will be a strong focus on profitability and reducing current assets in the second half of 2005.
 
Cash and cash equivalents decreased by CHF 835 million. This was primarily due to the payout to shareholders and the repayment of maturing long-term debt, but also to smaller acquisitions and the weaker operating cash flow.
 
The balance sheet remains strong, with a debt to equity ratio of approximately 1:2.
 
Second Quarter Overview
 
Financial highlights (in millions of Swiss francs, except per share data and percentages)

 
2nd quarter to 2nd quarter comparisons (unaudited)
   
 
Excluding restructuring
Including restructuring
       
Change in %
 
Three months ended June 30,
2005
2004
 
CHF
Local
curr. (a)
2005
2004
Net sales
  1 858    1 734    +7  +8     
Gross profit
  525    559    -6  -5     
Operating income
  142    160    -11  -10  100  160 
Net income
  109    99    +10    79  99 
Earnings per share, basic and diluted
  1.67    1.51    +10    1.21  1.51 
Adjusted EBITDA(1)
  247    252    -2       
Adjusted EBITDA margin (1) margin
  13.3   % 14.5   %        
 
Sales increased 8 percent in local currencies and 7 percent in Swiss francs in the second quarter of 2005. Sales prices for the second quarter increased 3
 
 

Page 4 of 10
 
 
percent, with volumes, including acquisition effect, up 5 percent over the second quarter of 2004. Compared with the first quarter of 2005, sales increased 4 percent, signaling further improvements. Sales in Europe were adversely affected by the lockout of the paper industry in Finland, causing a loss in sales of CHF 30-40 million, approximately 2 percent of the Company’s quarterly sales.
 
Gross profit margin at 28.3 percent, was lower than the first quarter, primarily due to reduced capacity utilization. The increases in raw material costs slowed down considerably in the second quarter.
 
Selling, general and administrative expenses were reduced, reflecting amongst other factors, savings coming from Project Shape.
 
Restructuring charges relating to Project Shape amounted to CHF 42 million (CHF 30 million after tax), in the second quarter.
 
Operating income before restructuring was 11 percent lower than the same period last year. Adjusted EBITDA margin before restructuring was 13.3 percent, as compared with 14.5 percent in the second quarter of 2004. It increased over the first quarter of 2005, indicating some improvement.
 
Net income for the second quarter was CHF 79 million. This figure includes CHF 30 million of restructuring charges, as well as CHF 30 million of income from discontinued operations relating to provisions from the Performance Polymers divestment in 2000. Comparable net income - excluding the impact of the provisions, as well as after tax restructuring charges - is 6 percent lower than in the second quarter of 2004, although it is higher than the first quarter of 2005.
 
Project Shape accelerated
 
The integration of Raisio Chemicals into the Water & Paper Treatment segment is moving ahead rapidly. Measures have been implemented to fully leverage synergies and the target for the Water & Paper Treatment segment to reach 14-15 percent adjusted EBITDA margin next year, is on track.
 
In the Textile Effects business, the action taken to realign the business in response to the shift of the textiles market and of Ciba Specialty Chemicals customers to Asia has made progress, however this process has been expanded and speeded up in order to realize higher savings earlier.
 
Savings from Project Shape of approximately CHF 20 million were made, with a reduction of approximately 200 positions globally. The acceleration and expansion will increase the expected savings for 2005 to CHF 60 million, from the CHF 35 million previously forecasted, with 600 positions in total, reduced during the year. Overall, annualized savings from Project Shape will increase from the CHF 130 million (CHF 90 million after tax) previously announced, to CHF 180 million by 2007.
 
Restructuring charges for Project Shape in 2005 will increase by CHF 80 million to CHF 130 million. Of this, CHF 50 million has been incurred in the first half of 2005.
 
Strategic repositioning of Textile Effects business
 
The shift of the textile market and customers to Asia was greatly accelerated by the ending of the WTO quotas, and is expected to continue over the coming years. A comprehensive strategic review of the Textile Effects business and its environment concluded that the global textile market will continue to offer attractive opportunities. However, while the underlying business has a strong
 
 

Page 5 of 10
 
 
market position and is a leader in innovation and quality, additional action is needed in order to put the business on a lower cost base, with higher, sustainable levels of profitability. The evaluation of potential strategic options is now well advanced and these options range from internal solutions, to a divestment of the business.
 
Armin Meyer, Chairman of the Board and CEO, comments:
“We are committed to finding a solution which secures a sustainable future for the Textile Effects business, strengthens the Company’s overall position and takes into account the interests of employees. The Ciba Specialty Chemicals strategy remains focused on further strengthening its businesses with sustainable, profitable growth.”
 
Strengthening innovation - further expansion in Asia
 
Innovation remains a priority for the Company. During the first half of 2005, the high value, high technology pigments business was reinforced with the acquisition of Metasheen, a high reflectance aluminum technology. Together with the joint venture for pearlescent effect pigments in China and other technological cooperation in this field, Ciba Specialty Chemicals has now built up a strong product offering in the effect pigments market. The Company has also successfully launched a new photoinitiator for the lucrative LCD market.
 
Ciba Specialty Chemicals continues to expand activities in Asia. The Daihan Swiss acquisition has provided a stronger, integrated platform for the pigments business in Korea. Similarly, the acquisition of the Raisio Chemicals businesses in China and Korea has further built up market presence for Paper Chemicals. The new research center in Shanghai was opened in April.
 
Substantial investment into new production facilities for Coating Effects will be made in India. In addition, there will be an investment in a new production facility for Plastic Additives in Asia Pacific in the next few months, to benefit from the anticipated growth in plastics manufacturing in Asia and the Middle East.
 
Ciba Specialty Chemicals appoints Chief Operating Officer
 
Ciba Specialty Chemicals has announced an adapted Executive Committee structure, to reflect the changing needs of the Company and its markets, which will, according to Armin Meyer, “strengthen our strategic and operational leadership.” The main change is the new position of Chief Operating Officer (see separate news release).
 
Segment Overview
 
Sales for the six months in Plastic Additives were CHF 936 million, on a par with the high levels reached in the first half of 2004. Strong sales price increases, especially in Base Polymers, were achieved during the period, offsetting raw material cost increases. Volumes were lower as the segment declined unprofitable business. Production levels were reduced in the second quarter to limit inventory build ups. Adjusted EBITDA margin was higher at 17.7 percent, from 16.6 percent in the first six months of 2004.
 
Coating Effects sales for the six months were down 4 percent in local currencies over the same period in 2004. Key to this decline, both in volumes and prices, was the impact of the continued reduction in the optical information storage business. In addition, the slowdown in the automotive industry, particularly in the US, but also to some extent in Europe, had a visible impact. There was, however, strong growth in products for industrial
 
 

Page 6 of 10
 
 
and decorative paints. Adjusted EBITDA margin stabilized in the first half 2005 at 19.4 percent, compared with 22.4 percent in the first six months of 2004.
 
Water & Paper Treatment made progress with increased sales as a result of the Raisio Chemicals acquisition, as well as double digit organic growth in the Water Treatment business. The paper business was impacted by the lockout in the Finnish paper industry, with a loss in sales of approximately CHF 30-40 million and the resultant effect on capacity utilization. Sales prices went up considerably in the Water Treatment business line, where there were significant raw material cost increases. Adjusted EBITDA margin continued to improve from the first to the second quarter, as sales price increases came through and efficiencies are now being realized from the Raisio Chemicals acquisition. The segment remains committed to reaching the target profitability levels of 14-15 percent adjusted EBITDA margin in 2006.
 
Textile Effects sales were 4 percent lower in local currencies from the first six months of 2004, as a result of weaker sales in Textile Dyes. Textile Chemicals, however, held up well. Sales improved from the first to the second quarter. Adjusted EBITDA margin of 8 percent was below that of the first six months of 2004, although there was a noticeable recovery from the first to the second quarter. This recovery stems from benefits of Project Shape, as well as a drive to increase sales levels and keep operational costs down.
 
Outlook
 
Business conditions for the first half of the year were influenced by varying demand across different customer industries. The Company anticipates a similar pattern for the remainder of the year. Growth in Asia is expected to continue, with little change in demand in Europe and the Americas. Raw material costs are expected to stabilize in the second half, however, it is difficult to make an accurate forecast with volatile oil prices. Further action will be implemented during the second half to ensure improved results, and particularly, a significantly higher level of cash flow.
 
Assuming this continuation of current business conditions, for the full year 2005, the Company expects higher sales in local currencies and a slightly higher adjusted EBITDA in Swiss francs, compared with 2004. Net income on a comparable basis, excluding periodic benefits and restructuring charges, is expected to be around the same level as 2004. It will, however, be challenging to achieve a free cash flow within the range previously indicated, CHF 380-480 million, excluding dividend.
 
Project Shape will result in savings for 2005 of approximately CHF 60 million, with 600 positions in total reduced during the year. Restructuring charges for Project Shape in 2005 will increase by CHF 80 million to CHF 130 million.
 
Overall, the acceleration and expansion of Project Shape will increase annualized savings by 2007, from the CHF 130 million (CHF 90 million after tax) previously announced, to CHF 180 million.
 
The financial impact of the repositioning of Textile Effects is not yet quantifiable.
 
***
 
Ciba Specialty Chemicals (SWX: CIBN, NYSE: CSB) is a leading global company dedicated to producing high-value effects for its customers’ products. We strive to be the partner of choice for our customers, offering them innovative products and one-stop expert service. We create effects that improve the quality of life - adding performance, protection, color and strength to textiles,
 
 

Page 7 of 10
 
 
plastics, paper, automobiles, buildings, home and personal care products and much more. Ciba Specialty Chemicals is active in more than 120 countries around the world and is committed to be a leader in its chosen markets. In 2004, the Company generated sales of 7 billion Swiss francs and invested 288 million in R&D.
 
 
Virtual news kit: www.cibasc.com/media
·  
News release in full (PDF)
·  
Half Year Financial Statements (PDF)
·  
Media presentation (available from 11:00 CET onwards)
·  
Photos Ciba Specialty Chemicals

Financial calendar
·  
November 2, 2005: Nine Month 2005 financial results

For further information please contact:
 
Media:  Tel. +41 61 636 4444  Fax +41 61 636 3019
 
Investor Relations:  Tel. +41 61 636 5081 Fax +41 61 636 5111


Page 8 of 10
 
 
Ciba Specialty Chemicals
 
Half Year Report 2005
 
 
 
Consolidated Financial Highlights (unaudited)
(in millions of Swiss francs, except per share data and percentages)
     
         
     
Change in %
Statements of income
Six months ended June 30,
2005  2004  CHF  Local curr.(a) 
Net sales
3 649
3 405
+7
+9
Gross profit
1 062
1 114
-5
-3
Operating income before restructuring charges
272
330
-18
-14
Restructuring charges(b)
(50)
0
   
Operating income
222
330
-33
-29
Financial income and expense, net
(57)
(71)
   
Income from continuing operations, before income taxes and minority interest
165
259
-36
 
Provision for income taxes
(46)
(55)
   
Minority interest
(3)
(3)
   
Income from continuing operations
116
201
-43
 
Income from discontinuing operations, net of tax
30
0
   
Net income
146
201
-27
 
Net income before restructuring charges
182
201
-10
 
         
Earnings per share, basic and diluted
2.22
3.03
-27
 
Earnings per share before restructuring charges, basic and diluted
2.77
3.03
-9
 
         
Adjusted EBITDA before restructuring charges
480
513
-6
-3
         
 
Balance sheets
June 30, 2005
Dec 31, 2004
Current assets
4 001
4 382
Property, plant and equipment, net
3 113
3 015
Other long-term assets
3 747
3 609
Total assets
10 861
11 006
Current liabilities
1 879
2 140
Long-term liabilities
4 691
4 647
Minority interest
78
68
Shareholders’ equity
4 213
4 151
Total liabilities and shareholders’ equity
10 861
11 006
     
Net debt
2 418
1 840

Statements of cash flows
Six months ended June 30,
2005
2004
Net cash (used in) provided by operating activities
(104)
122
Net cash used in investing activities
(128)
(796)
Net cash used in financing activities
(641)
(382)
Effect of exchange rate changes on cash and cash equivalents
38
(20)
Net decrease in cash and cash equivalents
(835)
(1 076)
     
Free cash flow
(200)
10


 

Page 9 of 10

 

 
Condensed Business Segment Data (unaudited)
(in millions of Swiss francs)
     
Change in %
       
Change in %
 
Six months ended June 30,
 
2005
 
2004
CHF
Local
curr. (a)
 
 
Six months ended June 30,
 
2005
 
2004
CHF
Local
curr. (a)
                     
Net sales
 
Adjusted EBITDA before restructuring charges
Plastic Additives
936
953
-2
0
 
Plastic Additives
166
158
+5
+7
Coating Effects
897
950
-6
-4
 
Coating Effects
174
213
-18
-15
Water & Paper Treatment
1 170
811
+44
+47
 
Water & Paper Treatment
137
112
+22
+23
Textile Effects
646
691
-7
-4
 
Textile Effects
52
72
-28
-22
           
Corporate
(49)
(42)
   
Total net sales
3 649
3 405
+7
+9
 
Total adjusted EBITDA before restructuring charges
480
513
-6
-3
                     
Operating income before restructuring charges
 
Operating income margin(c) before restructuring charges
Plastic Additives
121
110
+11
+13
 
Plastic Additives
13.0
%
11.5
%
   
Coating Effects
121
161
-25
-22
 
Coating Effects
13.5
%
17.0
%
   
Water & Paper Treatment
57
62
-8
-9
 
Water & Paper Treatment
4.9
%
7.6
%
   
Textile Effects
25
45
-45
-35
 
Textile Effects
3.8
%
6.5
%
   
Corporate and other expenses
(52)
(48)
                   
Total operating income before restructuring charges
272
330
-18
-14
 
Operating income margin before restructuring charges
7.4
%
9.7
%
   
                     
Depreciation and amortization
 
Adjusted EBITDA margin(d) before restructuring charges
Plastic Additives
45
48
-9
-8
 
Plastic Additives
17.7
%
16.6
%
   
Coating Effects
53
52
+2
+4
 
Coating Effects
19.4
%
22.4
%
   
Water & Paper Treatment
80
50
+59
+63
 
Water & Paper Treatment
11.7
%
13.9
%
   
Textile Effects
27
27
-2
0
 
Textile Effects
8.0
%
10.5
%
   
Corporate
3
6
                   
Total depreciation and amortization
208
183
+14
+16
 
Adjusted EBITDA margin before restructuring charges
13.2
%
15.1
%
   
                         

 
Exchange rates of principal currencies to CHF (unaudited)
 

 
   
Statement of income
average rates
Balance sheet
period-end rates
 
Six months ended June 30,
June 30,
Dec 31,
 
2005
2004
2005
2004
1
U.S. dollar
(USD)
1.20
1.27
1.27
1.15
1
British pound
(GBP)
2.25
2.30
2.32
2.21
1
Euro
(EUR)
1.55
1.55
1.54
1.54
100
Japanese yen
(JPY)
1.13
1.17
1.16
1.11
 
       
 
Three months ended June 30,
June 30,
Dec 31,
 
2005
2004
2005
2004
1
U.S. dollar
(USD)
1.22
1.28
1.27
1.15
1
British pound
(GBP)
2.27
2.31
2.32
2.21
1
Euro
(EUR)
1.54
1.54
1.54
1.54
100
Japanese yen
(JPY)
1.14
1.17
1.16
1.11

 
Notes to news release:
 
(a)   Change in percent in local currencies reflects the percent change in (i) 2005 results, as adjusted, to remove the effects of fluctuations in foreign currency rates as compared to 2004 and (ii) 2004 results, as reported.
 
(b)   Restructuring consists of charges incurred in connection with Project Shape, which is described in the Company’s 2004 annual report and 2005 half year financial statements. Restructuring net of taxes of CHF 14 million would be CHF 36 million.
 
(c)   Operating income margin is operating income expressed as a percentage of net sales.
 
(d)   Adjusted EBITDA margin is adjusted EBITDA expressed as a percentage of net sales.
 
 

Page 10 of 10
 
Reconciliation tables (unaudited)
(in millions of Swiss francs, except per share data)
 
Adjusted EBITDA before restructuring charges
Six months
 
Three months
Period ended June 30,
 
2005
   
2004
   
2005
   
2004
 
Adjusted EBITDA before restructuring charges
 
480
   
513
   
247
   
252
 
Restructuring charges
 
(50
)
 
0
   
(42
)
 
0
 
Depreciation and amortization
 
(208
)
 
(183
)
 
(105
)
 
(92
)
Operating income
 
222
   
330
   
100
   
160
 
Financial income and expense, net
 
(57
)
 
(71
)
 
(29
)
 
(42
)
Provision for income taxes
 
(46
)
 
(55
)
 
(20
)
 
(17
)
Minority interest
 
(3
)
 
(3
)
 
(2
)
 
(2
)
Income from discontinued operations, net of tax
 
30
   
0
   
30
   
0
 
Net income
 
146
   
201
   
79
   
99
 
 
Operating Income before restructuring changes
Six months
 
Three months     
Period ended June 30,
 
2005
   
2004
   
2005
   
2004
 
Operating income before restructuring charges
 
272
   
330
   
142
   
160
 
Restructuring charges
 
(50
)
 
0
   
(42
)
 
0
 
Operating income
 
222
   
330
   
100
   
160
 
 
Net income before restructuring charges  
Six months     
 
Three months 
Period ended June 30,
 
2005
   
2004
   
2005
   
2004
 
Net income before restructuring charges
 
182
   
201
   
109
   
99
 
Restructuring charges, net of tax
 
(36
)
 
0
   
(30
)
 
0
 
Net income
 
146
   
201
   
79
   
99
 
 
Earnings per share before restructuring charges  
Six months
 
Three months
Period ended June 30,
 
2005
   
2004
   
2005
   
2004
 
Net income per share before restructuring charges
 
2.77
   
3.03
   
1.67
   
1.51
 
Restructuring charges, net of tax
 
(0.55
)
 
0.00
   
(0.46
)
 
0.00
 
Net income per share
 
2.22
   
3.03
   
1.21
   
1.51
 
 
Components of net debt
   
June 30, 2005
   
Dec 31, 2004
 
Short-term debt
   
261
   
559
 
Long-term debt
   
2 943
   
2 917
 
Total debt
   
3 204
   
3 476
 
Cash and cash equivalents
   
(779
)
 
(1 614
)
Short-term investments
   
(7
)
 
(22
)
Net debt
   
2 418
   
1 840
 

Free cash flow
             
Six months ended June 30,
   
2005
   
2004
 
Free cash flow before restructuring payments
   
(178
)
 
10
 
Less: restructuring payments
   
(22
)
 
0
 
Free cash flow
   
(200
)
 
10
 
Add: net cash used in investing activities
   
128
   
796
 
Less: sales (acquisition) of businesses, net of cash
   
(32
)
 
(684
)
Net cash (used in) provided by continuing operations
   
(104
)
 
122
 
 

Forward-looking statements
Forward-looking statements and information contained in this announcement are qualified in their entirety as there are certain important factors that could cause results to differ materially from those anticipated. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as “believe”, “expect”, “may”, “are expected to”, “will”, “will continue”, “should”, “would be”, “seek” or “anticipate” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such statements reflect the current views and estimates of the Company with respect to market conditions and future events and are subject to certain risks, uncertainties and assumptions. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings, pricing strategies of competitors, introduction of competing products by other companies, lack of acceptance of new products and services by the Company’s targeted customers, changes in the Company’s business strategy, the Company’s ability to continue to receive adequate raw materials from its suppliers on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs, and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and various other factors. Furthermore, the Company does not assume any obligation to update these forward-looking statements.
 
 
 
 
 
 
 
 
 
 
EX-99.2 3 ex99-2.htm NEWS RELEASE News Release
Exhibit 99.2
 
 
Ciba Specialty Chemicals Inc.
Switzerland
Ciba Spezialitätenchemie AG
Schweiz
Ciba Spécialités Chimiques SA
Suisse
CIBA Logo

Page 1 of 2
August 18, 2005
Basel, Switzerland
 
News release
 
Ciba Specialty Chemicals appoints Chief Operating Officer
 
·  
Strengthening of strategic and operational leadership
 
·  
Brendan Cummins to take over newly created role of COO, responsible for the operational management of the businesses

The Board of Directors has decided to adapt the structure of the Executive Committee, to the changing needs of the Company and its markets and thereby, strengthen its strategic and operational leadership.
 
A new position of Chief Operating Officer (COO), responsible for the operational management of the businesses will be introduced. Brendan Cummins, currently Head of the Plastic Additives segment has been appointed to this position. The Company will be led by the Executive Committee with two dedicated teams - the Chairman’s Committee, focusing on strategic development, and the Operating Executive Committee, focusing on the operational management of the business.
 
“This move strengthens the leadership of the Company and makes us more agile. It allows me to concentrate even more on the important strategic development and long-term direction of the Company, while the new COO will primarily focus on operational management”, said Armin Meyer, Chairman of the Board & CEO. “With this new structure, we build on a very competent and well-proven team and ensure continuity and commitment”.
 
The Chairman’s Committee will comprise of the Chairman of the Board & CEO, the COO, the Chief Financial Officer (CFO), and the Chief Technology Officer. The Operating Executive Committee will comprise of the COO, CFO and the four Segment Heads.
 
The new Chief Operating Officer, Brendan Cummins, (54, Irish citizen), has been with Ciba for more than 30 years, of which, he spent around 20 years in Asia. He has held a number of leading international
 
 

 
Page 2 of 2
 
 
positions, including Regional President of China and the Head of the Home and Personal Care business. He has been a member of the Executive Committee since 2001 and is currently the global Head of Plastic Additives.
 
Giordano Righini, (55, Italian), currently Head Business Line Coatings, will succeed Brendan Cummins as global Head of the Plastic Additives segment and becomes a member of the Executive Committee. Giordano Righini is a chemist and joined Ciba in 1979. He has over 30 years experience in Research & Development, Technical Operations and commercial management.
 
The streamlining of the Executive Committee has resulted in the elimination of the function International Coordination & Human Resources. Christoph Biedermann, (48, Swiss), a member of the Executive Committee since 2001, currently in this position, has decided to pursue other opportunities outside of Ciba Specialty Chemicals. The Board of Directors thanks Christoph Biedermann for his contribution over the last four years as Segment Head and Head of International Coordination & Human Resources.
 
All changes take effect on October 1, 2005.  
***
Ciba Specialty Chemicals (SWX: CIBN, NYSE: CSB) is a leading global company dedicated to producing high-value effects for its customers’ products. We strive to be the partner of choice for our customers, offering them innovative products and one-stop expert service. We create effects that improve the quality of life - adding performance, protection, color and strength to textiles, plastics, paper, automobiles, buildings, home and personal care products and much more. Ciba Specialty Chemicals is active in more than 120 countries around the world and is committed to be a leader in its chosen markets. In 2004, the Company generated sales of 7 billion Swiss francs and invested 288 million in R&D.
 
Virtual news kit: www.cibasc.com/media
·  
News release
·  
CV + photo Brendan Cummins
·  
CV+ photo Giordano Righini
 
For further information please contact:
 
Media:  Tel. +41 61 636 4444  Fax +41 61 636 3019
 
Investor Relations:  Tel. +41 61 636 5081 Fax +41 61 636 5111
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