Cabot fiscal Q3 earnings jump 32% to US$62M, sales climb 17% to US$883M, on strong pricing, margins, volumes, record Performance Segment EBIT and New Business Segment revenues

BOSTON , July 27, 2011 (press release) – Cabot Corporation (NYSE:CBT - News) today announced results for its third quarter of fiscal 2011.

Key Highlights

Strong pricing and margin performance across the portfolio
Record Performance Segment EBIT and New Business Segment revenue
Volumes remain solid with capacity expansion projects on track to deliver future growth
Cabot to expand fumed silica capacity at Barry, Wales plant and inkjet colorants capacity at Haverhill, Mass. plant

       
(In millions, except per share amounts)     Fiscal 2011   Fiscal 2010  
      Third   First   Third   First  
     
Quarter
 
9 months
 
Quarter
 
9 months
 
                     
Net sales     $ 883     $ 2,427     $ 753     $ 2 ,144    
Net income attributable to Cabot Corporation     $ 62     $ 188     $ 47     $ 119    
                     
Net earnings per share attributable to Cabot Corporation     $ 0.95     $ 2.84     $ 0.72     $ 1.81    
Less Adjustments:                    
Net income per share from discontinued operations      
-
    $ 0.02       -       -    
Certain items per share     $ (0.09 )   $ (0.21 )   $ (0.23 )   $ (0.57 )  
Adjusted EPS     $ 1.04     $ 3.03     $ 0.95     $ 2.38    
                     
Less: Impact of discrete tax items per share     $ 0.06     $ 0.46     $ 0.05     $ 0.28    
Adjusted EPS excluding discrete tax items     $ 0.98     $ 2.57     $ 0.90     $ 2.10    
                                     

“We are pleased with the record segment EBIT of $115 million this quarter,” stated Cabot’s President and CEO. “We also saw record EBIT in the Performance Segment and record revenues in the New Business Segment. In the Performance Segment, we experienced strong volumes and margins from the delivery of high value products to our global customer base. Our New Business Segment maintained its focus on revenue growth and achieved record sales, mainly from our Inkjet Colorants Business. Rubber Blacks had another strong quarter driven by increased margins from pricing, product mix, energy efficiency and yield. Volumes remained solid and we continue to operate at high utilization levels. In addition, our strong balance sheet is helping us absorb higher working capital from rising carbon black raw material costs while ensuring our ability to pursue the capital investments necessary for our future growth. As part of our growth plan, we have recently announced a 25% capacity expansion at our fumed silica plant in Barry, Wales and we are doubling the capacity of our color pigment and polymer product lines at our inkjet colorants plant in Haverhill, Mass.,” Prevost concluded.

Financial Detail

For the third quarter of fiscal 2011, net income attributable to Cabot Corporation was $62 million ($0.95 per diluted common share) which includes a $0.09 per share charge principally for restructuring costs. Adjusted EPS was $1.04 per share.

Segment Results

Core Segment- Third quarter fiscal 2011 EBIT in the Rubber Blacks Business increased by $9 million when compared to the same quarter of fiscal 2010. The increase was driven principally by higher prices, a favorable product mix and energy center benefits. These positive factors more than offset the impact of higher raw material costs, including a $7 million unfavorable LIFO charge in the third quarter of fiscal 2011, and 3% lower volumes when compared to the third quarter of fiscal 2010. Excluding the impact of the closure of our carbon black facility in India, volumes decreased by 1%. Sequentially, global volumes were 3% higher driven by growth in emerging markets and Japan. When compared to the second quarter of fiscal 2011, EBIT was flat. Higher unit margins offset an unfavorable LIFO charge of $7 million and $8 million of quarterly benefits in the second quarter that did not repeat.

Regional volume changes for the third quarter of fiscal 2011 as compared to the same quarter of the prior year as well as compared to the second fiscal quarter of 2011 are included in the table below.

       
     

Third Quarter
Year over Year Change

 

 

Third Quarter
Sequential Change

 

 
Japan     8%   15%  
Southeast Asia     (3%)*   4%  
China     (3%)   10%  
Europe, Middle East, Africa     2%   (5%)  
North America     (2%)   (2%)  
South America     (3%)   2%  
             
*Excludes the impact of the closure of our carbon black facility in India.

In the Supermetals Business, EBIT increased by $5 million when compared to the third quarter of fiscal 2010. The increase was driven by improved margins from higher pricing and a favorable product mix, which more than offset lower volumes and higher ore costs. The business continues to be successful at implementing its strategy, shifting its portfolio toward higher value products. Sequentially, profitability decreased by $1 million from lower volumes that have resulted from product portfolio optimization efforts and higher ore costs. The unfavorable items more than offset the favorable margin impact of higher pricing and improved product mix.

Performance Segment- Third quarter fiscal 2011 EBIT in the Performance Segment increased by $7 million when compared to the same quarter of fiscal 2010. The increase was driven principally by higher volumes and higher unit margins from value pricing in the Performance Products Business. Volumes in the Performance Products Business increased by 9% when compared to the third quarter of fiscal 2010, while volumes in the Fumed Metal Oxides Business increased 2%. These favorable factors more than offset the impact of higher carbon black raw material costs, including a $3 million unfavorable LIFO charge in the third quarter of fiscal 2011. Sequentially, EBIT increased by $5 million due principally to higher volumes. Volumes in Performance Products were 1% higher, while volumes in Fumed Metal Oxides increased by 8% when compared to the second quarter of fiscal 2011.

Specialty Fluids Segment- For the third quarter of fiscal 2011, EBIT in the Specialty Fluids Segment decreased by $8 million due to lower sales and rental revenue as a result of jobs that were shorter in duration. Sequentially, EBIT increased $2 million from higher rental revenue resulting from higher activity levels driven by an increase in the number of jobs.

New Business Segment- Third quarter fiscal 2011 revenues in the New Business Segment increased by 20% ($5 million) and 11% ($3 million) when compared to the same quarter of fiscal 2010 and the second quarter of fiscal 2011, respectively. The growth in both periods was driven principally by record volumes in the Inkjet Colorants Business.

Cash Performance- The Company ended the third quarter of fiscal 2011 with a cash balance of $344 million. During the third fiscal quarter 2011, the Company’s cash balance declined by $22 million as the strong operating results were more than offset by $60 million of capital expenditures focused on our growth initiatives and a $68 million sequential increase in working capital, driven by the impact of higher carbon black raw material costs on inventory values and accounts receivable balances.

Taxes- During the third quarter of fiscal 2011, the Company recorded a net tax provision of $18 million, including discrete tax benefits of $4 million. The tax rate on continuing operations was 21% for the third quarter of fiscal 2011. Excluding discrete tax benefits and the impact of certain items, the quarterly operating tax rate was 24%.

Market Outlook

Commenting on the outlook for the Company’s end markets, Prevost said, “We continue to see solid demand in our end markets. The tire and automotive sectors are returning to their long-term regional growth rates and the foreseeable demand should ensure ongoing high utilization rates of our assets. There continues to be strong demand growth for high performance electronics, such as smartphones and tablets that will benefit our Supermetals business. In the construction and infrastructure markets, strength in emerging markets continues to be a key growth driver for us. Our capacity additions in carbon black, fumed silica and masterbatch will provide us additional opportunities to meet the demand in our key end markets over the coming quarters.”

“We remain focused on achieving our long term adjusted earnings per share target of $4.50 in 2014 through capacity expansion, margin improvement and growth from new products and businesses,” Prevost stated. “Cabot has strong leadership positions across our segments and geographies and is poised to benefit from the growth that is driven by the macroeconomic trends of energy efficiency and sustainability, growth of the middle class in emerging markets and globalization and mobility.”

Earnings Call

The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on Wednesday, July 27, 2011. The call can be accessed through Cabot’s investor relations website at http://investor.cabot-corp.com

Cabot Corporation, headquartered in Boston, Massachusetts, is a global specialty chemicals and performance materials company. Cabot’s major products are carbon black, capacitor materials, fumed silica, cesium formate drilling fluids, inkjet colorants and aerogels. The Company’s website address is: http://www.cabot-corp.com

Forward-Looking Statements- This earnings release contains forward-looking statements based on management’s current expectations, estimates and projections. All statements that address expectations or projections about the future, including our ability to meet our long-term financial targets, strategy for growth, market position, demand for our products, when we expect commissioning of our capacity additions to occur, and expected financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like “expects,” “anticipates,” “plans,” “intends,” “projects,” “indicates,” and similar expressions. Forward-looking statements are based on our current expectations, assumptions, estimates and projections about Cabot's businesses and strategies, market trends and conditions, economic conditions and other factors. These statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control and difficult to predict. If known or unknown risks materialize, or should underlying assumptions prove inaccurate, our actual results could differ materially from past results and from those expressed in the forward-looking statement. Important factors that could cause our results to differ materially from those expressed in the forward-looking statements include, but are not limited to changes in raw material costs; costs associated with the research and development of new products, including regulatory approval and market acceptance; competitive pressures; delays in the successful integration of structural changes, including restructuring plans, and joint ventures; delays in the completion or start-up of our capacity expansion projects; the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the company does business; and severe weather events that cause business interruptions, including plant and power outages, or disruptions in supplier or customer operations. These factors are discussed more fully in the reports we file with the Securities and Exchange Commission, particularly our latest annual report on Form 10-K.

Explanation of Terms Used- The term “LIFO” includes two factors: (i) the impact of current inventory costs being recognized immediately in cost of goods sold (“COGS”) under a last-in first-out (“LIFO”) method, compared to the older costs that would have been included in COGS under a first-in first-out (“FIFO”) method (“COGS impact”); and (ii) the impact of reductions in inventory quantities, causing historical inventory costs to flow through COGS (“liquidation impact”). The consolidated impact of using the LIFO method to value inventories in the US instead of the FIFO method for the third quarter of fiscal 2011 was an unfavorable $11 million and is comprised of an unfavorable $17 million COGS impact partially offset by a favorable $6 million liquidation impact. This compares to an $11 million favorable impact for the third quarter of fiscal 2010, comprised of a favorable $8 million liquidation impact and a favorable $3 million COGS impact.

The term “quarterly operating tax rate” represents the tax rate on our recurring operating results. This rate excludes discrete tax items, which are unusual and infrequent items that are excluded from the estimated annual effective tax rate and other tax items, including the impact of the timing of losses in certain jurisdictions, cumulative rate adjustment and the impact of certain items on both operating income and tax provision.

The term “product mix” refers to the various types and grades, or mix, of products sold in a particular Business or Segment during the period, and the positive or negative impact of that mix on the revenue or profitability of the Business or Segment.

Use of Non-GAAP Financial Measures- The preceding discussion of our results and the accompanying financial tables report adjusted EPS, a non-GAAP financial measure. In calculating adjusted EPS, we exclude from our earnings certain items of expense and income that management does not consider representative of the Company's ongoing operations. We believe this non-GAAP financial measure is useful to investors because it eliminates distortions in our operating results and helps facilitate comparisons of our operating performance across periods. Adjusted EPS should be considered as supplemental to, and not as a replacement for, EPS determined in accordance with GAAP. A reconciliation of adjusted EPS to EPS from continuing operations, the most directly comparable GAAP financial measure, and the certain items that are excluded from our calculation of adjusted EPS, are provided in the table titled "Certain Items and Reconciliation of Adjusted EPS.”
 
                     
                     
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
                     
                     
Periods ended June 30   Three Months   Nine Months
Dollars in millions, except per share amounts (unaudited)   2011   2010   2011   2010
                     
Net sales and other operating revenues   $ 883     $ 753     $ 2,427     $ 2,144  
                     
Cost of sales     708       599       1,933       1,714  
                     
Gross profit     175  
 
  154       494       430  
                     
                     
Selling and administrative expenses     62       61       190       189  
                     
Research and technical expenses     17       16       53       53  
Income from operations     96       77       251       188  
                     
                     
Other income and (expense)                
                     
Interest and dividend income     1       1       2       1  
                     
Interest expense     (9 )     (10 )     (29 )     (30 )
                     
Other (expense) and income     (3 )     2       3       (2 )
                     
Total other (expense) and income     (11 )     (7 )     (24 )     (31 )
                     
Income from continuing operations before income taxes and equity in net income of affiliated companies
    85       70       227       157  
                     
Provision for income taxes     (18 )     (20 )     (29 )     (30 )
                     
Equity in net income of affiliated companies, net of tax     2       1       6       5  
                     
Net income from continuing operations     69       51       204       132  
                     
Income from discontinued operations, net of tax (A)                 1        
                     
Net income     69       51       205       132  
                     
Net income attributable to noncontrolling interests, net of tax     7       4       17       13  
                     
Net income attributable to Cabot Corporation   $ 62     $ 47     $ 188     $ 119  
                     
                     
                     
Diluted earnings per share of common stock attributable to Cabot Corporation
               
                     
Continuing operations   $ 0.95     $ 0.72     $ 2.82     $ 1.81  
                     
Discontinued operations (A)                 0.02        
                     
Net income attributable to Cabot Corporation   $ 0.95     $ 0.72     $ 2.84     $ 1.81  
                     
Weighted average common shares outstanding                
Diluted    
65.6
     
64.5
     
65.4
     
64.2
 
                     
 
 

(A) Amounts relate to tax settlements in connection with our discontinued operations.

 

 
                   
                   
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
                   
                   
Periods ended June 30   Three Months   Nine Months
Dollars in millions, except per share amounts (unaudited)   2011   2010   2011   2010
                   
Sales                
                   
Core Segment   $ 578     $ 484     $ 1,594     $ 1,375  
Rubber blacks     531       437       1,436       1,247  
Supermetals     47       47       158       128  
                   
Performance Segment     240       200       652       587  
Performance products     173       137       464       401  
Fumed metal oxides     67       63       188       186  
                   
New Business Segment     30       25       77       64  
Inkjet colorants     20       15       50       43  
Aerogel     8       8       19       16  
Superior MicroPowders     2       2       8       5  
                   
Specialty Fluids Segment     12       22       42       52  
                   
Segment sales     860       731       2,365       2,078  
                   
Unallocated and other (A)     23       22       62       66  
                   
Net sales and other operating revenues   $ 883     $ 753     $ 2,427     $ 2,144  
                   
Segment Earnings Before Interest and Taxes                
                   
Core Segment   $ 69     $ 55     $ 199     $ 145  
                   
Rubber blacks     50       41       138       122  
Supermetals     19       14       61       23  
                   
Performance Segment     42       35       109       101  
                   
New Business Segment     1             (1 )     (2 )
                   
Specialty Fluids Segment     3       11       10       21  
                   
Total Segment Earnings Before Interest and Taxes (B)     115       101       317       265  
                   
Unallocated and Other                
                   
Interest expense     (9 )     (10 )     (29 )     (30 )
Certain items (C)     (5 )     (15 )     (16 )     (41 )
Unallocated corporate costs     (12 )     (9 )     (35 )     (30 )
General unallocated expense (D)     (2 )     4       (4 )     (2 )
Less: Equity in net income of affiliated companies, net of tax     (2 )     (1 )     (6 )     (5 )
                   
Income from continuing operations before income taxes and equity in net income of affiliated companies
    85       70       227       157  
                   
Provision for income taxes     (18 )     (20 )     (29 )     (30 )
                   
Equity in net income of affiliated companies, net of tax     2       1       6       5  
                   
Net income from continuing operations     69       51       204       132  
                   
Income from discontinued operations, net of tax (E)                 1        
                   
Net income     69       51       205       132  
                   
Net income attributable to noncontrolling interests, net of tax     7       4       17       13  
                   
Net income attributable to Cabot Corporation   $ 62     $ 47     $ 188     $ 119  
                   
Diluted earnings per share of common stock attributable to Cabot Corporation
               
                   
Continuing operations   $ 0.95     $ 0.72     $ 2.82     $ 1.81  
                   
Discontinued operations (E)                 0.02        
                   
Net income attributable to Cabot Corporation   $ 0.95     $ 0.72     $ 2.84     $ 1.81  
                   
Weighted average common shares outstanding                
                   
Diluted    
65.6
     
64.5
     
65.4
     
64.2
 
                   

(A) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, and the impact of unearned revenue.

(B) Segment Earnings Before Interest and Taxes ("EBIT") is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in net income of affiliated companies, royalty income, and allocated corporate costs.

(C) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS table.

(D) General unallocated expense includes foreign currency transaction gains (losses), interest income, dividend income, and profit related to unearned revenue.

(E) Amounts relate to tax settlements in connection with our discontinued operations.

 

 
           
           
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
           
           
      June 30,   September 30,
      2011   2010
Dollars in millions, except share and per share amounts   (unaudited)   (audited)
           
Current assets:        
           
Cash and cash equivalents   $ 344     $ 387  
Accounts and notes receivable, net of reserve for doubtful accounts of $5 and $4     697       576  
Inventories:        
Raw materials     133       121  
Work in process     9       38  
Finished goods     249       178  
Other     43       36  
Total inventories     434       373  
Prepaid expenses and other current assets     73       72  
Deferred income taxes     32       30  
Total current assets     1,580       1,438  
           
Property, plant and equipment     3,141       2,943  
Accumulated depreciation and amortization     (2,111 )     (1,968 )
Net property, plant and equipment     1,030       975  
           
Goodwill     41       39  
Equity affiliates     58       61  
Intangible assets, net of accumulated amortization of $13 and $12     4       4  
Assets held for rent     46       40  
Deferred income taxes     255       245  
Other assets     88       84  
           
Total assets   $ 3,102     $ 2,886  

 

 
           
           
CABOT CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION
           
           
      June 30,   September 30,
      2011   2010
Dollars in millions, except share and per share amounts   (unaudited)   (audited)
           
Current liabilities:        
           
Notes payable to banks   $ 61     $ 29  
Accounts payable and accrued liabilities     428       447  
Income taxes payable     20       34  
Deferred income taxes     6       6  
Current portion of long-term debt     26       23  
Total current liabilities     541       539  
           
Long-term debt     578       600  
Deferred income taxes     6       6  
Other liabilities     340       324  
           
Stockholders' equity:        
Preferred stock:        
Authorized: 2,000,000 shares of $1 par value        
Issued and outstanding: None and none            
Common stock:        
Authorized: 200,000,000 shares of $1 par value        
Issued: 65,439,772 and 65,429,916 shares     65       65  
Outstanding: 65,406,101 and 65,370,220 shares        
Less cost of 33,671 and 59,696 shares of common treasury stock     (1 )     (2 )
Additional paid-in capital     60       46  
Retained earnings     1,278       1,125  
Deferred employee benefits     (16 )     (20 )
Accumulated other comprehensive income     126       88  
Total Cabot Corporation stockholders' equity     1,512       1,302  
Noncontrolling interests     125       115  
Total equity     1,637       1,417  
Total liabilities and equity   $ 3,102     $ 2,886  

 

CABOT CORPORATION
      Fiscal 2010   Fiscal 2011
Dollars in millions,                                      
except per share amounts (unaudited) Dec. Q.   Mar. Q.   June Q.   Sept. Q.   FY   Dec. Q.   Mar. Q.   June Q.   Sept. Q.   FY
                                           
Sales                                        
Core Segment $ 445     $ 446     $ 484     $ 479     $ 1,854     $ 501     $ 515     $ 578         $ 1,594  
Rubber blacks (A)   399       411       437       430       1,677       442       463       531           1,436  
Supermetals (A)   46       35       47       49       177       59       52       47           158  
Performance Segment   187       200       200       196       783       190       222       240           652  
Performance products (A)   126       138       137       130       531       132       159       173           464  
Fumed metal oxides (A)   61       62       63       66       252       58       63       67           188  
New Business Segment   17       22       25       24       88       20       27       30           77  
Inkjet colorants   14       14       15       14       57       14       16       20           50  
Aerogel   2       6       8       8       24       3       8       8           19  
Superior MicroPowders   1       2       2       2       7       3       3       2           8  
Specialty Fluids Segment   15       15       22       29       81       17       13       12           42  
Segment Sales (A)   664       683       731       728       2,806       728       777       860           2,365  
Unallocated and other (A), (B)   15       29       22       21       87       25       14       23           62  
                                           
Net sales and other operating revenues $ 679     $ 712     $ 753     $ 749     $ 2,893     $ 753     $ 791     $ 883         $ 2,427  
                                           
Segment Earnings Before Interest and Taxes                                      
Core Segment $ 49     $ 41     $ 55     $ 40     $ 185     $ 60     $ 70     $ 69         $ 199  
Rubber blacks (A)   43       38       41       28       150       38       50       50           138  
Supermetals (A)   6       3       14       12       35       22       20       19           61  
Performance Segment (A)   34       32       35       29       130       30       37       42           109  
New Business Segment   (3 )     1                   (2 )     (2 )           1           (1 )
Specialty Fluids Segment   5       5       11       14       35       6       1       3           10  
Total Segment Earnings Before Interest and Taxes (A), (C)   85       79       101       83       348       94       108       115           317  
                                           
                                           
Unallocated and Other                                      
Interest expense   (9 )     (11 )     (10 )     (10 )     (40 )     (10 )     (10 )     (9 )         (29 )
Certain items (D)   (17 )     (9 )     (15 )     (11 )     (52 )     (4 )     (7 )     (5 )         (16 )
Unallocated corporate costs   (11 )     (10 )     (9 )     (9 )     (39 )     (10 )     (13 )     (12 )         (35 )
General unallocated (expense) income (A), (E)   (3 )     (3 )     4             (2 )     3       (5 )     (2 )         (4 )
Less: Equity in net income of affiliated companies, net of tax   (3 )     (1 )     (1 )     (2 )     (7 )     (3 )     (1 )     (2 )         (6 )
                                           
Income from continuing operations before income taxes and equity in net income of affiliated companies
                                     
  42       45       70       51       208       70       72       85           227  
(Provision) benefit for income taxes   (11 )     1       (20 )     (16 )     (46 )     6       (17 )     (18 )         (29 )
Equity in net income of affiliated companies, net of tax   3       1       1       2       7       3       1       2           6  
                                           
Net income from continuing operations   34       47       51       37       169       79       56       69           204  
Income from discontinued operations, net of tax (F)                                 1                       1  
                                           
Net income   34       47       51       37       169       80       56       69           205  
                                           
Net income attributable to noncontrolling interests, net of tax   5       4       4       2       15       5       5       7           17  
                                           
Net income attributable to Cabot Corporation $ 29     $ 43     $ 47     $ 35     $ 154     $ 75     $ 51     $ 62         $ 188  
                                           
Diluted earnings per share of common stock attributable to Cabot Corporation
                                     
                                           
Continuing operations $ 0.44     $ 0.65     $ 0.72     $ 0.54     $ 2.35     $ 1.11     $ 0.76     $ 0.95         $ 2.82  
Discontinued operations (F)                                 0.02                       0.02  
                                           
Net income attributable to Cabot Corporation $ 0.44     $ 0.65     $ 0.72     $ 0.54     $ 2.35     $ 1.13     $ 0.76     $ 0.95         $ 2.84  
                                           
Weighted average common shares outstanding                                      
Diluted  
63.9
     
64.1
     
64.5
     
64.8
     
64.3
     
65.2
     
65.5
     
65.6
         
65.4
 
                                           

(A) Beginning with the third quarter of fiscal 2010, management no longer allocates its corporate adjustment for unearned revenue to its segments. Therefore, unearned revenue and cost of sales related to unearned revenue, which had been allocated to Segment Sales and Segment Earnings Before Interest and Taxes ("EBIT") in prior periods, have been reclassified to "Unallocated and other" and "General unallocated (expense) income". Prior periods have been recast to conform to the new allocation method. This change had an immaterial impact on segment EBIT for all periods presented.

(B) Unallocated and other reflects royalties paid by equity affiliates, other operating revenues, external shipping and handling fees, and the impact of unearned revenue as discussed in note (A) above.

(C) Segment EBIT is a measure used by Cabot's Chief Operating Decision-Maker to measure consolidated operating results, assess segment performance and allocate resources. Segment EBIT includes equity in net income of affiliated companies, royalty income, and allocated corporate costs.

(D) Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS table.

(E) General unallocated (expense) income includes foreign currency transaction gains (losses), interest income, dividend income, and the profit related to unearned revenue as discussed in note (A) above.

(F) Amounts relate to tax settlements in connection with our discontinued operations.

 

 
       
                                                   
                                                   
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS
                                                   
                                                   
CERTAIN ITEMS:                                
Periods ended June 30   Three Months   Nine Months
Dollars in millions, except per share amounts (unaudited) 2011   2011   2010   2010   2011   2011   2010   2010
                      $   per share(A)   $   per share(A)   $   per share(A)   $   per share(A)
                                                   
Certain items before income taxes                                
                                                   
Environmental reserves and legal settlements   $ ―   $ ―   $ (1 )   $ (0.01 )   $ ―   $ ―   (2 )   $ (0.02 )
                                                   
Recovery of previously impaired investment                                       1       0.01  
                                                   
Long-lived asset impairment (B)                                       (2 )     (0.02 )
                                                   
Global restructuring activities     (5 )     (0.09 )     (14 )     (0.22 )     (16 )     (0.21 )   (38 )     (0.54 )
                                                   
  Total certain items     (5 )     (0.09 )     (15 )     (0.23 )     (16 )     (0.21 )   (41 )     (0.57 )
                                                   
Discontinued operations (C)                             1       0.02            
                                                   
  Total certain items and discontinued operations     (5 )     (0.09 )     (15 )     (0.23 )     (15 )     (0.19 )   (41 )     (0.57 )
                                                   
Tax impact of certain items     (1 )         1           2         5      
                                                   
  Total certain items and discontinued operations after tax $ (6 )   $ (0.09 )   $ (14 )   $ (0.23 )   $ (13 )   $ (0.19 )   (36 )   $ (0.57 )
                                                   
                                                   
                                                   
Periods ended June 30   Three Months   Nine Months                                
Dollars in millions (unaudited)   2011   2010   2011   2010                                
                                                   
Statement of Operations Line Item                                            
                                                   
Cost of sales   $ (5 )   $ (12 )   $ (15 )   $ (25 )                                
                                                   
Selling and administrative expenses           (3 )     (1 )     (16 )                                
                                                   
Research and technical expenses                                                        
                                                   
  Total certain items   $ (5 )   $ (15 )   $ (16 )   $ (41 )                                
                                                   
                                                   
NON-GAAP MEASURE:                                
Periods ended June 30 (unaudited)   Three Months   Nine Months                
                      2011   2010   2011   2010                
                      per share(A)   per share(A)   per share(A)   per share(A)              
Reconciliation of Adjusted EPS to GAAP EPS                                
Net income per share attributable to Cabot Corporation $ 0.95     $ 0.72     $ 2.84     $ 1.81                  
Less: Net income per share from discontinued operations               0.02                        
Net income per share from continuing operations $ 0.95     $ 0.72     $ 2.82     $ 1.81                  
Less: Certain items per share     (0.09 )     (0.23 )     (0.21 )     (0.57 )                
Adjusted earnings per share   $ 1.04     $ 0.95     $ 3.03     $ 2.38                  
                                                   

(A) Per share amounts are calculated after tax.

(B) Land related to former carbon black site.

(C) Amounts relate to tax settlements in connection with our discontinued operations.

 

 


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