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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q/A
                               (Amendment No. 1)


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2007


                         Commission file number 1-12372


                              CYTEC INDUSTRIES INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                      22-3268660
   (State or other jurisdiction                         (I.R.S. Employer
 of incorporation or organization)                      Identification No).


              Five Garret Mountain Plaza
               West Paterson, New Jersey                          07424
        (Address of principal executive offices)                (Zip Code)


        Registrant's telephone number, including area code (973) 357-3100



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes |X| No |_|

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer |X|   Accelerated filer |_|   Non-accelerated filer |_|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes |_| No |X|

There were 47,989,664 shares of common stock outstanding at July 25, 2007.

                                      -1-


EXPLANATORY NOTE:

This Amendment No. 1 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2007, originally filed on August 1, 2007, is being
filed solely to add the financial table under the heading "Cytec Engineered
Materials" on page 20 which was omitted in the original filing.

Except as described above, no other changes have been made to the Quarterly
Report. This Amendment No. 1 to the Quarterly Report continues to speak as of
the date of the Quarterly Report, and Registrant has not updated the disclosures
contained in this Amendment No. 1 to the Quarterly Report to reflect any events
that occurred at a date to the filing of the Quarterly Report.



                     CYTEC INDUSTRIES INC. AND SUBSIDIARIES
                             10-Q Table of Contents


                                                                                                   
                                                                                                      Page
Part I - Financial Information

        Item 1.         Consolidated Financial Statements                                                3
                        Consolidated Statements of Income                                                3
                        Consolidated Balance Sheets                                                      4
                        Consolidated Statements of Cash Flows                                            5
                        Notes to Consolidated Financial Statements                                       6
        Item 2.         Management's Discussion and Analysis of Financial Condition and
                        Results of Operations                                                           18
        Item 3.         Quantitative and Qualitative Disclosures About Market Risk                      25
        Item 4.         Controls and Procedures                                                         26

Part II - Other Information

        Item 1.         Legal Proceedings                                                               28
        Item 2.         Unregistered Sales of Equity Securities, Use of Proceeds and Issuer
                        Purchases of Equity Securities                                                  29

        Item 4.         Submission of Matters to a Vote of Security Holders                             29
        Item 5.         Other                                                                           29
        Item 6.         Exhibits                                                                        30


Signature                                                                                               31
Exhibit Index                                                                                           32




                                      -2-

PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

                     CYTEC INDUSTRIES INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                 (Dollars in millions, except per share amounts)


                                                                           
                                                Three Months Ended          Six Months Ended
                                                     June 30,                   June 30,
                                             -----------------------------------------------------
                                                 2007        2006(1)         2007        2006(1)
--------------------------------------------------------------------------------------------------
Net sales                                    $     864.0   $     853.1   $   1,727.5   $   1,672.5
Manufacturing cost of sales                        662.8         688.0       1,361.7       1,333.7
Selling and technical services                      53.1          54.2         103.0         106.9
Research and process development                    19.2          17.2          37.6          36.1
Administrative and general                          28.9          26.1          55.2          51.0
Amortization of acquisition intangibles              9.7           9.3          18.9          18.0
Gain on sale of assets held for sale                   -             -          15.7             -
--------------------------------------------------------------------------------------------------
Earnings from operations                            90.3          58.3         166.8         126.8
Other income (expense), net                          0.1          14.9           1.5          14.0
Equity in earnings of associated companies           0.1           0.9           0.4           1.7
Interest expense, net                               11.4          14.6          21.6          29.1
--------------------------------------------------------------------------------------------------
Earnings before income taxes and cumulative
 effect of accounting change                        79.1          59.5         147.1         113.4
Income tax provision                                24.3          11.0          40.6          25.6
--------------------------------------------------------------------------------------------------
Earnings before cumulative effect of
 accounting change                                  54.8          48.5         106.5          87.8
Cumulative effect of accounting change (net
 of income tax benefit of $0.7)                        -             -             -         (1.2)
--------------------------------------------------------------------------------------------------
Net earnings                                 $      54.8   $      48.5   $     106.5   $      86.6
--------------------------------------------------------------------------------------------------

Basic net earnings per common share:
Earnings before cumulative effect of
 accounting change                           $      1.14   $      1.02   $      2.22   $      1.87
Cumulative effect of accounting change, net
 of taxes                                              -             -             -        (0.03)
--------------------------------------------------------------------------------------------------
Net earnings                                 $      1.14   $      1.02   $      2.22   $      1.84
--------------------------------------------------------------------------------------------------

Diluted net earnings per common share:
Earnings before cumulative effect of
 accounting change                           $      1.11   $      1.00   $      2.17   $      1.81
Cumulative effect of accounting change, net
 of taxes                                              -             -             -        (0.02)
--------------------------------------------------------------------------------------------------
Net earnings                                 $      1.11   $      1.00   $      2.17   $      1.79
--------------------------------------------------------------------------------------------------

Dividends per common share                   $      0.10   $      0.10   $      0.20   $      0.20
--------------------------------------------------------------------------------------------------


(1) 2006  results  were  restated  to show the  effect of  Financial  Accounting
Standards  Board Staff  Position No. AUG AIR-1,  "Accounting  for Planned  Major
Maintenance Activities" ("FSP AUG-AIR 1"), which we adopted retroactively during
the first quarter of 2007.  For further  details see Note 2 to the  Consolidated
Financial Statements.

See accompanying Notes to Consolidated Financial Statements

                                      -3-

                     CYTEC INDUSTRIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                 (Dollars in millions, except per share amounts)

                                               June 30,   December 31,
                                                 2007       2006(1)
-----------------------------------------------------------------------
Assets
Current assets
  Cash and cash equivalents                  $      30.8   $      23.6
  Trade accounts receivable, less allowance
   for doubtful accounts of $5.3 and $5.1 at
   June 30, 2007 and December 31, 2006,
   respectively                                    577.7         510.3
  Other accounts receivable                         62.0          81.5
  Inventories                                      486.5         474.6
  Deferred income taxes                              8.4           9.2
  Other current assets                              23.3          15.4
  Assets held for sale                               6.9          38.8
-----------------------------------------------------------------------
Total current assets                             1,195.6       1,153.4
-----------------------------------------------------------------------

Investment in associated companies                  20.9          23.3

Plants, equipment and facilities, at cost        1,937.1       1,895.5
   Less: accumulated depreciation                 (938.0)       (897.0)
-----------------------------------------------------------------------
     Net plant investment                          999.1         998.5
-----------------------------------------------------------------------
Acquisition intangibles, net of accumulated
 amortization of
$112.8 and $92.1 at June 30, 2007 and
 December 31, 2006, respectively                   474.8         486.1
Goodwill                                         1,054.3       1,042.5
Deferred income taxes                               23.8          33.2
Other assets                                        96.5          93.5
-----------------------------------------------------------------------
Total assets                                 $   3,865.0   $   3,830.5
-----------------------------------------------------------------------

Liabilities
Current liabilities
  Accounts payable                           $     304.8   $     298.8
  Short-term borrowings                             42.1          41.8
  Current maturities of long-term debt             101.1           1.4
  Accrued expenses                                 180.2         203.8
  Income taxes payable                              11.6          39.3
  Deferred income taxes                             16.3           2.0
  Liabilities held for sale                          1.4          16.3
-----------------------------------------------------------------------
     Total current liabilities                     657.5         603.4
-----------------------------------------------------------------------
Long-term debt                                     740.8         900.4
Pension and other postretirement benefit
 liabilities                                       341.5         371.1
Other noncurrent liabilities                       297.5         273.6
Deferred income taxes                              107.2         105.3

Stockholders' equity
Common stock, $.01 par value per share,
 150,000,000 shares authorized; issued
 48,132,640 shares                                   0.5           0.5
Additional paid-in capital                         269.2         258.5
Retained earnings                                1,436.8       1,339.6
Accumulated other comprehensive income (loss)       36.2          (5.7)
Treasury stock, at cost, 422,446 shares in
 2007 and 510,006 shares in 2006                   (22.2)        (16.2)
-----------------------------------------------------------------------
Total stockholders' equity                       1,720.5       1,576.7
-----------------------------------------------------------------------
Total liabilities and stockholders' equity   $   3,865.0   $   3,830.5
-----------------------------------------------------------------------

(1) Balances at December  31, 2006 have been  restated to show the effect of FSP
AUG-AIR 1, which was adopted retroactively during the first quarter of 2007. For
further details see Note 2 to the Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements

                                      -4-

                     CYTEC INDUSTRIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                              (Dollars in millions)

                                                  Six Months Ended
                                                      June 30,
-----------------------------------------------------------------------
                                                 2007         2006(1)
-----------------------------------------------------------------------
Cash flows provided by (used in) operating
 activities
Net earnings                                 $     106.5   $      86.6
Noncash items included in net earnings:
  Depreciation                                      49.3          55.0
  Amortization                                      23.2          21.1
  Share-based compensation                           6.8           5.7
  Deferred income taxes                             15.7           5.7
  Gain on sale of assets                           (15.7)            -
   Asset impairment charges                            -          13.8
  Cumulative effect of accounting change, net
   of taxes                                            -           1.9
  Other                                              2.9           3.3
Changes in operating assets and liabilities,
 excluding effects of divestiture:
  Trade accounts receivable                        (57.6)        (56.2)
  Other receivables                                 18.1           2.7
  Inventories                                       (7.0)        (31.2)
  Other assets                                     (12.2)          2.6
  Accounts payable                                   1.9          16.4
  Accrued expenses                                 (20.3)        (19.0)
  Income taxes payable                              (9.2)        (14.1)
  Other liabilities                                (11.5)          0.6
-----------------------------------------------------------------------
Net cash provided by operating activities           90.9          94.9
-----------------------------------------------------------------------
Cash flows provided by (used in) investing
 activities
  Additions to plants, equipment and
   facilities                                      (39.4)        (40.9)
  Proceeds received on sale of assets               27.1             -
-----------------------------------------------------------------------
Net cash used in investing activities              (12.3)        (40.9)
-----------------------------------------------------------------------
Cash flows provided by (used in) financing
 activities
  Proceeds from long-term debt                     194.1          65.9
  Payments on long-term debt                      (254.9)       (177.3)
  Change in short-term borrowings                   (0.2)         (0.5)
  Cash dividends                                    (9.6)         (9.4)
  Proceeds from the exercise of stock options       19.0          30.5
  Purchase of treasury stock                       (25.1)            -
  Excess tax benefits from share-based
   payment arrangements                              4.0           7.7
  Other                                             (0.3)         (0.4)
-----------------------------------------------------------------------
Net cash used in financing activities              (73.0)        (83.5)
-----------------------------------------------------------------------
Effect of currency rate changes on cash and
 cash equivalents                                    1.6           2.3
-----------------------------------------------------------------------
Increase/(decrease) in cash and cash
 equivalents                                         7.2         (27.2)
Cash and cash equivalents, beginning of
 period                                             23.6          68.6
-----------------------------------------------------------------------
Cash and cash equivalents, end of period     $      30.8   $      41.4
-----------------------------------------------------------------------

(1) 2006  results  were  restated to show the effect of FSP AUG-AIR 1, which was
adopted  retroactively during the first quarter of 2007. For further details see
Note 2 to the Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements

                                      -5-

                     CYTEC INDUSTRIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
 (Currencies in millions, except per share amounts, unless otherwise indicated)

1.  BASIS OF PRESENTATION

The accompanying  unaudited  consolidated  financial  statements included herein
have been prepared  pursuant to the rules and  regulations of the Securities and
Exchange Commission for reporting on Form 10-Q. Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principles  generally  accepted in the United States of America
("U.S.  GAAP")  have  been  condensed  or  omitted  pursuant  to such  rules and
regulations.  Financial statements prepared in accordance with U.S. GAAP require
management to make certain  estimates and  assumptions  that affect the reported
amounts of assets and liabilities,  revenues and expenses and other disclosures.
In the opinion of management,  these financial statements include all normal and
recurring  adjustments  necessary  for a  fair  presentation  of  the  financial
position  and the  results  of our  operations  and cash  flows for the  interim
periods  presented.  The results of  operations  for any interim  period are not
necessarily  indicative  of the  results of  operations  for the full year.  The
financial  statements  should  be  read in  conjunction  with  the  Consolidated
Financial  Statements  and  Notes  to  the  Consolidated   Financial  Statements
contained in the  Company's  2006 Annual Report on Form 10-K.  Unless  indicated
otherwise,  the  terms  "Company",  "Cytec",  "we",  "us" and "our"  each  refer
collectively to Cytec Industries Inc. and its subsidiaries.

2.  DEFERRED PLANNED MAINTENANCE COSTS

In September  2006, the Financial  Accounting  Standards  Board ("FASB")  issued
Staff  Position  No.  AUG  AIR-1,  "Accounting  for  Planned  Major  Maintenance
Activities" ("FSP"). This FSP prohibits accruing as a liability the future costs
of periodic major  overhauls and  maintenance  of plant and equipment  under the
"accrue-in-advance"   methodology,   as  the  costs  for  future  planned  major
maintenance activities do not meet the definition of a liability. We adopted the
FSP as of  January  1,  2007  and  restated  our  prior  consolidated  financial
statements  accordingly.  Prior to adoption,  we utilized the  accrue-in-advance
method for  incremental  costs to be incurred for the planned major  maintenance
activities which related to our Building Block Chemicals segment. We adopted the
deferral  method to account for  maintenance  expenses  incurred  for  scheduled
maintenance  activities,  which are  amortized  evenly until the next  scheduled
activity.  The  impact to our  consolidated  results  of  operations  was a $0.3
increase in net earnings for the year ended  December 31, 2006, and a $0.1 and a
$0.2  increase in net earnings for the three and six months ended June 30, 2006,
respectively.  As a result of these immaterial  changes,  earnings per share for
the three  months  ended June 30,  2006 is  unchanged.  The impact on 2006 basic
earnings  per share for the six months  ended June 30,  2006 was an  increase of
$0.01 per share and diluted  earnings per share is unchanged.  The impact to our
consolidated  financial position was an increase in retained earnings of $6.6 as
of December  31,  2006,  as a result of an increase in other assets for $2.3 for
the  addition of prior  unamortized  deferred  charges and a decrease in accrued
expenses of $8.5, as well as adjustments of deferred taxes for these  respective
items. There was no impact to our 2006 net cash provided by operating activities
in our consolidated statement of cash flows.

3.  NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued  Statement of Financial  Accounting  Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities -
Including an amendment of FASB Statement No. 115" ("SFAS 159"). SFAS 159 permits
companies to choose to measure certain  financial assets and liabilities at fair
value (the  "fair  value  option").  If the fair value  option is  elected,  any
upfront  costs and fees related to the item must be  recognized  in earnings and
cannot  be  deferred,  e.g.,  debt  issue  costs.  The fair  value  election  is
irrevocable and may generally be made on an instrument-by-instrument basis, even
if a company has similar  instruments  that it elects not to fair value.  At the
adoption  date,  unrealized  gains and losses on  existing  items for which fair
value has been  elected are  reported as a  cumulative  adjustment  to beginning
retained  earnings.  SFAS 159 is  effective  for fiscal  years  beginning  after
November 15, 2007.  We are  currently  evaluating  the impact,  if any, that the
adoption of SFAS 159 will have on our consolidated financial statements.

In  September  2006,  the 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.  However,  for some  entities,  the
application of SFAS 157 will change current practice.  SFAS 157 is effective for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal  years.  We are still in the process of reviewing  the impact of adopting
this  statement.  However,  we do not expect the  adoption of SFAS 157 to have a
material impact on our consolidated financial statements.

                                      -6-

4.  DIVESTITURES

In October 2006, we completed the first of three phases of the sale of our water
treatment chemicals and acrylamide product line to Kemira Group ("Kemira"). This
first phase  included the product  lines  themselves,  the related  intellectual
property,  the majority of the  manufacturing  sites and  essentially all of the
sales,  marketing,  manufacturing,  R&D and technical  services  personnel.  The
manufacturing  sites in the first  phase  included  Mobile,  Alabama,  Longview,
Washington, Bradford, UK, and the acrylamide manufacturing plant at our Fortier,
Louisiana  facility  which will be operated by our  personnel  under a long term
manufacturing  agreement.  The  sale  of our  Botlek  manufacturing  site in the
Netherlands  was completed and  transferred to Kemira in January 2007 as part of
the phase two closing.  We will continue to supply  acrylonitrile  to the Kemira
acrylamide  plants at Fortier and Botlek under long term supply  agreements.  In
addition, under various long term manufacturing  agreements, we will manufacture
certain water  treatment  products for Kemira at several of our sites and Kemira
will  manufacture  for us certain  mining  chemicals at the Mobile,  Alabama and
Longview,  Washington sites and various other products at the Botlek site. These
contracts were all deemed to be at estimated fair value. Sales of certain assets
at various  subsidiaries in Latin America and Asia/Pacific are expected to close
in the third quarter of 2007 as the last phase of the transaction.

The timing of the flow of funds is as follows: approximately $208.0 was received
in October 2006 for the first closing,  and approximately $21.0 was received for
the second  closing in January  2007.  We also  received  approximately  $6.0 in
February 2007 for a working capital  adjustment from the first phase closing per
the terms of the contract. An estimated $10.0 is expected upon the completion of
the transfer of the assets at the various subsidiaries, bringing estimated total
proceeds to $245.0.  The remaining  subsidiary net asset closings are subject to
certain  conditions  and the amounts could change due to final  working  capital
transferred.  We recorded a pre-tax gain of $75.5 ($59.6  after-tax)  related to
the first phase  closing in the fourth  quarter of 2006,  and a pre-tax  gain of
$15.7 ($15.3 after-tax) in the first quarter of 2007 from the phase two closing.

The assets and  liabilities  of our water  treatment  chemicals  and  acrylamide
product lines  included in the June 30, 2007 and December 31, 2006  consolidated
balance sheets are comprised of:


-----------------------------------------------------------------
                                   June 30,          December 31,
                                     2007               2006
-----------------------------------------------------------------
Accounts receivable                $   3.9           $    6.5
Inventories                            3.0                4.3
Property, plant and equipment            -               26.6
Other assets                             -                1.4
-----------------------------------------------------------------
Assets held for sale               $   6.9           $   38.8
-----------------------------------------------------------------
Accounts payable                   $     -           $    3.4
Accrued liabilities                    1.4               12.7
Other noncurrent liabilities             -                0.2
-----------------------------------------------------------------
Liabilities held for sale          $   1.4           $   16.3
-----------------------------------------------------------------

5.  RESTRUCTURING OF OPERATIONS

In accordance with our policy, restructuring costs are included in our corporate
unallocated   operating  results   consistent  with  management's  view  of  its
businesses.

For the three and six months ended June 30, 2007, we recorded net  restructuring
charges of $1.8 and $2.6,  respectively,  primarily related to the 2006 decision
to shut down our manufacturing  facility in Dijon,  France,  for costs that were
not  accruable  in  prior  periods.   We  expect  to  incur   additional   minor
restructuring  costs in the remainder of 2007 that primarily relate to personnel
and site  closure  costs  that are not  accruable  at June 30,  2007,  including
potential  additional site remediation  costs. In 2006, based on forecasted cash
flow  information,  we determined that the  manufacturing  facility in Dijon and
related intangible assets were impaired and thus were written off. This facility
manufactured  solvent-borne alkyd and solvent-borne  acrylic based resins in our
Cytec Surface  Specialties  ("CSS") segment. We have moved production of some of
the more  profitable  products  manufactured  at Dijon to other  facilities  and
ceased production of the remainder.  We are in the process of attempting to sell
the site. The restructuring for the three months ended June 30, 2007 was charged
as follows:  manufacturing  cost of sales $1.7, and  administrative  and general
$0.1.  The  restructuring  for the six months ended June 30, 2007 was charged as
follows: manufacturing cost of sales $2.3, and administrative and general $0.3.

In 2006, we recorded  severance of $19.5 including $8.4 related to the shut down
of the  manufacturing  facility  in  Dijon,  $6.4 for the  restructuring  of our
Botlek, Netherlands facility, and $4.7 for other restructuring  initiatives.  As
of December  31, 2006,  the reserve  balance  related to severance  for the 2006
restructuring  initiatives  was $13.5 after cash  payments of $6.4 and  currency
translation  adjustments.  Also in 2006,  we  recorded an  impairment  charge of
$29.3,  of which $13.8 was related to the Botlek  facility for the impairment of
fixed assets related to our Polymer  Additives  product line in our  Performance
Chemicals segment and $15.5 for the impairment of our manufacturing facility and
related  intangible  assets in Dijon.  In addition,  we recorded a restructuring
charge of $2.3 for other costs related to the Botlek facility.

                                      -7-


2005  restructuring  initiatives  included aggregate charges of $16.8 related to
both Cytec Engineered  Materials and Cytec Specialty Chemicals  segments.  As of
June 30, 2007, the reserve balance related to 2005 restructuring initiatives was
$0.6.

A summary of the restructuring activity is outlined in the table below:


                                                            
                                        2005                2006
                                    Restructuring       Restructuring           Total
------------------------------------------------------------------------------------------
Balance December 31, 2006          $           1.4     $          13.5     $          14.9
------------------------------------------------------------------------------------------
First Quarter 2007 charges                       -                 0.8                 0.8
Cash payments                                 (0.7)               (1.8)               (2.5)
Currency translation adjustments                 -                 0.2                 0.2
------------------------------------------------------------------------------------------
Balance March 31, 2007             $           0.7     $          12.7     $          13.4
------------------------------------------------------------------------------------------
Second Quarter 2007 charges                      -                 1.8                 1.8
------------------------------------------------------------------------------------------
Cash payments                                 (0.2)               (4.6)               (4.8)
------------------------------------------------------------------------------------------
Currency translation adjustments               0.1                   -                 0.1
------------------------------------------------------------------------------------------
Balance June 30, 2007              $           0.6     $           9.9     $          10.5
------------------------------------------------------------------------------------------


Cash payments related to the above  restructurings  are expected to be completed
in 2007, except for certain long-term severance payments.

6.  SHARE-BASED COMPENSATION

On January  1,  2006,  we adopted  SFAS No.  123  (revised  2004),  "Share-Based
Payment" ("SFAS 123R"), which requires companies to recognize  compensation cost
in an amount  equal to the fair  value of  share-based  payments,  such as stock
options  granted to  employees.  As a result of the  adoption  of SFAS 123R,  we
recorded  additional  charges  related to stock  options and stock  appreciation
rights that are settled with common  shares  ("stock-settled  SARS") of $3.3 and
$6.4 for the  three  and six  months  ended  June 30,  2007,  respectively.  The
adoption  of SFAS 123R was  recorded  as of  January 1, 2006 and  resulted  in a
non-cash charge for the cumulative effect of a change in accounting principle of
$1.6 and a non-cash credit of $0.4 for cash-settled SARS (as a result of the new
requirement  to record  expense at fair value) and  non-vested  and  performance
stocks  (forfeitures  estimated  now, as well as grant date only market value of
the shares under award), for a net charge of $1.2, net of a tax benefit of $0.7.
The effect on basic and diluted  earnings  per share for the  cumulative  effect
charge was $0.03 and $0.02 per  share,  respectively,  for the six months  ended
June 30, 2006.

For stock options  granted  before January 1, 2005, the fair value of each stock
option grant was estimated on the date of grant using the  Black-Scholes  option
pricing model. For stock options and stock-settled SARS granted after January 1,
2005,  the fair value of each award is  estimated  on the date of grant  using a
binomial-lattice  option  valuation model.  Stock-settled  SARS are economically
valued  the  same  as  stock  options.  The  binomial-lattice   model  considers
characteristics  of fair value option  pricing that are not available  under the
Black-Scholes  model.  Similar to the Black-Scholes  model, the binomial-lattice
model takes into account  variables  such as  volatility,  dividend  yield,  and
risk-free  interest  rate.  However,  in addition,  the  binomial-lattice  model
considers the contractual  term of the option,  the probability  that the option
will be exercised prior to the end of its contractual  life, and the probability
of  termination or retirement of the option holder in computing the value of the
option. For these reasons, we believe that the binomial-lattice model provides a
fair value that is more  representative of actual experience and future expected
experience than the value calculated in previous years using Black-Scholes.  The
assumptions  for the  quarters  ended  June 30,  2007 and 2006 are  noted in the
following table:

----------------------------------------------------------------------------
                                            2007           2006
----------------------------------------------------------------------------
Expected life (years)                           6.2            5.7
Expected volatility                            27.2%          37.6%
Expected dividend yield                        0.69%          0.81%
Range of risk-free interest rate         4.8% - 5.2%    4.4% - 4.7%
Weighted-average fair value per option       $19.50          $19.01
----------------------------------------------------------------------------

                                      -8-


The  expected  life of options  granted is derived from the output of the option
valuation  model and  represents  the period of time that  options  granted  are
expected to be outstanding.  Expected  volatilities are based on the combination
of implied market volatility and our historical volatility.  The decrease in our
expected  volatility  from  2006  represents  a change  in  methodology  used to
calculate the expected  volatility.  Prior to 2007, our expected  volatility was
based on a weighted  average of the implied  volatility  and the mean  reversion
volatility  (represents  the annualized  volatility of the stock prices over our
entire stock history) of our stock with weighting of 10% and 90%,  respectively.
In 2007,  we  changed  the  methodology  to a weighted  average  of our  implied
volatility  and our most  recent 6.2 years  (which  represents  the most  recent
expected life of the options/stock-SARS)  volatility with weighting of 50% each.
We feel that the revised  methodology  is more  representative  of the  market's
expectation of our volatility,  based on recent trends and the mature industries
in which we  participate.  The risk-free rate for periods within the contractual
life of the option is based on the U.S.  Treasury  yield  curve in effect at the
time of  grant.  SFAS  123R  specifies  that  initial  accruals  be based on the
estimated  number of instruments for which the requisite  service is expected to
be  rendered.  Therefore,  we are required to  incorporate  the  probability  of
pre-vesting forfeiture in determining the number of expected vested options. The
forfeiture rate is based on the historical forfeiture experience and prospective
actuarial analysis.

Stock Award and Incentive Plan:

The 1993 Stock Award and Incentive Plan (the "1993 Plan") provides for grants of
a variety of awards,  such as stock options  (including  incentive stock options
and nonqualified stock options), non-vested stock (including performance stock),
stock  appreciation  rights  (including  those  settled with common  shares) and
deferred  stock awards and  dividend  equivalents.  At June 30, 2007,  there are
approximately 5,100,000 shares reserved for issuance under the 1993 Plan.

We have utilized the stock option  component of the 1993 Plan to provide for the
granting of nonqualified  stock options and stock-settled  SARS with an exercise
price  at  100% of the  market  price  on the  date of the  grant.  Options  and
stock-settled  SARS are generally  exercisable in  installments of one-third per
year commencing one year after the date of grant and annually  thereafter,  with
contract lives of generally 10 years from the date of grant.

A summary of stock  options and  stock-settled  SARS activity for the six months
ended June 30, 2007 is presented below.


                                                                  
                                                               Weighted
                                                Weighted        Average
                                                 Average       Remaining      Aggregate
Options and Stock-Settled SARS   Number of      Exercise      Contractual     Intrinsic
          Activity:                 Units         Price      Life (Years)       Value
------------------------------------------------------------------------------------------
Outstanding at January 1, 2007      4,339,920         $35.00
                       Granted        586,006          58.22
                     Exercised       (531,666)         36.92
                     Forfeited        (64,953)         46.39
  Outstanding at June 30, 2007      4,329,307         $37.73            5.6         $112.7
------------------------------------------------------------------------------------------
  Exercisable at June 30, 2007      3,201,611         $32.11            4.5         $101.4
------------------------------------------------------------------------------------------

                                                Weighted
                                                 Average
 Nonvested Options and Stock-                Grant Date Fair
         Settled SARS:        Number of Units     Value
------------------------------------------------------------
  Nonvested at January 1, 2007      1,088,466         $18.24
                       Granted        586,006          19.50
                        Vested       (511,907)         17.85
                     Forfeited       (34,869)          17.89
------------------------------------------------------------
    Nonvested at June 30, 2007      1,127,696         $19.08
------------------------------------------------------------


During  the six  months  ended  June  30,  2007,  we  granted  586,006  units of
stock-settled  SARS and stock options.  We did not grant any stock-settled  SARS
prior to 2006. The  weighted-average  grant-date fair value of the stock-settled
SARS and stock  options  granted  during the six months  ended June 30, 2007 and
2006 was  $19.50 and $19.01  per  share,  respectively.  Stock-settled  SARS are
deemed to be  equity-based  awards under SFAS 123R. The total intrinsic value of
stock options and stock-settled  SARS exercised during the six months ended June
30, 2007 and 2006 was $11.8 and $20.8,  respectively.  Treasury shares have been
utilized  for stock  option  exercises.  The total fair  value of stock  options
vested  during  the six months  ended June 30,  2007 and 2006 was $9.7 and $8.9,
respectively.

                                      -9-


As of June 30, 2007,  there was $13.7 of total  unrecognized  compensation  cost
related to stock  options and  stock-settled  SARS.  That cost is expected to be
recognized  over a  weighted-average  period of 1.7 years as the majority of our
awards vest over three years.  Compensation  cost  related to stock  options and
stock-settled  SARS  capitalized  in  inventory as of June 30, 2007 and 2006 was
approximately $0.5 and $0.3, respectively.

Cash received  (for stock options only) and the tax benefit  realized from stock
options and stock-settled  SARS exercised were $19.0 and $4.3 for the six months
ended June 30, 2007 and $30.5 and $7.7 for the six months  ended June 30,  2006,
respectively.  Cash used to settle  cash-settled  SARS was $0.5 and $0.3 for the
six months ended June 30, 2007 and 2006, respectively.  The liability related to
our cash-settled SARS was $4.5 at June 30, 2007.

As  provided  under the 1993  Plan,  we have also  issued  non-vested  stock and
performance  stock.  Non-vested  shares are subject to certain  restrictions  on
ownership and transferability that lapse upon vesting. Performance stock payouts
are based on the attainment of certain financial performance  objectives and may
vary  depending  on the  degree to which  the  performance  objectives  are met.
Performance  stocks awarded in 2005 relate to the 2007 performance  period.  The
total amount of share-based  compensation  expense recognized for non-vested and
performance  stock for the three and six months ended June 30, 2007 was $0.1 and
$0.2,  respectively,  and $0.3 and $0.6 for the three and six months  ended June
30, 2006, respectively.

Upon adoption of SFAS 123R, we calculated  our additional  paid-in  capital pool
("APIC  Pool") to be $41.4.  Exercises of stock options and  stock-settled  SARS
since the adoption increased the APIC Pool to $56.0 at June 30, 2007.

7.  EARNINGS PER SHARE (EPS)

Basic  earnings per common share  excludes  dilution and is computed by dividing
net earnings by the weighted-average  number of common shares outstanding (which
includes shares  outstanding,  less performance and non-vested  shares for which
vesting criteria have not been met) plus deferred stock awards, weighted for the
period  outstanding.  Diluted  earnings per common share is computed by dividing
net  earnings  by the  sum of  the  weighted-average  number  of  common  shares
outstanding for the period adjusted (i.e.,  increased) for all additional common
shares that would have been  outstanding if potentially  dilutive  common shares
had been issued and any  proceeds of the  issuance  had been used to  repurchase
common stock at the average  market  price  during the period.  The proceeds are
assumed to be the sum of the amount to be paid to the Company  upon  exercise of
options,  the amount of compensation  cost attributed to future services and not
yet  recognized  and the amount of income  taxes that  would be  credited  to or
deducted from capital upon exercise.

The following shows the reconciliation of weighted-average shares:


                                                                       
                                              Three Months Ended         Six Months Ended
                                                   June 30,                 June 30,
                                   ----------------------------------------------------------
                                            2007          2006          2007         2006
---------------------------------------------------------------------------------------------
Weighted average shares outstanding:       48,178,286   47,418,662    48,071,408   47,167,598
Effect of dilutive shares:
    Options and stock-settled SARS          1,034,911    1,147,138     1,052,869    1,147,430
    Performance/Restricted Stock               23,864       66,630        22,824       63,846
---------------------------------------------------------------------------------------------
Adjusted average shares outstanding        49,237,061   48,632,430    49,147,101   48,378,874
---------------------------------------------------------------------------------------------


Outstanding  stock  options to purchase  35,068 and 1,500 shares of common stock
for the three months ended June 30, 2007 and 2006, respectively,  and 35,068 and
43,000  shares of common  stock for the six months ended June 30, 2007 and 2006,
respectively,  were excluded from the above calculation  because their inclusion
would have had an  anti-dilutive  effect on  earnings  per share.  In  addition,
543,776  and  640,420 of  outstanding  stock-settled  SARS for the three and six
months ended June 30, 2007 and 2006, respectively,  were excluded from the above
calculation due to their anti-dilutive effect on earnings per share.

8.  INVENTORIES

Inventories consisted of the following:

----------------------------------------------------
                             June 30,   December 31,
                               2007        2006
----------------------------------------------------
Finished goods                $327.8       $333.4
Work in process                 39.6         26.4
Raw materials & supplies       119.1        114.8
----------------------------------------------------
Total inventories             $486.5       $474.6
----------------------------------------------------

                                      -10-

9.  DEBT

Long-term debt, including the current portion, consisted of the following:


                                                                            
                                                        June 30, 2007            December 31, 2006
---------------------------------------------------------------------------------------------------------
                                                     Face    Carrying Value     Face      Carrying Value
---------------------------------------------------------------------------------------------------------
Five-Year Term Loan Due February 15, 2010         $         -   $         -    $      52.6    $      52.6
Five-Year Revolving Credit Line Due June 7, 2012         34.3          34.3           42.0           42.0
6.75% Notes Due March 15, 2008                          100.0          99.6          100.0           99.3
5.5% Notes Due October 1, 2010                          250.0         249.8          250.0          249.7
4.6% Notes Due July 1, 2013                             200.0         201.3          200.0          201.5
6.0% Notes Due October 1, 2015                          250.0         249.5          250.0          249.4
Other                                                     7.4           7.4            7.3            7.3
---------------------------------------------------------------------------------------------------------
                                                  $     841.7   $     841.9    $     901.9    $     901.8
Less: Current maturities                                101.5         101.1            1.4            1.4
---------------------------------------------------------------------------------------------------------
Long-term debt                                    $     740.2   $     740.8    $     900.5    $     900.4
---------------------------------------------------------------------------------------------------------


During the first  quarter of 2007,  we repaid the $52.6  outstanding  balance at
December 2006 under the five-year  term loan and terminated  this  facility.  In
June 2007,  we amended and restated our revolving  credit  agreement to increase
the facility  from $350.0 to $400.0 and extended the maturity date to June 2012.
Borrowings  against the $400.0  unsecured  five-year  revolving  credit facility
totaled  $34.3 at June 30,  2007.  This  facility  contains  covenants  that are
customary for such facilities.

The  weighted-average  interest  rate on all of our debt was 5.05% and 4.73% for
the six months ended June 30, 2007 and 2006, respectively.  The weighted-average
interest rate on short-term  borrowing  outstanding as of June 30, 2007 and 2006
was 4.70% and 4.77%, respectively.

10. ENVIRONMENTAL, CONTINGENCIES AND COMMITMENTS

Environmental Matters

We are  subject to  substantial  costs  arising  out of  environmental  laws and
regulations,  which  include  obligations  to remove or limit the effects on the
environment  of the  disposal  or  release of certain  wastes or  substances  at
various sites or to pay compensation to others for doing so.

As of June 30, 2007 and December 31, 2006, the aggregate  environmental  related
accruals were $103.2 and $102.7, respectively.  As of June 30, 2007 and December
31, 2006, $7.4 of the above amounts was included in accrued  expenses,  with the
remainder included in other noncurrent  liabilities.  Environmental  remediation
spending  for the three  months  ended June 30, 2007 and 2006 was $1.3 and $1.3,
respectively,  and for the six months  ended June 30, 2007 and 2006 was $2.1 and
$2.0, respectively.

These  accruals  can change  substantially  due to such  factors  as  additional
information  on the nature or extent of  contamination,  methods of  remediation
required,  changes in the apportionment of costs among  responsible  parties and
other actions by governmental  agencies or private parties or if we are named in
a new  matter  and  determine  that an  accrual  needs to be  provided  or if we
determine that we are not liable and no longer require an accrual.

A further  discussion  of  environmental  matters can be found in Note 13 of the
Notes to the  Consolidated  Financial  Statements  contained  in our 2006 Annual
Report on Form 10-K.

Other Contingencies

We are the subject of numerous  lawsuits and claims incidental to the conduct of
our or certain of our predecessors'  businesses,  including  lawsuits and claims
relating   to   product   liability,   personal   injury   including   asbestos,
environmental, contractual, employment and intellectual property matters.

During the third quarter of 2006,  the  Actuarial and Analytics  Practice of AON
Risk Consultants  ("AON")  completed a study of our asbestos related  contingent
liabilities  and related  insurance  receivables.  We previously  commissioned a
similar study from AON in 2003. For these studies,  we provided AON with,  among
other  things,  detailed data for the past ten years on the incidence of claims,
the  incidence of  malignancy  claims,  indemnity  payments for  malignancy  and
non-malignancy  claims, and dismissal rates by claim. The actuarial  methodology
employed  by  AON  was  primarily  based  on  epidemiological  data  assumptions
regarding asbestos disease  manifestation,  the information  provided by us, and
the estimates of claim filing and indemnity  costs that may occur in the future.
In conjunction  with AON, we also  conducted a detailed  review of our insurance
position and estimated insurance  recoveries.  We expect to recover close to 54%
of our future  indemnity costs and certain defense and processing  costs already
incurred.  We anticipate  updating the study  approximately every three years or
earlier if circumstances  warrant. We are in the process of negotiating coverage
in place and commutation agreements with several of our insurance carriers.

                                      -11-


As a result of the findings from the 2006 AON study,  we recorded an increase of
$9.0 in September  2006 to our self insured and insured  contingent  liabilities
for  pending  and  anticipated  probable  future  claims  and  recorded a higher
receivable for probable insurance recoveries for past, pending and future claims
of $6.8. The reserve increase is attributable to higher  settlement values which
more than  offset a  decrease  in  number  of  claimants.  The  increase  in the
receivable is a result of the higher gross liability plus an increase in overall
projected insurance recovery rates.

As of June 30, 2007 and  December  31,  2006,  the  aggregate  self-insured  and
insured contingent liability was $70.3 and $72.4, respectively,  and the related
insurance  recovery  receivable  for the  liability  as well as claims  for past
payments was $39.9 at June 30, 2007 and $40.9 at December 31, 2006. The asbestos
liability  included in the above  amounts at June 30, 2007 and December 31, 2006
was $54.2 and $54.6,  respectively,  and the insurance receivable related to the
liability  as well as claims for past  payments  was $38.2 at June 30,  2007 and
$38.1 at  December  31,  2006.  We  anticipate  receiving  a net tax benefit for
payment of those claims to which full insurance recovery is not realized.

The following table presents  information about the number of claimants involved
in asbestos claims with us:


                                                                              
------------------------------------------------------------------------------------------
                                                       Six Months Ended     Year Ended
                                                         June 30, 2007    December 31, 2006
                                                       ----------------   -----------------
Number of claimants at beginning of period                       8,600              22,200
Number of claimants associated with claims closed
 during period                                                    (300)            (15,800)
Number of claimants associated with claims opened
 during period                                                     200               2,200
                                                       ---------------     ---------------
Number of claimants at end of period                             8,500               8,600
------------------------------------------------------------------------------------------


Numbers in the foregoing  table are rounded to the nearest hundred and are based
on  information  as received by us which may lag actual  court  filing  dates by
several  months or more.  Claims  are  recorded  as closed  when a  claimant  is
dismissed  or severed  from a case.  Claims  are opened  whenever a new claim is
brought,  including from a claimant previously dismissed or severed from another
case. The significant  decline in the number of claimants  during 2006 primarily
reflects  disposition  of a large number of  unwarranted  filings in Mississippi
made  immediately  prior to the  institution of tort reform  legislation in that
state effective January 1, 2003.

It should be noted that the ultimate  liability and related  insurance  recovery
for all  pending  and  anticipated  future  claims  cannot  be  determined  with
certainty due to the difficulty of forecasting  the numerous  variables that can
affect the amount of the  liability  and  insurance  recovery.  These  variables
include but are not limited to: (i) significant  changes in the number of future
claims; (ii) significant changes in the average cost of resolving claims;  (iii)
changes in the nature of claims received; (iv) changes in the laws applicable to
these claims; and (v) financial viability of co-defendants and insurers.

At June 30, 2007, we are among several  defendants in  approximately 41 cases in
the U.S.,  in which  plaintiffs  assert  claims for  personal  injury,  property
damage,  and other  claims  for  relief  relating  to one or more  kinds of lead
pigment  that  were  used  as an  ingredient  decades  ago in  paint  for use in
buildings.  The  different  suits were  brought by  government  entities  and/or
individual  plaintiffs,  on behalf of themselves and others. The suits variously
seek  compensatory and punitive  damages and/or  injunctive  relief,  including:
funds for the cost of  monitoring;  detecting and removing lead based paint from
buildings and for medical monitoring;  for personal injuries allegedly caused by
ingestion of lead based paint; and plaintiffs'  attorneys' fees. We believe that
the suits against us are without merit, and we are vigorously  defending against
all such claims. Accordingly, no loss contingency has been recorded.

In July,  2005,  the Supreme Court of Wisconsin  held in a case in which we were
one of several defendants that Wisconsin's risk contribution doctrine applies to
bodily injury cases  against  manufacturers  of white lead  pigment.  Under this
doctrine,  manufacturers of white lead pigment may be liable for injuries caused
by white lead pigment  based on their past market  shares  unless they can prove
they are not  responsible  for the white lead pigment which caused the injury in
question.  Seven other courts have previously rejected the applicability of this
and  similar  doctrines  to white  lead  pigment.  We  settled  this case for an
immaterial amount. Although we are a defendant in approximately 30 similar cases
in Wisconsin  and  additional  actions may be filed in  Wisconsin,  we intend to
vigorously  defend  ourselves if such case(s) are filed based on what we believe
to be our  non-existent  or  diminutive  market  share.  Accordingly,  we do not
believe  that our  liability,  if any,  in such cases will be  material,  either
individually or in the aggregate and no loss contingency has been recorded.

                                      -12-


We have access to a substantial  amount of primary and excess general  liability
insurance for property  damage and believe these policies are available to cover
a significant portion of both our defense costs and indemnity costs, if any, for
lead pigment related property damage claims.  We have agreements with two of our
insurers which provide that they will pay for approximately  fifty percent (50%)
of our defense  costs  associated  with lead  pigment  related  property  damage
claims.

We commenced binding  arbitration  proceedings against SNF SA ("SNF") in 2000 to
resolve a  commercial  dispute  relating  to SNF's  failure to  purchase  agreed
amounts  of  acrylamide  under  a  long-term  agreement.   In  July,  2004,  the
arbitrators awarded us damages and interest aggregating approximately (euro)11.0
plus  interest  on the award at a rate of 7% per annum from July 28,  2004 until
paid.  After further  proceedings  in France,  we collected  (euro)12.2  ($15.7)
related to the  arbitration  award  including  interest in the second quarter of
2006.  Subsequent  to the  arbitration  award,  SNF filed a  complaint  alleging
criminal violation of French and European  Community  antitrust laws relating to
the  contract,  which was the  subject  of the  arbitration  proceedings,  which
complaint was dismissed in December  2006.  SNF has also filed a final appeal of
the court order which  allowed us to enforce the award and a separate  complaint
in France seeking compensation from Cytec for (euro)54.0 in damages it allegedly
suffered  as a result of our  attachment  on various  SNF  receivables  and bank
accounts to secure  enforcement of the  arbitration  award.  We believe that the
appeal and complaint are without merit. SNF also appealed the arbitration  award
in Belgium where the Brussels Court of First Instance  invalidated  the award in
March 2007.  We have  appealed  that  decision to the Belgium  Court of Appeals,
which will review the matter on a de novo basis. The Belgium decision should not
affect the enforceability of the award in France.

While it is not  feasible to predict  the  outcome of all pending  environmental
matters,  lawsuits and claims,  it is  reasonably  possible that there will be a
necessity  for future  provisions  for costs for  environmental  matters and for
other  contingent  liabilities  that we believe will not have a material adverse
effect on our  consolidated  financial  position,  but could be  material to our
consolidated  results of operations or cash flows in any one accounting  period.
We cannot  estimate any additional  amount of loss or range of loss in excess of
the  recorded  amounts.  Moreover,  many of these  liabilities  are paid over an
extended  period,  and the timing of such payments  cannot be predicted with any
certainty.

From time to time,  we are also  included  in legal  proceedings  as a plaintiff
involving  tax,  contract,  patent  protection,  environmental  and other  legal
matters.  Gain contingencies related to these matters, if any, are recorded when
they are realized.

A further discussion of other contingencies can be found in Note 13 of the Notes
to the Consolidated  Financial Statements contained in our 2006 Annual Report on
Form 10-K.

Commitments

We frequently enter into long-term contracts with customers with terms that vary
depending on specific  industry  practices.  Our  business is not  substantially
dependent  on  any  single   contract  or  any  series  of  related   contracts.
Descriptions  of our  significant  sales  contracts at December 31, 2006 are set
forth in Note 13 of the Notes to Consolidated  Financial Statements contained in
our 2006 Annual Report on Form 10-K.

11. COMPREHENSIVE INCOME

The components of  comprehensive  income,  which represents the change in equity
from  non-owner  sources,  for the three and six  months  ended  June 30, are as
follows:


                                                                           
                                                   Three Months Ended            Six Months Ended
                                                        June 30,                     June 30,
                                                     2007        2006(1)       2007          2006(1)
------------------------------------------------------------------------------------------------------
Net earnings as reported or restated             $      54.8  $      48.5  $     106.5    $      86.6
Other comprehensive income (loss):
  Accumulated pension liability (2)                      2.2            -         17.9              -
  Unrealized gains on cash flow hedges                  (0.4)        (9.3)        10.3           (8.6)
  Foreign currency translation adjustments              15.2         24.8         13.7(3)        38.6
------------------------------------------------------------------------------------------------------
Comprehensive income                             $      71.8  $      64.0  $     148.4    $     116.6
------------------------------------------------------------------------------------------------------


(1)  2006 results  were  restated to show the effect of FSP AUG-AIR 1, which was
     adopted retroactively during the first quarter of 2007. For further details
     see Note 2 to the Consolidated Financial Statements.
(2)  2007  includes  amortization,  first quarter  impacts of a curtailment  and
     remeasurement  related to  certain  U.S.  plans,  and a  settlement  in the
     Netherlands  related  to the sale of the  water  treatment  and  acrylamide
     product  lines.  For  further  details  see  Note  17 to  the  Consolidated
     Financial Statements.
(3)  2007  includes  the  impact  of  recognizing   $13.8  of  foreign  currency
     translation adjustments in first quarter net earnings as a component of the
     gain on the sale of the water treatment and acrylamide product lines.

                                      -13-

12. INCOME TAXES

The  effective  rate for the three and six months  ended June 30, 2007 was a tax
provision of 30.7%  ($24.3) and  27.6%($40.6),  respectively,  compared to 18.5%
($11.0) and 22.6% ($25.6) for the three and six months ended June 30, 2006.  The
2007  effective  tax rate  for the  quarter  and  year to date  was  unfavorably
impacted by a shift in our earnings to higher tax jurisdictions, changes in U.S.
tax laws regarding  export  incentives,  and a French  restructuring  charge for
which no tax benefit was given due to the  unlikely  utilization  of related net
operating  losses.  The rate was favorably  affected by the  relatively  low tax
expense of $0.4 with  respect to a $15.7 gain  recorded in the first  quarter of
2007 on the second phase of the water business  divestiture  and changes in U.S.
tax laws regarding manufacturing  incentives.  Excluding these items and accrued
interest and penalties on unrecognized tax benefits in accordance with FIN 48 as
described below, the underlying  estimated annual effective tax rate for the six
months ended June 30, 2007 was 29.3%, with a normalized effective rate of 29.75%
including such interest and penalties.

The  2006  effective  tax rate for the  quarter  and year to date was  favorably
impacted by the continued mix of earnings  reported in countries  with lower tax
rates compared to the U.S., a tax benefit from a  restructuring  charge recorded
at 29.6%, and the favorable  decision in a legal dispute, a portion of which was
recorded  in a lower  tax  entity.  Also  favorably  impacting  the  rate  was a
reduction  in tax expense of $3.5 as a result of the  completion  of prior years
U.S. tax audits,  offset to a lesser extent by the December 31, 2005  expiration
of the U.S. research and development tax credit for that period.

In 2005,  we  received  a final  notice  from  the  Norwegian  Assessment  Board
disclosing an increase to taxable income with respect to a 1999 restructuring of
certain of our  European  operations.  The tax  liability  attributable  to this
assessment,  excluding interest and possible  penalties,  was approximately 84.0
Norwegian krone ($14.2).  We  unsuccessfully  contested this assessment before a
Norwegian  tribunal  in 2006 and  filed an appeal in  response  to this  adverse
decision during the first quarter of 2007.

In the event the Norwegian  authorities  ultimately prevail in their assessment,
approximately  22.0 Norwegian krone ($3.7) of tax related to this matter will be
remitted in  subsequently  filed tax  returns  beginning  with the 2005  taxable
period in accordance with Norwegian law. As a result,  we remitted 4.4 Norwegian
krone ($0.7) of additional  tax in 2006 for the 2005 taxable  period  related to
this  dispute.  Accordingly,  the  accrued  balance  at June  30,  2007 for this
contingency  was 24.7  Norwegian  krone ($4.2),  which  represents our remaining
liability  (including interest) regarding this matter in the event we ultimately
accept  the  Norwegian's  court  decision  as final.  We also  expect to pay 3.5
Norwegian  krone ($0.6)  during 2007 for this issue  related to the 2006 taxable
period.

In June 2006,  the FASB  issued  FASB  Interpretation  No. 48,  "Accounting  for
Uncertainty  in Income  Taxes--an  interpretation  of FASB  Statement  No.  109,
Accounting for Income Taxes" ("FIN 48"). FIN 48 addresses the  determination  of
whether tax benefits claimed or expected to be claimed on a tax return should be
recorded in the  financial  statements.  Under FIN 48, we may  recognize the tax
benefit from an uncertain  tax position  only if it is more likely than not that
the tax position  will be sustained on  examination  by the taxing  authorities,
based on the technical  merits of the position.  The tax benefits  recognized in
the financial  statements  from such a position  should be measured based on the
largest  benefit  that has a greater  than  fifty  percent  likelihood  of being
realized upon settlement with the tax authorities. FIN 48 also provides guidance
on  derecognition,  classification,  interest  and  penalties  on income  taxes,
accounting in interim periods and requires increased disclosures.

We adopted  the  provisions  of FIN 48 on  January  1, 2007.  As a result of the
implementation  of FIN 48, we  recognized a $0.3  decrease in the  liability for
unrecognized tax benefits. This decrease in liability resulted in an increase to
the  January  1, 2007  retained  earnings  balance  in the  amount  of $0.3.  In
addition,  as of January 1, 2007,  we  reclassified  $19.3 of  unrecognized  tax
benefits from current  taxes  payable to  non-current  taxes  payable,  which is
included in other non-current liabilities on the consolidated balance sheet. The
amount of unrecognized tax benefits at January 1, 2007 is $25.6 (gross) of which
$18.9 would impact our effective tax rate, if  recognized.  As of June 30, 2007,
the amount of  unrecognized  tax benefits is $28.6  (gross) of which $20.6 would
impact our effective tax rate, if recognized.  There are no known  uncertain tax
positions  which are  reasonably  possible to change over the next twelve months
necessitating a significant change in our unrecognized tax benefits.

We recognize  interest and  penalties  related to  unrecognized  tax benefits in
income tax expense in the consolidated  statements of income.  We had recorded a
liability for the payment of interest and penalties of approximately  $2.4 as of
January 1, 2007, increasing to approximately $3.1 as of June 30, 2007.

The Internal Revenue SerFvice (the "IRS") has completed and closed its audits of
our tax  returns  through  2003.  During  the second  quarter  of 2007,  the IRS
commenced the audit of our tax returns for the years 2004 and 2005.

State income tax returns are generally  subject to  examination  for a period of
3-5 years after filing of the respective return. The state impact of any federal
changes  remains  subject to examination by various states for a period of up to
one year after formal  notification to the states.  We have various state income
tax returns in the process of examination and administrative appeals.

                                      -14-


International  jurisdictions have statutes of limitations generally ranging from
3-5 years after filing of the respective return. Years still open to examination
by tax authorities in major jurisdictions include Austria (2005 onward), Belgium
(2004 onward),  Germany (2005 onward),  Netherlands (2005 onward),  Canada (2001
onward), UK (2005 onward),  Italy (2005 onward), China (2003 onward), and Norway
(1999  onward).   We  are  currently  under  examination  in  several  of  these
jurisdictions.

13. OTHER FINANCIAL INFORMATION

On April 19, 2007 the Board of Directors  declared a $0.10 per common share cash
dividend,  paid on May 25, 2007 to  shareholders  of record as of May 10,  2007.
Cash  dividends  paid in the second quarter of 2007 and 2006 were $4.8 and $4.7,
respectively,  and for the six months ended June 30, 2007 and 2006 were $9.6 and
$9.4, respectively. On July 19, 2007 the Board of Directors declared a $0.10 per
common share cash dividend, payable on August 27, 2007 to shareholders of record
as of August 10, 2007.

Income taxes paid for the six months ended June 30, 2007 and 2006 were $30.9 and
$30.8,  respectively.  Interest  paid for the six months ended June 30, 2007 and
2006 was $22.6 and $28.9, respectively. Interest income for the six months ended
June 30, 2007 and 2006 was $0.6 and $1.1, respectively.

UCB SA ("UCB") was considered a related party during the year ended December 31,
2006 since it then owned more than 10% of Cytec's  outstanding common stock. UCB
announced  in  March  2007  that it had sold all of its  Cytec  shares  and as a
result,  UCB is no longer a related party.  As of June 30, 2007 and December 31,
2006, $2.5 and $2.4 was owed from UCB  respectively,  which is included in other
receivables  on  the  accompanying   consolidated  balance  sheet.  The  balance
represents  amounts to be  received  from UCB for  certain  pre-acquisition  tax
liabilities  which we have  paid or will pay as a result of our  acquisition  of
Surface Specialties.

14. SEGMENT INFORMATION

Summarized  segment  information  for our four  segments  for the  three and six
months ended June 30 is as follows:


                                                                     
                                         Three Months Ended             Six Months Ended
                                              June 30,                      June 30,
                                   ------------------------------  --------------------------
                                        2007           2006(1)        2007         2006(1)
                                   ----------------  ------------  ------------  ------------
Net sales
---------
Cytec Performance Chemicals
     Sales to external customers       $     184.8   $     229.6   $     363.8   $     455.6
     Intersegment sales                        1.9           2.1           3.7           3.9
Cytec Surface Specialties                    419.6         390.8         824.1         764.7
Cytec Engineered Materials                   166.6         151.6         330.1         290.7
Building Block Chemicals
     Sales to external customers              93.0          81.1         209.5         161.5
     Intersegment sales                        7.3          23.2          16.7          46.3
                                        -----------   -----------   -----------   -----------
Net sales from segments                      873.2         878.4       1,747.9       1,722.7
Elimination of intersegment revenue           (9.2)        (25.3)        (20.4)        (50.2)
                                        -----------   -----------   -----------   -----------

Net sales                              $     864.0   $     853.1   $   1,727.5   $   1,672.5
---------------------------------------------------------------------------------------------


                                                % of               % of               % of                % of
                                                sales              sales              sales               sales
                                              ---------          ---------          ---------           ---------
Earnings (loss) from operations
-------------------------------
Cytec Performance Chemicals        $    23.7      13%   $   18.3      8%   $    36.6    10%   $    36.2      8%
Cytec Surface Specialties               32.8       8%       29.5      8%        48.5     6%        58.9      8%
Cytec Engineered Materials              34.8      21%       28.3     19%        67.4    20%        52.2     18%
Building Block Chemicals                 4.6       5%        6.4      6%         7.2     3%         6.3      3%
                                    ----------           --------           --------           ---------

Earnings from segments                  95.9      11%       82.5      9%       159.7     9%       153.6      9%

Corporate and Unallocated (2)           (5.6)              (24.2)                7.1              (26.8)
                                    ----------           --------           --------           ---------

Earnings from operations           $    90.3      10%   $   58.3      7%   $   166.8    10%   $   126.8      8%
-----------------------------------------------------------------------------------------------------------------


(1) 2006  results  were  restated to show the effect of FSP AUG-AIR 1, which was
adopted  retroactively during the first quarter of 2007. For further details see
Note 2 to the Consolidated Financial Statements.

(2) In the  second  quarter of 2007  Corporate  and  Unallocated  includes a net
restructuring  charge of $1.8 for costs  related  primarily to the shutdown of a
manufacturing  facility in France. In the first six months of 2007 Corporate and
Unallocated  includes  a net  restructuring  charge  of $2.6  million  primarily
related  to the  shutdown  of a  manufacturing  facility  in France  and a $15.7
million gain as a result of completing the second phase of the sale of our water
treatment  chemicals and acrylamide product lines to Kemira Group. See notes 4&5
to the consolidated financial statements.

                                      -15-


In  the  second  quarter  of  2006  Corporate  and  Unallocated  includes  a net
restructuring  charge of $21.9 million and $1.0 for integration costs related to
the Surface Specialties  acquisition.  In the first six months of 2006 Corporate
and Unallocated includes a net restructuring charge of $22.3 million. See note 5
to the consolidated financial statements.

15. GOODWILL AND OTHER ACQUISITION INTANGIBLES

The following is the activity in the goodwill balances for each segment.


                                                                
                                      Cytec        Cytec       Cytec
                                    Performance   Surface     Engineered
                                     Chemicals   Specialties  Materials  Corporate    Total
-----------------------------------------------------------------------------------------------
Balance, December 31, 2006           $      88.2   $   712.4   $    241.2  $    0.7  $  1,042.5
Currency exchange rate changes               0.8        11.0            -         -        11.8
-----------------------------------------------------------------------------------------------
Balance, June 30, 2007               $      89.0   $   723.4   $    241.2  $    0.7  $  1,054.3
-----------------------------------------------------------------------------------------------

Other acquisition intangibles consisted of the following major classes:

                     Weighted-                                Accumulated
                      average   Gross carrying value         amortization          Net carrying value
                       Useful ---------------------------------------------------------------------------
                          Life  June 30,   December 31,   June 30,  December 31,  June 30,   December 31,
                       (years)      2007           2006      2007          2006       2007           2006
---------------------------------------------------------------------------------------------------------
Technology-based          15.2  $   55.0  $        53.9  $  (21.3)  $     (19.1)  $   33.7  $        34.8
Marketing-related        < 2.0       2.0            1.9      (1.6)         (1.2)       0.4            0.7
Marketing-related         15.8      63.1           62.3     (17.8)        (15.0)      45.3           47.3
Marketing-related         40.0      44.6           43.6      (1.1)         (0.5)      43.5           43.1
Customer-related          15.0     422.9          416.5     (71.0)        (56.3)     351.9          360.2
---------------------------------------------------------------------------------------------------------
Total                           $  587.6  $       578.2  $ (112.8)  $     (92.1)  $  474.8  $       486.1
---------------------------------------------------------------------------------------------------------


Amortization of acquisition intangibles for the three months ended June 30, 2007
and 2006 was $9.7 and $9.3, respectively,  and for the six months ended June 30,
2007 and 2006 were  $18.9 and  $18.0,  respectively.  Assuming  no change in the
gross carrying amount of acquisition intangibles and the currency exchange rates
remain constant, the estimated  amortization of acquisition  intangibles for the
fiscal  year 2007 is $37.6,  for the years 2008 and 2009 is $36.9 per year,  and
for the years 2010 and 2011 is $36.8 per year.

16. DERIVATIVE FINANCIAL INSTRUMENTS AND COMMODITY HEDGING ACTIVITIES

Derivative Financial Instruments

We  periodically  enter  into  currency  forward  contracts  primarily  to hedge
currency  fluctuations of transactions  denominated in currencies other than the
functional   currency  of  the  business.   At  June  30,  2007,  the  principal
transactions   hedged  involved  accounts   receivable,   accounts  payable  and
intercompany  loans. When hedging currency  exposures,  our practice is to hedge
such exposures with forward contracts  denominated in the same currency and with
similar  critical  terms  as  the  underlying  exposure,   and  therefore,   the
instruments  are effective at generating  offsetting  changes in the fair value,
cash flows or future earnings of the hedged item or transaction.

At June 30,  2007,  net  contractual  amounts of forward  contracts  outstanding
translated  into U. S.  dollar  amounts of  $103.7.  Of this  total,  $103.0 was
attributed  to the  net  exposure  in  forward  selling  of U. S.  dollars.  The
remaining $0.7 was the net exposure in forward buying of Euros,  translated into
U.  S.  dollar  equivalent  amount.  The  unfavorable  fair  value  of  currency
contracts,  based  on  forward  exchange  rates  at  June  30,  2007,  was  $0.4
(unfavorable fair value at December 31, 2006 of $1.3).

Our euro  denominated bank borrowings are used to provide a partial hedge of our
net investment in our Belgium-based subsidiary, Cytec Surface Specialties SA/NV.
From time to time we also enter into designated forward euro contracts to adjust
the amount of the net  investment  hedge.  At June 30, 2007,  we had  designated
forward contracts to purchase (euro)58.0.

                                      -16-


In September 2005, we entered into (euro)207.9 of five year cross currency swaps
and (euro)207.9 of ten year cross currency swaps.  The swaps included an initial
exchange of $500.0 on October 4, 2005 and will require final principal exchanges
of $250.0 each on the  settlement  date of the 5-Year  Notes due October 1, 2010
and 10-Year Notes due October 1, 2015.  At the initial  principal  exchange,  we
paid U.S. dollars to counterparties and received euros. Upon final exchange,  we
will provide euros to counterparties  and receive U.S.  dollars.  The swaps also
call for a semi-annual  exchange of fixed euro interest  payments for fixed U.S.
dollar interest  receipts.  With respect to the five year swaps, we will receive
5.5% per annum and will pay  3.784%  per annum on each  April 1 and  October  1,
through the maturity  date of the five year swaps.  With respect to the ten year
swaps,  we will  receive  6.0% per annum and will pay  4.5245% per annum on each
April 1 and October 1,  through  the  maturity  date of the ten year swaps.  The
cross currency swaps have been  designated as cash flow hedges of the changes in
value of the future  euro  interest  and  principal  receipts  that  result from
changes in the U.S.  dollar to euro exchange  rates on certain euro  denominated
intercompany receivables we have with one of our subsidiaries. At June 30, 2007,
the unfavorable fair values of the five and ten year swaps were $20.9 and $17.8,
respectively,  and at December 31, 2006, the unfavorable fair values of the five
and ten year swaps were $16.9 and $16.4, respectively.

Commodity Hedging Activities

At June 30, 2007, we held natural gas swaps, including the gas swaps for Fortier
plant,  with an unfavorable fair value of $2.0, which will be reclassified  into
Manufacturing Cost of Sales through June 2008 as these swaps are settled.

For more information  regarding our hedging activities and derivative  financial
instruments,  refer to Note 7 to the Consolidated Financial Statements contained
in our 2006 Annual Report on Form 10-K.

17. EMPLOYEE BENEFIT PLANS

Net  periodic  cost for our  pension  and  postretirement  benefit  plans was as
follows:

                                                      Postretirement
                                  Pension Plans             Plans
                              ---------------------  ------------------
                                     Three Months Ended June 30,
                              -----------------------------------------
                                    2007      2006      2007      2006
-----------------------------------------------------------------------
Service cost                    $    5.0  $    6.5  $    0.3  $    0.3
Interest cost                       11.0      11.0       3.6       3.4
Expected return on plan assets     (11.0)    (10.8)     (1.2)     (1.2)
Net amortization and deferral        3.9       4.1      (2.6)     (2.3)
                                 --------  --------  --------  --------
Net periodic cost               $    8.9  $   10.8  $    0.1  $    0.2
-----------------------------------------------------------------------

                                      Six Months Ended June 30,
                              -----------------------------------------
                                    2007      2006      2007      2006
-----------------------------------------------------------------------
Service cost                    $   10.1  $   12.5  $    0.6  $    0.6
Interest cost                       22.4      21.6       7.2       6.8
Expected return on plan assets     (21.8)    (21.3)     (2.4)     (2.4)
Net amortization and deferral        7.9       7.5      (5.2)     (4.6)
Curtailments/settlements (1)         3.3         -         -         -
                                 -------- --------- --------- ---------
Net periodic cost               $   21.9  $   20.3  $    0.2  $    0.4
-----------------------------------------------------------------------

(1)  Primarily  represents a settlement  charge  related to the transfer of plan
assets  and  liabilities  in the  Netherlands  related  to the sale of the water
treatment and acrylamide  product lines,  which was charged  against the gain on
sale.

We  disclosed  in our 2006  Annual  Report  on Form  10-K  that we  expected  to
contribute  $36.4 and $13.4,  respectively,  to our pension  and  postretirement
plans in 2007. Through June 30, 2007, $17.2 and $7.8 in contributions were made,
respectively.

In March 2007 we  announced a change to certain of our U.S.  pension  plans from
defined benefit plans to defined contribution plans effective December 31, 2007.
A related  plan  curtailment  was recorded in the first  quarter of 2007,  which
resulted in a decrease in our pension liabilities of $13.4, with a corresponding
increase in accumulated other comprehensive  income of $8.2 and an adjustment to
deferred  taxes  of  $5.2.  The  curtailment  had an  immaterial  effect  on our
consolidated  statement  of  income.  We  considered  these  plan  changes to be
significant  events as  contemplated  by SFAS 158,  "Employers'  Accounting  for
Defined  Benefit  Pension and Other  Postretirement  Plans, an amendment of FASB
Statements  No. 87, 88,  106,  and 132(R)"  ("SFAS  158") and  accordingly,  the
liabilities  and assets for the affected plans have been  remeasured as of March
31, 2007.  The  remeasurement  resulted in a decrease to pension  liabilities of
approximately  $6.1,  a  corresponding  increase  of $3.7 in  accumulated  other
comprehensive  income,  and an  adjustment  to  deferred  taxes  for  $2.4.  The
remeasurement  was driven by a change in the discount  rate  assumption  for the
affected plans (from 5.85% at December 31, 2006 to 6.00% at March 31, 2007), and
slightly better than expected  returns on plan assets for the three months ended
March 31, 2007.

We also sponsor  various  defined  contribution  retirement  plans in the United
States and a number of other  countries,  consisting  primarily  of savings  and
profit growth  sharing  plans.  Contributions  to the savings plans are based on
matching a percentage of employees'  contributions.  Contributions to the profit
growth sharing plans are generally based on our financial  performance.  Amounts
expensed  related to these  plans for the three  months  ended June 30, 2007 and
2006 were $4.8 and $4.9,  respectively,  and for the six  months  ended June 30,
2007 and 2006 were $9.9 and $9.3 respectively.

                                      -17-


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
Consolidated   Financial   Statements  and  Notes  to   Consolidated   Financial
Statements.  Currency  amounts  are  in  millions,  except  per  share  amounts.
Percentages are approximate.

GENERAL

We are a global  specialty  chemicals  and  materials  company  which  sells our
products to diverse  major  markets for  aerospace,  adhesives,  automotive  and
industrial coatings,  chemical intermediates,  inks, mining and plastics.  Sales
price and  volume by region and the impact of  exchange  rates on our  reporting
segments are important measures that are analyzed by management.

In the course of our ongoing  operations,  a number of  strategic  product  line
acquisitions and  dispositions  have been made. The results of operations of the
acquired  businesses  have been  included in our  consolidated  results from the
dates of the respective acquisitions.

We also  report  net sales in four  geographic  regions:  North  America,  Latin
America, Asia/Pacific and Europe/Middle East/Africa. The destination of the sale
determines the region under which it is reported  consistent  with  management's
view of the business.  North  America  consists of the United States and Canada.
Latin America includes Mexico,  Central America, South America and the Caribbean
Islands.  Asia/Pacific  is comprised of Asia,  Australia  and the islands of the
South Pacific Rim.

Raw  material  cost  changes  year on year  and  selling  price  changes  are an
important factor in profitability especially in years of high volatility. Global
oil and natural gas costs in certain  countries are highly  volatile and many of
our raw materials are derived from these two commodities. Discussion of the year
to year  impact of raw  materials,  energy  costs  changes,  and our  ability to
recover these increases through higher selling prices is provided in our segment
discussion.   In  addition,  higher  global  demand  levels  and,  occasionally,
operating difficulties at suppliers, have limited the availability of certain of
our raw materials  which have  contributed to increased  costs for some of these
raw materials.

Quarter Ended June 30, 2007, Compared With Quarter Ended June 30, 2006

Consolidated Results

Net sales for the second  quarter of 2007 were $864.0  compared  with $853.1 for
the second quarter of 2006, an increase of $10.9 or 1.3%.  Performance  Chemical
sales were down due to the divestiture of the water treatment  chemicals product
line. Excluding the divestiture,  sales were up slightly with higher volumes and
selling  prices  in  mining,  phosphines,  and  urethane  specialties  offset by
decreases  in other  product  lines with  changes in exchange  rates  increasing
sales. In the Cytec Surface Specialties segment,  sales increased primarily as a
result of  increased  selling  prices and  changes in exchange  rates  partially
offset by lower demand primarily in North America and by discontinuing  the sale
of unprofitable  solvent-borne  products. The Cytec Engineered Materials segment
sales  increase  was  primarily  volume  related  with higher sales to the large
commercial aircraft,  business jet, and high performance automotive sectors. The
Building Block  Chemicals  segment sales were up despite the negative  impact of
the  divestiture of the acrylamide  product line,  which was more than offset by
increased volumes of acrylonitrile to the purchaser of the divested product line
and by higher selling volumes and prices of melamine.

For a detailed discussion on sales refer to the Segment Results section below.

Manufacturing cost of sales was $662.8 or 77% of sales during the second quarter
of 2007 compared with $688.0 or 81% of sales for the second quarter of 2006. The
second quarter 2007 decrease is primarily due to lower  manufacturing costs from
the divestiture of the water treatment and acrylamide product lines and benefits
of  restructuring  initiatives  partially offset by higher raw material costs of
$21.9. The second quarter of 2007 included a $1.7 restructuring charge primarily
related to the closure of an unprofitable  manufacturing facility in France. The
second quarter of 2006 included a net  restructuring  charge of $21.6  primarily
related  to our  Polymer  Additives  business.  See  Note 5 to the  consolidated
financial statements for additional detail of the net restructuring charges.

Selling and technical services was $53.1 in 2007 versus $54.2 in the prior year.
The decrease was primarily attributable to the divestiture of the water treating
chemicals product line and cost reduction initiatives in the Surface Specialties
segment partially offset by increased spending in Cytec Engineered Materials and
Mining Chemicals due to the higher levels of growth in those areas.

                                      -18-


Research  and process  development  was $19.2 in 2007 versus  $17.2 in the prior
year.  This  increase  was  primarily  attributable  to  increased  spending  in
Engineered Materials and Surface Specialties to develop and qualify new products
and  applications,  partially offset by lower spending in Performance  Chemicals
due to the divestiture of the water treating chemicals product line.

Administrative  and general  expenses were $28.9 in 2007 which was up from $26.1
in the prior year. The increase in 2007 was primarily due to higher compensation
expenses and an increase in  incentive  compensation  expenses.  Included in the
2006  results  is  $1.0  for  integration  expenses  primarily  associated  with
transition off of UCB's information technology system infrastructure.

Amortization  of  acquisition  intangibles  was $9.7 in 2007  versus $9.3 in the
prior  year.  The  slight  increase  primarily  resulted  from  the  accelerated
amortization of certain Radcure trademarks in the Surface Specialties segment.

Other income  (expense),  net was income of $0.1 in 2007 compared with income of
$14.9 in the prior  year.  Included  in the second  quarter of 2006 is a gain of
$15.7 in  connection  with  proceeds  collected in an  arbitration  award of the
commercial  dispute  as  discussed  in  Note  10 to the  consolidated  financial
statements.

Equity in earnings  of  associated  companies  was $0.1 versus $0.9 in the prior
year.  The lower  earnings  are  primarily  due to market  share loss at a major
customer of our joint venture.

Interest  expense,  net was $11.4 in 2007 compared with $14.6 in the prior year.
The decrease is primarily  due to the lower  average debt  compared to the prior
year.

The  effective  tax rate for the quarter ended June 30, 2007 was a tax provision
of 30.7% ($24.3)  compared to 18.5% ($11.0) for the quarter ended June 30, 2006.
The 2007 effective tax rate for the quarter was unfavorably  impacted changes in
U.S. tax laws regarding export incentives and a French  restructuring charge for
which no tax benefit was given due to the  unlikely  utilization  of related net
operating  losses.  Excluding the negative  impact of our inability to recognize
any tax benefit on the  restructuring  charge and certain other  discrete  items
from the first quarter of 2007,  the  underlying  effective  annual tax rate was
29.75% for the quarter.

The  effective tax rate for the quarter ended June 30, 2006 was 18.5 % resulting
in a tax  provision of $11.0.  The 2006  effective  tax rate for the quarter was
favorably  impacted by a tax benefit  from a  restructuring  charge  recorded at
29.6%, and the gain related to a legal dispute partially recorded in a lower tax
entity, resulting in an effective rate of 20%. Also favorably impacting the rate
was a reduction in tax expense of $3.5 as a result of the completion of 2002 and
2003 U.S. tax audits.  Excluding these items, the underlying  effective tax rate
for the three months ended June 30, 2006 was 27%.

Net  earnings  for the  second  quarter of 2007 were  $54.8  ($1.11 per  diluted
share),  an increase over the net earnings of $48.5 ($1.00 per diluted share) in
the second quarter of 2006. The 2007 earnings are higher primarily due to higher
operating  earnings  in  the  quarter  from  lower  manufacturing  costs  due to
restructuring  initiatives and higher net selling prices in excess of higher raw
material  costs,  partially  offset by higher  operating  costs.  Earnings  also
increased  due to lower net interest  expense and were  partially  offset by the
higher tax rate discussed  above. The second quarter of 2007 also included a net
after tax restructuring charge of $1.8.

Net earnings for 2006 were $48.5 which  included an after-tax net  restructuring
charge of $15.4, an after-tax gain of $12.4 related to a favorable resolution of
a legal  dispute and an income tax benefit of $3.5 related to the  completion of
prior years tax audits.

Segment Results (Sales to external customers)

Year-to-year  comparisons  and  analyses of changes in net sales by product line
segment and region are set forth below.

Cytec Performance Chemicals


                                                                              
                                           Total                            % Change Due to
                                                             ---------------------------------------------
                                 2007      2006    % Change    Price   Volume/Mix Divestiture   Currency
----------------------------------------------------------------------------------------------------------
North America                 $     67.9$     86.2       -21%        -        -2%        -19%           -
Latin America                       31.8      33.2        -4%        -        -1%         -5%           2%
Asia/Pacific                        32.4      31.7         2%       -1%       11%        -10%           2%
Europe/Middle East/Africa           52.7      78.5       -33%       -1%        -         -37%           3%
                              ----------------------------------------------------------------------------
Total                         $    184.8$    229.6       -20%        -         -         -22%           2%
----------------------------------------------------------------------------------------------------------


Overall selling volumes were down 22% primarily  attributable to the divestiture
of the water treating chemicals product line.  Excluding the divestiture,  sales
and prices were up slightly  with higher  volumes and selling  prices in mining,
phosphines, and urethane specialties offset by decreases in other product lines.
Overall  sales were up in  Asia/Pacific  primarily  due to higher  Mining  sales
volumes  offset by lower sales volumes across a number of product lines in North
America. Changes in exchange rates increased sales by 2%.

                                      -19-


Earnings  from  operations  were $23.7,  or 13% of sales in 2007,  compared with
$18.3,  or 8%  of  sales,  in  2006.  The  increase  in  earnings  is  primarily
attributable  to  benefits  of our  restructuring  initiatives  and a  favorable
product mix primarily due to the  divestiture  of the water  treating  chemicals
product line, partially offset by a $4.1 increase in raw material costs from the
second quarter of 2006.

Cytec Surface Specialties


                                                                
                                           Total                     % Change Due to
                                                             --------------------------------
                                 2007        2006  % Change    Price    Volume/Mix  Currency
---------------------------------------------------------------------------------------------
North America                 $     94.6  $    93.9        1%        3%       -2%          -
Latin America                       18.4       15.1       22%        6%       10%          6%
Asia/Pacific                        69.7       69.4        1%        5%       -5%          1%
Europe/Middle East/Africa          236.9      212.4       12%        8%       -4%          8%
                              ---------------------------------------------------------------
Total                         $    419.6  $   390.8        7%        6%       -3%          4%
---------------------------------------------------------------------------------------------


Selling  volumes  decreased  3% primarily  due to lower sales of liquid  coating
resins  (aminos  lower  due to price  competition  partially  offset  by  higher
waterborne resins) and powder coatings resins in North America. In Asia/Pacific,
we had lower sales primarily in powder coating resins due to weak demand and the
impact from price  competition on lower end products.  In Europe,  sales volumes
were negatively impacted primarily by discontinuing  unprofitable  solvent-borne
products and in Radcure  resins due to lower demand in the  industrial  coatings
sector.  Selling prices were up 6% due to increases in liquid coating resins and
powder coatings across all regions while selling prices were essentially flat in
Radcure resins. Changes in exchange rates increased sales by 4%.

Earnings  from  operations  were $32.8,  or 8% of sales in 2007,  compared  with
$29.5,  or  8%  of  sales  in  2006.  The  increase  in  earnings  is  primarily
attributable  to the higher  selling prices which more than offset the increased
raw material costs of $15.4,  the lower selling  volumes,  and higher  operating
costs.

Cytec Engineered Materials



                                                                         
                                           Total                     % Change Due to
                                                             --------------------------------
                                 2007      2006     % Change    Price  Volume/Mix  Currency
---------------------------------------------------------------------------------------------
North America                 $    106.5  $    95.4       12%        2%       10%          -
Latin America(1)                     0.2        0.3         -         -        -           -
Asia/Pacific                        11.9       12.5       -5%        1%       -6%          -
Europe/Middle East/Africa           48.0       43.4       11%        2%        7%          2%
                              ---------------------------------------------------------------
Total                         $    166.6  $   151.6       10%        2%        7%          1%
---------------------------------------------------------------------------------------------

(1) Due to the level of sales in this geographic region, percentage comparisons
are not meaningful.

Overall selling volumes  increased 7% primarily due to higher sales to the large
commercial  aircraft,  business jet, and high performance  automotive markets in
North  America and Europe.  Overall  prices  increased 2% primarily due to price
increases in a number of market  segments in all regions  except Latin  America.
Changes in exchange rates increased sales by 1%.

Earnings  from  operations  were $34.8,  or 21% of sales in 2007,  compared with
$28.3,  or 19% of sales in 2006.  The impact of the increased  sales volumes and
higher  selling  prices were  partially  offset by slightly  higher raw material
costs of $0.6, increased costs in manufacturing to support the higher production
volumes, and higher commercial and research and development costs.

Building Block Chemicals


                                                                            
                                                                            % Change Due to
                                                             ----------------------------------------------
                                        Total
                                 2007      2006   % Change      Price    Volume/Mix  Divestiture  Currency
-----------------------------------------------------------------------------------------------------------
North America                 $    56.6 $     42.0       35%         2%         40%          -7%          -
Latin America(1)                    0.6        1.4        -          -           -            -           -
Asia/Pacific                        3.1        3.0        3%         4%          2%          -3%          -
Europe/Middle East/Africa          32.7       34.7       -6%        12%         14%         -32%          -
                              -----------------------------------------------------------------------------
Total                         $    93.0 $     81.1       15%         6%         28%         -19%          -
-----------------------------------------------------------------------------------------------------------


(1) Due to the level of sales in this geographic region, percentage comparisons
are not meaningful.

                                      -20-


Overall selling  volumes were up 9%. Sales were  negatively  impacted 19% by the
divestiture  of the  acrylamide  product  line  which  was more  than  offset by
increased  volumes of  acrylonitrile  to the  purchaser of the divested  product
line.  Excluding these items,  sales of acrylonitrile  were lower in the quarter
due to a planned  maintenance  turnaround  partially  offset by higher  melamine
sales  volume.  The higher  melamine  sales volume is primarily due to increased
capacity available  following our takeover of the manufacturing  plant in August
2006,  which  previously  was a 50-50  manufacturing  joint venture with a third
party. Overall selling prices increased sales by 6%.

Earnings from operations  were $4.6 or 5% of sales in 2007,  compared with $6.4,
or 6% of  sales  in  2006.  The  decrease  in  earnings  was  primarily  due  to
unfavorable  mix due to the  divestiture of the acrylamide  product line and the
acrylonitrile  planned maintenance  turnaround in June 2007, partially offset by
selling price increases which were in excess of raw material increases of $1.8.

Six Months Ended June 30, 2007, Compared With Six Months Ended June 30, 2006

Consolidated Results

Net sales for the first six months of 2007 were $1,727.5  compared with $1,672.5
for the prior year period,  an increase of $55.0 or 3.3%. The Cytec  Performance
Chemicals  segment sales volumes  decreased  primarily due to the divestiture of
the water treating  chemicals  product line.  Cytec  Performance  Chemicals also
experienced  slightly  lower  volumes in North  America  due to  reduced  demand
partially  offset by increased  volumes in Europe and Asia. In the Cytec Surface
Specialties segment, sales increased primarily as a result of the higher selling
prices in liquid  coating  resins  and  powder  coatings  in all  regions,  plus
favorable  exchange  rate changes  partially  offset by lower  volumes in liquid
coating  resins  and  Radcure.  The Cytec  Engineered  Materials  segment  sales
increase was primarily  volume related with higher sales to the large commercial
aircraft and launch  markets with price  increases in a number of markets across
most regions.  The Building  Block  Chemicals  segment sales were up despite the
negative impact of the divestiture of the acrylamide product line which was more
than  offset by  increased  volumes of  acrylonitrile  to the  purchaser  of the
divested  product  line  and  higher  selling  volumes  of  melamine  as well as
increased selling prices.

For a detailed discussion on sales refer to the Segment Results section below.

Manufacturing cost of sales was $1,361.7 or 79% for the first six months of 2007
compared with $1,333.7 or 80% of sales for the first six months of 2006. Most of
the increase is associated  with higher selling  volumes and higher raw material
costs of $51.7  partially  offset by reduced costs due to the divestiture of the
water  treatment  chemicals  and  acrylamide  product  lines  and  restructuring
initiatives. The first six months of 2006 included a net restructuring charge of
$21.3. See Note 5 to the consolidated financial statements for additional detail
of the net restructuring charge.

Selling and  technical  services  was $103.0 in 2007 versus  $106.9 in the prior
year. The reduction was primarily due to the  divestiture of the water treatment
chemicals  product  line  partially  offset by  higher  spending  in  Engineered
Materials and Surface Specialties.

Research  and process  development  was $37.6 in 2007 versus  $36.1 in the prior
year  primarily due to higher  research and  development  spending in Engineered
Materials  and Surface  Specialties  to develop and  qualify  new  products  and
applications.  Partially offset by a decline due to the divestiture of the water
chemicals product line.

Administrative and general expenses were $55.2 in 2007 versus $51.0 in the prior
year.  The increase in 2007 was primarily  attributable  to higher  compensation
expense and an increase in incentive compensation expenses. The first six months
of 2006 includes  integration expenses of $1.0 associated with transitioning off
of  UCB's  information   technology  system   infrastructure.

Amortization  of acquisition  intangibles  was $18.9 in 2007 versus $18.0 in the
prior year primarily due to increased amortization of Radcure Trademarks.

Other income  (expense),  net was income of $1.5 in 2007 compared with income of
$14.0 in the prior year  period.  Included  in the first six months of 2006 is a
gain of $15.7 in connection with proceeds  collected in an arbitration  award in
settlement of the commercial dispute as discussed in Note 10 to the consolidated
financial statements.

Equity in earnings of  associated  companies was $0.4 in 2007 versus $1.7 in the
prior year.  The  decline is  attributable  to the market  share loss at a major
customer of our associated company.

Interest  expense,  net was $21.6 in 2007 compared with $29.1 in the prior year.
The decrease is primarily  due to the lower  average debt  compared to the prior
year.

                                      -21-


The effective rate for the six months ended June 30, 2007 was a tax provision of
27.6% ($40.6)  compared to 22.6% ($25.6) for the six months ended June 30, 2006.
The 2007 effective tax rate for year to date was unfavorably impacted by a shift
in our earnings to higher tax jurisdictions,  changes in U.S. tax laws regarding
export incentives,  and a French  restructuring  charge for which no tax benefit
was given due to the unlikely  utilization of related net operating losses.  The
rate was  favorably  affected  by the  relatively  low tax  expense of $0.4 with
respect to a $15.7 gain recorded in the first quarter on the second phase of the
water business divestiture and changes in U.S. tax laws regarding  manufacturing
incentives.  Excluding  these  items  and  accrued  interest  and  penalties  on
unrecognized  tax benefits in accordance  with FIN 48, the underlying  estimated
annual effective tax rate for the six months ended June 30, 2007 was 29.3%, with
a  normalized  annual  effective  rate of 29.75%  including  such  interest  and
penalties.

The  effective tax rate for the first six months of 2006 was 22.6% ($25.6) which
was favorably impacted by a tax benefit from a restructuring  charge recorded at
29.6%,  and the gain on the  favorable  decision  in a legal  dispute  partially
recorded in a lower tax entity,  resulting  in an  effective  rate of 20%.  Also
favorably  impacting the rate was a reduction in tax expense of $3.5 as a result
of the completion of 2002 and 2003 U.S. tax audits.  Excluding these items,  the
underlying  annual effective tax rate for the six months ended June 30, 2006 was
27%.

Net earnings for 2007 were $106.5  ($2.17 per diluted  share)  compared with net
earnings for 2006 of $86.6 ($1.79 per diluted  share).  The  improvement  in net
earnings is primarily  attributable to higher operating  earnings from increased
selling volumes,  increased  selling prices in excess of raw material costs, and
benefits from prior  restructuring  initiates.  Earnings  also  increased due to
lower net interest expense.  These increases were partially offset by the higher
effective tax rate discussed above.

Net  earnings for 2006 were $86.6  ($1.79 per diluted  share) which  included an
after-tax net restructuring  charge of $15.7, an after-tax gain of $12.4 related
to a  favorable  resolution  of a legal  dispute,  an income tax benefit of $3.5
related to the completion of prior years tax audits and the cumulative effect of
an accounting  change  after-tax  charge of $1.2 related to the adoption of SFAS
123R.

Segment Results (Sales to external customers)

Year-to-year  comparisons  and  analyses of changes in net sales by product line
segment and region are set forth below.

Cytec Performance Chemicals


                                                                               
                                           Total                             % Change Due to
                                                              ----------------------------------------------
                                 2007       2006  % Change      Price    Volume/Mix  Divestiture  Currency
------------------------------------------------------------------------------------------------------------
North America                 $    132.7 $   176.2      -25%         -           -6%         -19%         -
Latin America                       61.6      67.2       -8%         2%          -8%          -3%         1%
Asia/Pacific                        66.5      60.6       10%        -2%          15%          -5%         2%
Europe/Middle East/Africa          103.0     151.6      -32%         -            2%         -38%         4%
                              ------------------------------------------------------------------------------
Total                         $    363.8 $   455.6      -20%         -           -1%         -21%         2%
------------------------------------------------------------------------------------------------------------


Overall  selling  volumes  decreased 22% primarily due to the divestiture of the
water treating chemicals product line. In North America, there was lower volumes
in most product lines. In Latin America,  selling  volumes are down  principally
due to timing  of mine  fills.  Overall  volume in Asia  Pacific  increased  15%
primarily  due to  volume  gains in mining  chemicals  and  specialty  additives
product lines.  Overall average price was flat as price increases were offset by
customer mix. Changes in exchange rates increased sales by 2%.

Earnings from operations were $36.6, or 10% of sales,  compared with $36.2 or 8%
of sales in 2006.  Earnings were up slightly and operating  margins  improved as
the  favorable  product mix and  benefits  of the 2006  polymer  additives  cost
restructuring  more than  offset the lost  contribution  of the  divested  water
treating chemical product line and raw material cost increases $7.7.

Cytec Surface Specialties


                                                
                            Total                      % Change Due to
                                               --------------------------------
                   2007      2006   % Change     Price   Volume/Mix  Currency
-------------------------------------------------------------------------------
North America   $   180.1 $   193.2        -7%        3%      -10%           -
Latin America        34.5      29.4        17%        4%        9%           4%
Asia/Pacific        133.0     128.1         4%        6%       -3%           1%
Europe/Middle
 East/Africa        476.5     414.0        15%        7%       -1%           9%
               ----------------------------------------------------------------
Total           $   824.1 $   764.7         8%        6%       -3%           5%
-------------------------------------------------------------------------------


                                      -22-


Overall  selling  volumes  decreased 3% primarily due to weak demand across most
product lines in North  America and lower sales of solvent borne resin  products
due to the discontinuance of certain products.  Overall selling prices increased
6% primarily due to higher selling prices in liquid coating resins and powder in
all regions.  Overall Radcure resin volumes were down 2% primarily due to weaker
demand in North America and price  competition while overall Radcure prices were
basically  flat.  Changes in  exchange  rates  increased  sales by 5% across all
product lines and most regions.

Earnings from operations were $48.5, or 6% of sales,  compared with $58.9, or 8%
of sales in 2006.  The  decrease in earnings is  primarily  attributable  to the
lower  selling  volumes,  higher raw  materials of $38.3,  and higher  operating
expenses partially offset by increased selling prices of $43.6.

Cytec Engineered Materials


                                                                 
                                           Total                      % Change Due to
                                                              -------------------------------
                                 2007        2006   % Change    Price   Volume/Mix  Currency
---------------------------------------------------------------------------------------------
North America                 $    206.9  $    180.2       15%        2%        13%        -
Latin America(1)                     0.6         0.6        -         -          -         -
Asia/Pacific                        24.0        20.8       15%        1%        14%        -
Europe/Middle East/Africa           98.6        89.1       11%        2%         6%        3%
                              ---------------------------------------------------------------
Total                         $    330.1  $    290.7       14%        2%        11%        1%
---------------------------------------------------------------------------------------------


(1) Due to the level of sales in this geographic region, percentage comparisons
are not meaningful.

Overall  selling  volumes  increased  11%  from  higher  volumes  to  the  large
commercial  aircraft primarily due to build rates and new program sales into the
launch vehicle  market  segment.  Net selling  prices  increased 2% due to price
increases across a number of markets in most regions.  Changes in exchange rates
increased sales by 1%.

Earnings from operations  were $67.4,  or 20% of sales,  compared with $52.2, or
18% of sales in 2006.  The impact of the increased  sales on operating  earnings
due to  higher  volumes  and  higher  selling  prices  was  partially  offset by
increased raw material costs of $2.0, higher  manufacturing costs as a result of
increased  production volumes, and higher technical and research and development
expenditures.

Building Block Chemicals


                                                                           
                                           Total                            % Change Due to
                                                              -------------------------------------------
                                 2007       2006  % Change      Price   Volume/Mix Divestiture Currency
---------------------------------------------------------------------------------------------------------
North America                 $    112.8 $    86.2       31%         -         38%       -7%            -
Latin America(1)                     1.1       2.8        -          -          -         -             -
Asia/Pacific                        11.7      12.0       -3%        17%       -19%       -1%            -
Europe/Middle East/Africa           83.9      60.5       39%        12%        65%      -38%            -
                              ---------------------------------------------------------------------------
Total                         $    209.5 $   161.5       30%         6%        43%      -19%            -
---------------------------------------------------------------------------------------------------------


(1) Due to the level of sales in this geographic region,  percentage comparisons
are not meaningful.

Overall selling  volumes were up 24%. Sales were negatively  impacted 19% by the
divestiture  of the  acrylamide  product  line  which  was more  than  offset by
increased  volumes of  acrylonitrile  to the  purchaser of the divested  product
line.  Melamine  sales  were  higher in the six month  period  primarily  due to
increased capacity available  following our takeover of the manufacturing  plant
in August 2006, which previously was a 50-50  manufacturing joint venture with a
third party. Overall selling prices increased sales by 6%.

Earnings from operations were $7.2, or 3% of sales in 2007,  compared with $6.3,
or 3% of sales in 2006. The increase in earnings was primarily due to the higher
volumes  of  acrylonitrile  and  melamine  as well as 6% higher  selling  prices
partially offset by the divestiture of the acrylamide  product line,  higher raw
material  costs of $3.8,  and lower  production  due to the planned  maintenance
turnaround of the acrylonitrile manufacturing facility in June 2007.

LIQUIDITY AND FINANCIAL CONDITION

At June 30,  2007 our cash  balance  was $30.8  compared  with $23.6 at year end
2006.

Cash flows  provided by operating  activities  were $90.9 in 2007  compared with
$94.9 in 2006. Trade accounts receivable increased $57.6 reflecting the increase
in sales and inventory  increased  $7.0 due to higher  inventory  levels to meet
increasing demand. Accrued expenses decreased $20.3 primarily due to payments in
excess of current  accruals for:  incentive  compensation  and profit sharing of
$9.4,  restructuring  related activities of $4.8 and customer rebate payments of
approximately $2.5.

                                      -23-


Cash flows used in investing  activities were $12.3 for 2007 compared with $40.9
for 2006.  This  decrease was  primarily  attributable  to the proceeds of $27.1
related to the sale of our water treatment chemicals and acrylamide product line
to Kemira Group. Capital spending for the first half of 2007 was $39.4, although
this is expected to trend  higher as activity on our  expansion  projects in the
Engineered  Materials and Surface Specialty segments increase over the remainder
of the year.

Net cash flows used in financing  activities  were $73.0 in 2007  compared  with
$83.5  for  2006.  This  change  is  primarily  due to a  reduction  in net debt
repayments  in 2007.  In the first half of 2007,  we had net debt  repayments of
$60.8 and treasury stock  repurchases  of 432,800  shares for $25.1,  which were
partially offset by proceeds received on the exercise of stock options of $19.0.
In June 2007, we amended and restated our revolving credit agreement to increase
the facility  from $350.0 to $400.0,  and extend the maturity date to June 2012.
Borrowings  against the $400.0  unsecured  five-year  revolving  credit facility
totaled $34.3 and therefore,  we have $365.7 of borrowing capacity unutilized at
June 30, 2007.

Approximately  $43.7 remained  authorized  under our stock buyback program as of
June 30, 2007. We anticipate  repurchases will be made from  time-to-time on the
open  market or in private  transactions  and will be utilized  for  share-based
compensation plans and other corporate purposes.

On April 19, 2007 the Board of Directors  declared a $0.10 per common share cash
dividend,  paid on May 25, 2007 to  shareholders  of record as of May 10,  2007.
Cash  dividends  paid in the second quarter of 2007 and 2006 were $4.8 and $4.7,
respectively,  and for the six months ended June 30, 2007 and 2006 were $9.6 and
$9.4, respectively. On July 19, 2007 the Board of Directors declared a $0.10 per
common share cash dividend, payable on August 27, 2007 to shareholders of record
as of August 10, 2007.

During  2006,  the Pension  Protection  Act of 2006 was enacted in the U.S.  The
principal  changes  under  this  legislation   relate  to  the  way  assets  and
liabilities  are  valued  to  determine  required  pension  contributions.  This
legislation  also  impacts  the timing and manner of required  contributions  to
under-funded   pension   plans.   These  changes  could   increase  the  funding
requirements  for our U.S.  pension  plans.  Accordingly,  the  amounts we might
contribute to these benefit plans in the future are subject to  uncertainty.  We
believe we have adequate liquidity to fund any increased funding requirements of
our U.S. pension plans that may occur due to the Pension Protection Act.

We believe  that we have the ability to fund our  operating  cash  requirements,
planned  capital  expenditures  and dividends as well as the ability to meet our
debt service requirements for the foreseeable future from existing cash and from
internal cash generation.  However,  from time to time, based on such factors as
local tax  regulations,  prevailing  interest  rates  and our plans for  capital
investment  or other  investments,  it may make  economic  sense to utilize  our
existing  credit  lines in order to meet  those  cash  requirements,  which  may
include debt-service related disbursements.

We  have  not  guaranteed  any  indebtedness  of our  unconsolidated  associated
company.

Excluding the impact of increasing  raw  materials,  inflation is not considered
significant  since the rate of inflation has remained  relatively  low in recent
years and  investments  in areas of the world where  inflation  poses a risk are
limited.  The  impact of  increasing  raw  material  costs are  discussed  under
"Customers  and  Suppliers" in "Business" in Item 1 in our 2006 Annual Report on
Form 10-K.

There were no material changes in contractual obligations from December 31, 2006
to June 30, 2007. Reference is also made to Note 12 in the Notes to Consolidated
Financial  Statements  included herein which describes certain gross liabilities
totaling $28.6 for unrecognized tax benefits that will be resolved at some point
over the next several years.

OTHER

2007 OUTLOOK

In our July 19, 2007 press release,  which was also furnished as an exhibit to a
current report on Form 8-K, we presented our best estimate of the full year 2007
earnings  at the time  based  on  various  assumptions  set  forth in the  press
release.  There can be no assurance  that sales or earnings  will develop in the
manner projected. Actual results may differ materially. See "Comments on Forward
Looking Statements."

                                      -24-


SIGNIFICANT ACCOUNTING ESTIMATES / CRITICAL ACCOUNTING POLICIES

See "Critical  Accounting  Policies"  under Item 7A of our 2006 Annual Report on
Form 10-K,  filed with the  Securities  and Exchange  Commission on February 28,
2007 and incorporated by reference herein. There were no changes to our critical
accounting policies except as follows.

Accounting for Uncertainty in Income Taxes

During the first  quarter of 2007, we adopted FIN 48. Under FIN 48, we recognize
the tax benefit  from an uncertain  tax position  only if it is more likely than
not that  the tax  position  will be  sustained  on  examination  by the  taxing
authorities,  based on the technical  merits of the  position.  The tax benefits
recognized in the financial  statements  from such a position are measured based
on the largest benefit that has a greater than fifty percent likelihood of being
realized upon effective  settlement.  See Note 12 of the Consolidated  Financial
Statements for additional details on the impact of adoption of FIN 48.

COMMENTS ON FORWARD-LOOKING STATEMENTS

A number of the  statements  made by us in this report,  in our Annual Report on
Form 10-K,  or in other  documents,  including  but not limited to the Chairman,
President  and  Chief  Executive  Officer's  letter to  Stockholders,  our press
releases and other periodic  reports to the Securities and Exchange  Commission,
may be  regarded  as  "forward-looking  statements"  within  the  meaning of the
Private Securities Litigation Reform Act of 1995.

Forward-looking  statements  include,  among others,  statements  concerning our
(including  our  segments)  outlook  for  the  future,  anticipated  results  of
acquisitions  and  divestitures,  restructuring  initiatives  and their expected
results,  pricing  trends,  the effects of changes in currency  rates and forces
within the industry,  the completion  dates of and anticipated  expenditures for
capital projects,  expected sales growth,  operational excellence strategies and
their results,  expected annual effective tax rates, our long-term goals,  legal
settlements  and other  statements of  expectations,  beliefs,  future plans and
strategies,  anticipated  events or trends and  similar  expressions  concerning
matters  that are not  historical  facts.  Such  statements  are based  upon our
current  beliefs  and  expectations  and are  subject to  significant  risks and
uncertainties.  Actual results may vary  materially  from those set forth in the
forward-looking statements.

The following factors,  among others,  could affect the anticipated results: the
ability to complete the successful integration of Surface Specialties, including
realization of anticipated  synergies within the expected  timeframes or at all,
and the ongoing operations of the business; the ability to successfully complete
planned  restructuring  activities,  including  realization  of the  anticipated
savings  and  operational  improvements  resulting  from  such  activities;  the
retention  of  current  ratings  on our debt;  changes  in global  and  regional
economies; the financial well-being of end consumers of our products; changes in
demand for our products or in the  quality,  costs and  availability  of our raw
materials and energy; customer inventory reductions; the actions of competitors;
currency and interest rate  fluctuations;  technological  change; our ability to
renegotiate  expiring  long-term  contracts;   changes  in  employee  relations,
including possible strikes;  government regulations,  including those related to
taxation and those particular to the purchase, sale and manufacture of chemicals
or  operation  of  chemical  plants;  governmental  funding  for those  military
programs  that  utilize  our  products;   litigation,   including  its  inherent
uncertainty  and changes in the number or  severity  of various  types of claims
brought   against  us;   difficulties   in  plant   operations   and   materials
transportation,  including  those caused by hurricanes or other natural  forces;
environmental  matters;  returns on employee  benefit plan assets and changes in
the discount rates used to estimate employee benefit liabilities; changes in the
medical cost trend rate;  changes in  accounting  principles  or new  accounting
standards;  political  instability or adverse treatment of foreign operations in
any of the  significant  countries  in  which  we  operate;  war,  terrorism  or
sabotage; epidemics; and other unforeseen circumstances.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        (Currencies in millions)

For a discussion  of market  risks at  year-end,  refer to Item 7A of our Annual
Report  on Form  10-K for the year  ended  December  31,  2006,  filed  with the
Securities  and Exchange  Commission  on February 28, 2007 and  incorporated  by
reference herein. Other 2007 financial instrument transactions include:

Commodity Price Risk: At June 30, 2007, we held natural gas swaps, including the
gas swaps for our Fortier plant,  with an unfavorable  fair value of $2.0, which
will be reclassified into Manufacturing Cost of Sales through June 2008 as these
swaps are settled.

Assuming all other factors are held constant,  a hypothetical  increase/decrease
of  10% in the  price  of  natural  gas  would  cause  an  increase/decrease  of
approximately $3.8 in the value of the swaps.

                                      -25-


Interest Rate Risk: At June 30, 2007, our  outstanding  borrowings  consisted of
$42.1 of  short-term  borrowings  and $841.9 of long-term  debt,  including  the
current portion. The long-term debt had a face value of $841.7 and a fair value,
based on dealer quoted values, of approximately $818.7 at June 30, 2007.

Assuming other factors are held constant, a hypothetical increase/decrease of 1%
in the  weighted-average  prevailing  interest  rates on our variable  rate debt
outstanding as of June 30, 2007,  interest  expense would  increase/decrease  by
approximately $0.2 for the next fiscal quarter.

Currency Risk: We periodically  enter into currency forward contracts  primarily
to hedge currency  fluctuations of transactions  denominated in currencies other
than the  functional  currency of the business.  At June 30, 2007, the principal
transactions   hedged  involved  accounts   receivable,   accounts  payable  and
intercompany  loans. When hedging currency  exposures,  our practice is to hedge
such exposures with forward contracts  denominated in the same currency and with
similar  critical  terms  as  the  underlying  exposure,   and  therefore,   the
instruments  are effective at generating  offsetting  changes in the fair value,
cash flows or future earnings of the hedged item or transaction.

At June 30,  2007,  net  contractual  amounts of forward  contracts  outstanding
translated into U. S. dollar amounts of $103.7.  The  unfavorable  fair value of
currency contracts,  based on forward exchange rates at June 30, 2007, was $0.4.
Assuming that period-end exchange rates between the underlying currencies of all
outstanding contracts and the various hedged currencies were to adversely change
by a hypothetical  10%, the fair value of all outstanding  contracts at June 30,
2007 would decrease by approximately $15.8. However, since these contracts hedge
specific  transactions,  any change in the fair value of the contracts  would be
offset by  changes  in the  underlying  value of the item or  transaction  being
hedged.

In September,  2005,  we entered into  (euro)207.9  of five year cross  currency
swaps and  (euro)207.9 of ten year cross  currency swaps to effectively  convert
the 5-Year Notes and 10-Year Notes into euro-denominated  liabilities. The swaps
included an initial exchange of $500.0 on October 4, 2005 and will require final
principal  exchanges of $250.0 on each settlement date of the 5-Year and 10-Year
Notes  (October  1, 2010 and  October 1,  2015),  respectively.  At the  initial
principal  exchange,  we paid US dollars to  counterparties  and received euros.
Upon final  exchange,  we will provide  euros to  counterparties  and receive US
dollars.  The swaps also call for a semi-annual  exchange of fixed euro interest
payments for fixed US dollar  interest  receipts.  With respect to the five year
swaps,  we will  receive  5.5% per annum and will pay  3.784%  per annum on each
April 1 and October 1,  through the maturity  date of the five year swaps.  With
respect  to the ten year  swaps,  we will  receive  6.0% per  annum and will pay
4.5245% per annum on each April 1 and October 1,  through the  maturity  date of
the ten year swaps.  The cross currency swaps have been  designated as cash flow
hedges  of the  changes  in value of the  future  euro  interest  and  principal
receipts  that results from changes in the US dollar to euro  exchange  rates on
certain euro denominated  intercompany  loans receivable we have with one of our
subsidiaries.  At June 30, 2006, the unfavorable  fair value of the five and ten
year swaps were $20.9 and $17.8,  respectively.  Assuming other factors are held
constant, a hypothetical increase of 10% in the euro exchange rate would have an
adverse   effect  of   approximately   $53.9  on  the  combined   value  of  the
cross-currency swaps.

Our euro  denominated bank borrowings are used to provide a partial hedge of our
net investment in our Belgium-based subsidiary, Cytec Surface Specialties SA/NV.
From time to time we also enter into forward euro  contracts to adjust the level
of this net  investment  hedge.  At June 30, 2007,  we had forward  contracts to
purchase  (euro)58.0 which were designated as a net investment  hedge.  Assuming
other  factors are held  constant,  a  hypothetical  decrease of 10% in the euro
exchange rate would have an adverse impact of approximately $7.8 in the value of
these forward contracts.

Item 4.  CONTROLS AND PROCEDURES

We carried out an evaluation,  under the supervision and with the  participation
of the  management,  including the Chief  Executive  Officer and Chief Financial
Officer,  of  the  effectiveness  of  the  Company's   disclosure  controls  and
procedures  as required by Exchange  Act Rule  13a-15(b)  as of the period ended
June 30, 2007. Based upon that evaluation, the Chief Executive Officer and Chief
Financial  Officer have  concluded  that the Company's  disclosure  controls and
procedures are effective.

We continue the process of  implementing  our Cytec Specialty  Chemicals  global
enterprise-wide   planning   systems  for  the  acquired   business  of  Surface
Specialties.  The world-wide implementation is expected to be completed in early
2009  and  includes   changes  that  involve  internal  control  over  financial
reporting.  Although  we expect  this  implementation  to  proceed  without  any
material  adverse  effects,  the  possibility  exists that the  migration to our
global  enterprise-wide  planning  systems could  adversely  affect our internal
control,  our disclosure  control and procedures or our results of operations in
future  periods.  We are  reviewing  each  system  and  site as they  are  being
implemented and the controls affected by the implementation. Appropriate changes
have  been  or  will  be  made  to any  affected  internal  control  during  the
implementation.  We will test all significant  modified controls  resulting from
the implementation to ensure they are functioning effectively.

                                      -26-


As of January 1, 2007, we began utilizing the aforementioned  global systems for
the acquired Surface  Specialties  entities in the United States and Canada.  In
conjunction  with this  implementation,  the former  U.S.  legal  entity for the
Surface  Specialty  business was also merged with the Cytec Industries Inc. U.S.
legal  entity.  We have  reviewed  the results of the merger and the  concurrent
systems  implementation and have concluded that neither had a negative impact on
our internal control over financial reporting.

There were no changes in internal control over financial reporting that occurred
during the three months ended June 30, 2007 that have  materially  affected,  or
are reasonably likely to materially  affect, the Company's internal control over
financial reporting.

                                      -27-


PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS (Currencies in millions, except per share amounts)

We are the subject of numerous  lawsuits and claims incidental to the conduct of
our or our predecessors'  businesses,  including lawsuits and claims relating to
product liability, personal injury, environmental,  contractual,  employment and
intellectual  property matters. Many of the matters relate to the use, handling,
processing,  storage,  transport or disposal of hazardous materials.  We believe
that the  resolution  of such  lawsuits and claims,  including  those  described
below,  will not have a material  adverse effect on our  consolidated  financial
position,  but could be material to our  consolidated  results of operations and
cash flows in any one accounting  period.  We, in this section,  include certain
predecessor entities being indemnified by us.

Material  developments to legal proceedings  described in our 2006 Annual Report
on Form 10-K are set forth below.

The following table presents  information  about asbestos claims activity during
the six months ended June 30, 2007:


                                                                              
---------------------------------------------------------------------------------------------------
                                                                       For the Six Month Period
                                                                                 Ended
                                                                             June 30, 2007
---------------------------------------------------------------------------------------------------
Number of claimants at beginning of period                                       8,600
Number of claimants associated with claims closed during period                   (300)
Number of claimants associated with claims opened during period                    200
---------------------------------------------------------------------------------------------------
Number of claimants at end of period                                             8,500
---------------------------------------------------------------------------------------------------


Numbers in the foregoing  table are rounded to the nearest hundred and are based
on  information  as received by the  Company,  which may lag actual court filing
dates by several  months or more.  Claims are recorded as closed when a claimant
is dismissed or severed from a case.  Claims are opened  whenever a new claim is
brought,  including from a claimant previously dismissed or severed from another
case.

We commenced binding arbitration  proceedings against SNF SA ("SNF"), in 2000 to
resolve a  commercial  dispute  relating  to SNF's  failure to  purchase  agreed
amounts  of  acrylamide  under  a  long-term  agreement.   In  July,  2004,  the
arbitrators awarded us damages and interest aggregating approximately (euro)11.0
plus  interest  on the award at a rate of 7% per annum from July 28,  2004 until
paid.  After further  proceedings  in France,  we collected  (euro)12.2  ($15.7)
related to the  arbitration  award  including  interest in the second quarter of
2006.  Subsequent  to the  arbitration  award,  SNF filed a  complaint  alleging
criminal violation of French and European  Community  antitrust laws relating to
the  contract,  which was the  subject  of the  arbitration  proceedings,  which
complaint was dismissed in December  2006.  SNF has also filed a final appeal of
the court order which  allowed us to enforce the award and a separate  complaint
in France seeking compensation from Cytec for (euro)54.0 in damages it allegedly
suffered  as a result of our  attachment  on various  SNF  receivables  and bank
accounts to secure  enforcement of the  arbitration  award.  We believe that the
appeal and complaint are without merit. SNF also appealed the arbitration  award
in Belgium where the Brussels Court of First Instance  invalidated  the award in
March 2007.  We have  appealed  that  decision to the Belgium  Court of Appeals,
which will review the matter on a de novo basis. The Belgium decision should not
affect the enforceability of the award in France.

See also Note 10 of the Notes to the Consolidated Financial Statements herein.


                                      -28-

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER
        PURCHASES OF EQUITY SECURITIES (Currencies in millions, except per share
        amounts)

During the six months ended June 30, 2007, we repurchased common stock for $25.1
under  our stock  buyback  program,  which was  suspended  in  October  2004 and
reinstated in February 2007.  Approximately  $43.7 remained authorized under the
buyback  program as of June 30, 2007.  Pursuant to this  program,  shares can be
repurchased in open market transactions or privately negotiated  transactions at
our discretion.


                                                                     
                                                                                Approximate Dollar
                                                              Total Number of     Value of Shares
                                                             Shares Purchased as  That May Yet Be
                      Total Number of    Average Price Per    Part of Publicly        Purchased
       Period         Shares Purchased          Share         Announced Program  Under the Program
----------------------------------------------------------------------------------------------------
March 1, 2007 -
 March 31, 2007           170,000              $57.04             170,000              $59.0
----------------------------------------------------------------------------------------------------
April 1, 2007 -
 April 30, 2007            72,000              $55.64              72,000              $55.0
----------------------------------------------------------------------------------------------------
 May 1, 2007 - May
  31, 2007                 78,000              $57.81              78,000              $50.5
----------------------------------------------------------------------------------------------------
 June 1, 2007 - June
  30, 2007                112,800              $60.75             112,000              $43.7
----------------------------------------------------------------------------------------------------


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its annual meeting of Common Stockholders on April 19, 2007. At
this meeting, the following matters were voted on:

     1.   Election of Directors - Ms. Chris A. Davis and Messrs Louis L. Hoynes,
          Jr.,  and  William P.  Powell  were  elected  Directors  at the Annual
          Meeting for terms ending at the Annual Meeting of Stockholders in 2010
          by the  margins  set  forth  below.  In  addition,  the  terms  of the
          following   directors   continued  after  that  meeting:   Anthony  G.
          Fernandes,  Barry C. Johnson, David Lilley, Thomas W. Rabaut, Jerry R.
          Satrum, Raymond P. Sharpe and James R. Stanley.

                        Name                    Votes For       Votes Withheld
                --------------------------------------------------------------
                Chris A. Davis                  44,088,484        923,694
                Louis L. Hoynes, Jr.            43,607,804      1,404,374
                William P. Powell               42,610,529      2,401,649
                --------------------------------------------------------------

     2.   The  appointment of KPMG LLP as the Company's  independent  registered
          public accounting firm for 2007 was ratified by the following margin:

                        For                     Against         Abstain
                -------------------------------------------------------
                     44,508,855                 416,569         86,754
                -------------------------------------------------------

Item 5.  OTHER

REGULATORY DEVELOPMENTS

The   Registration,   Evaluation  and   Authorization  of  Chemicals   ("REACH")
legislation  became  effective  in the  European  Union  on June 1,  2007.  This
legislation  requires  manufacturers  and  importers  of  certain  chemicals  to
register  certain  chemicals and evaluate their potential impact on human health
and  the  environment.  Under  REACH,  where  warranted  by a  risk  assessment,
specified  uses  of  some  hazardous  substances  may  be  restricted.   Covered
substances  must  be   pre-registered   by  December  31,  2008.   Subsequently,
registration is required based on volume for covered substances  manufactured or
imported into the European  Union in quantities  greater than one metric ton per
year.  The European  Commission  is preparing  technical  guidance  documents to
facilitate the  implementation of REACH, but this guidance is not expected to be
available until the end of 2007. Currently,  REACH is expected to take effect in
three primary stages over eleven years  following the final  effective date. The
registration, evaluation and authorization phases would require expenditures and
resource  commitments,  for example,  in order to compile and file comprehensive
reports, including testing data, on each chemical substance and perform chemical
safety  assessments.  We do not  expect  to incur  significant  costs  for REACH
compliance in 2007. However,  the overall cost of compliance over the next 10-15
years could be  substantial.  In addition,  it is possible that REACH may affect
raw material supply,  customer demand for certain products,  and our decision to
continue to manufacture and sell certain products in the European Union.

                                      -29-


Item 6. EXHIBITS

        (a).    Exhibits

See Exhibit Index on page 33 for exhibits  filed with this  Quarterly  Report on
Form 10-Q.

                                      -30-


                                    SIGNATURE

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.


                                        CYTEC INDUSTRIES INC.

                                        By: /s/ David M. Drillock
                                            ---------------------
                                            David M. Drillock
                                            Vice President and
                                            Chief Financial Officer


August 13, 2007

                                      -31-


Exhibit Index
-------------

12   Computation  of Ratio of  Earnings  to Fixed  Charges for the three and six
     months ended June 30, 2007 and 2006

31.1 Certification of David Lilley,  Chief Executive  Officer,  Pursuant to Rule
     13a-14(a) of the Securities Exchange Act

31.2 Certification of David Drillock, Chief Financial Officer,  Pursuant to Rule
     13a-14(a) of the Securities Exchange Act

32.1 Certification  of David  Lilley,  Chief  Executive  Officer  Pursuant to 18
     U.S.C.   Section  1350,   As  Adopted   Pursuant  to  Section  906  of  The
     Sarbanes-Oxley Act of 2002

32.2 Certification  of David Drillock,  Chief Financial  Officer  Pursuant to 18
     U.S.C.   Section  1350,   As  Adopted   Pursuant  to  Section  906  of  The
     Sarbanes-Oxley Act of 2002


                                      -32-