Cabot Corp. Reports Record $248 Million Income From Operations For Fiscal 2010
BOSTON, Oct. 26 /PRNewswire-FirstCall/ — Cabot Corporation (NYSE: CBT) today announced results for its fourth quarter and full fiscal year 2010.
(Logo: http://photos.prnewswire.com/prnh/20000323/CABOTLOGO )
(Logo: http://www.newscom.com/cgi-bin/prnh/20000323/CABOTLOGO )
Key Highlights
- Four quarters of strong performance in fiscal 2010, yielding adjusted EPS of $3.04
- Volumes remain stable quarter on quarter with levels still 5 to 10% below the peak of 2008
- Supermetals and Specialty Fluids businesses deliver strong results in fiscal 2010
- New Business Segment reports full year revenues up 31%
(In millions, except per share
amounts) 2010 2009
---- ----
Fourth Full Fourth Full
Quarter Year Quarter Year
------- ---- ------- ----
Net sales $749 $2,893 $610 $2,243
Net earnings (loss) per share
attributable to Cabot Corporation $0.54 $2.35 $(0.19) $(1.25)
Less: Net loss per share from
discontinued operations - - - $(0.01)
Less: Certain items per share $(0.12) $(0.69) $(0.47) $(1.37)
Adjusted earnings per share $0.66 $3.04 $0.28 $0.13
--------------------------- ----- ----- ----- -----
Commenting on the results, Patrick Prevost, Cabot’s President and CEO, stated, “We are pleased with our fourth quarter and full fiscal year financial results. This is our fourth consecutive quarter of strong performance. We ended the year with a record level of operating income and an outstanding return on invested capital of 14% on an adjusted basis. Maintaining our strategic focus combined with successful execution of our restructuring initiatives and a solid rebound in end market demand contributed to the company’s record performance.”
Prevost continued, “We are benefiting from having rebased our fixed costs and from our investments in new efficient capacity, energy centers and yield technology. Our pricing and business mix decisions have been highly disciplined and we have minimized the effect of the contract lag on our results. Our broad geographic footprint and our leading positions in the fastest growing regions of the world are competitive advantages. We have worked closely with our customers to maintain a reliable supply of high quality products. We are making great strides toward our goal of being their preferred supplier of performance materials. Our new business ventures continue to meet key milestones and contribute improved financial performance. All of these factors have led to our success as we continue to position Cabot as a top tier global specialty chemicals company.”
Financial Detail
For the fourth quarter of fiscal 2010, net income attributable to Cabot Corporation was $35 million ($0.54 per diluted common share) which includes the impact of discrete and other tax items as shown below. Adjusted EPS was $0.66 per common share, excluding $0.12 per common share of charges from certain items principally related to restructuring.
(In millions, except per share
amounts) 2010 2009
---- ----
Fourth Full Fourth Full
Quarter Year Quarter Year
------- ---- ------- ----
Adjusted EPS before discrete &
other tax items $0.67 $2.80 $0.31 $(0.06)
Impact of discrete & other tax
items $(0.01) $0.24 $(0.03) $0.19
Adjusted earnings per share $0.66 $3.04 $0.28 $0.13
--------------------------- ----- ----- ----- -----
Segment Results
Core Segment- Fourth quarter fiscal 2010 profitability in the Rubber Blacks Business increased by $9 million when compared to the same quarter of fiscal 2009 driven by higher volumes and unit margins. Globally, volumes increased by 4% versus the prior year’s quarter from improvement in market demand and the benefit of increased capacity in China. Unit margins benefited from a favorable product mix and our efforts to limit the effect of the contract lag. Sequentially, profitability decreased by $13 million due to higher raw material and maintenance costs in the fourth quarter and 2% lower volumes.
Profitability in the Supermetals Business increased by $13 million compared to the same quarter of fiscal 2009. The improvement was driven by higher volumes from increased market demand, especially in the higher value products, and lower raw material costs. Sequentially, profit decreased by $2 million as the effects of higher volumes and higher pricing were more than offset by maintenance costs in the fourth quarter. The Supermetals Business generated $26 million and $77 million of cash on a constant currency basis in the fourth quarter and full year of fiscal 2010, respectively, from strong operating results and reduced working capital.
Performance Segment- Fourth quarter fiscal 2010 profitability in the Performance Segment increased by $1 million when compared to the same quarter of fiscal 2009. The increase was driven by higher volumes in the Performance Products Business and improved unit margins in the Fumed Metal Oxides Business. Volumes increased by 2% in Performance Products when compared to the fourth quarter of fiscal 2009, while Fumed Metal Oxides volumes decreased by 1%. Sequentially, segment profit decreased by $6 million due principally to an unfavorable LIFO effect. Volumes in Fumed Metal Oxides increased by 7% when compared to the third quarter of fiscal 2010, while Performance Products volumes declined 3%.
Specialty Fluids Segment- Profitability in the Specialty Fluids Segment for the fourth quarter of fiscal 2010 increased by $10 million when compared to the fourth quarter of fiscal 2009. The increase was driven by higher volumes from a strong level of drilling activity in the North Sea and higher pricing. Sequentially, profit increased by $3 million with the improvement driven by drilling activity in the North Sea.
New Business Segment- Fourth quarter fiscal 2010 revenues in the New Business Segment increased by 26% ($5 million) when compared to the fourth quarter of fiscal 2009, and were equivalent to the third quarter of fiscal 2010. The revenue increase relative to the same quarter last year was driven by higher volumes in Inkjet Colorants and commercial success in the oil and gas market for the Aerogel Business. During the fourth quarter of fiscal 2010 the New Business Segment reported its third consecutive quarter of positive operating profit and ended fiscal 2010 with an $8 million improvement over the full year of fiscal 2009.
Cash Performance- The Company ended the fourth quarter of fiscal 2010 with a cash balance of $388 million. The strong cash balance is a result of robust operating results and a sequential reduction in working capital, principally from higher accounts payable balances.
Taxes- During the fourth quarter of fiscal 2010, the Company recorded a tax provision of $16 million, for an overall tax rate of 31%. The quarterly operating tax rate was approximately 28%.
Outlook
Commenting on the outlook for the Company, Prevost said, “Our consistently strong financial performance during fiscal 2010 and our solid execution over the last two years gives me great confidence in our strategy and our ability to achieve our long term financial targets. We have a portfolio of leading technologies, an efficient manufacturing platform and a broad geographic footprint that will allow us to leverage the continued global demand recovery. Our cash position and solid balance sheet will serve us well as we focus on growth over the coming years.”
Earnings Call
The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on October 27, 2010. 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, 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. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Cabot, particularly its latest annual report on Form 10-K, could cause results to differ materially from those stated. These factors 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; successful integration of structural changes, including restructuring plans, and joint ventures; 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.
Explanation of Terms Used-
The term “LIFO effect” 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 fourth quarter of fiscal 2010 was a benefit of $5 million and is comprised of a favorable $6 million liquidation impact partially offset by an unfavorable $1 million COGS impact. This compares to a $4 million unfavorable impact for the fourth quarter of fiscal 2009, comprised of an unfavorable $5 million COGS impact, partially offset by a favorable $1 million liquidation 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 and adjusted ROIC and also include information on our reportable segment sales and segment (or business) operating profit before taxes (“PBT”). Adjusted EPS, adjusted ROIC and segment PBT are non-GAAP financial measures and are not intended to replace EPS and income (loss) from continuing operations before taxes, equity in net income of affiliated companies and noncontrolling interest, respectively, the most directly comparable GAAP financial measures. Both EPS and adjusted EPS are calculated on a diluted share basis. In calculating adjusted EPS, adjusted ROIC and segment PBT, we exclude certain items, meaning items that are significant and unusual or infrequent and not believed to reflect the true underlying business performance, and, therefore, are not allocated to a segment’s results or included in adjusted EPS or adjusted ROIC. Further, in calculating segment PBT we include equity in net income of affiliated companies, royalties paid by equity affiliates and allocated corporate costs but exclude interest expense, foreign currency translation gains and losses, interest income, dividend income and unallocated corporate costs. Adjusted return on invested capital is calculated as income (loss) from continuing operations less after tax noncontrolling interest in net income, after tax net interest expense and after tax certain items; divided by the previous five quarters’ average of stockholders’ equity plus noncontrolling interest plus debt, less cash and after tax certain items. Our chief operating decision-maker uses adjusted EPS and adjusted ROIC to evaluate the performance of the Company in terms of profitability and the efficient use of capital employed without items management does not believe are indicative of the core earnings power of the Company. Segment PBT is used to evaluate changes in the operating results of each segment before non-operating factors and before certain items and to allocate resources to the segments. We believe that these non-GAAP measures also assist our investors in evaluating the changes in our results and the Company’s performance. A reconciliation of adjusted EPS to EPS is shown in the table titled Certain Items and Reconciliations, and a reconciliation of total segment PBT to income (loss) from operations before taxes, equity in net income of affiliated companies and noncontrolling interest is shown in the table titled Summary Results by Segments. The certain items that are excluded from our calculation of adjusted EPS, adjusted ROIC and segment PBT are detailed in the table titled Certain Items and Reconciliations.
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Periods ended September 30 Three Months
Dollars in millions, except per share amounts
(unaudited) 2010 2009
--------------------------------------------- ---- ----
Net sales and other operating revenues $749 $610
Cost of sales 615 538
--- ---
Gross profit 134 72
Selling and administrative expenses 57 51
Research and technical expenses 17 18
--- ---
Income (loss) from operations 60 3
Other income and (expense)
Interest and dividend income 1 1
Interest expense (10) (7)
Other income and (expense) - (7)
Total other income and (expense) (9) (13)
--- ---
Income (loss) from continuing operations before
income taxes and equity in net income of
affiliated companies 51 (10)
(Provision) benefit for income taxes (16) (1)
Equity in net income of affiliated companies, net
of tax 2 3
Net income (loss) from continuing operations 37 (8)
Loss from discontinued operations, net of tax (A) - -
Net income (loss) 37 (8)
Net income (loss) attributable to noncontrolling
interests, net of tax 2 3
Net income (loss) attributable to Cabot
Corporation $35 $(11)
--- ----
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
Continuing Operations (B) $0.54 $(0.19)
Discontinued Operations (A), (B) - -
Net income (loss) attributable to Cabot
Corporation (B) $0.54 $(0.19)
Weighted average common shares outstanding
Diluted 65 63
Periods ended September 30 Twelve Months
Dollars in millions, except per share amounts
(unaudited) 2010 2009
--------------------------------------------- ---- ----
Net sales and other operating revenues $2,893 $2,243
Cost of sales 2,329 2,016
----- -----
Gross profit 564 227
Selling and administrative expenses 246 211
Research and technical expenses 70 71
--- ---
Income (loss) from operations 248 (55)
Other income and (expense)
Interest and dividend income 2 3
Interest expense (40) (30)
Other income and (expense) (2) (20)
Total other income and (expense) (40) (47)
--- ---
Income (loss) from continuing operations before
income taxes and equity in net income of
affiliated companies 208 (102)
(Provision) benefit for income taxes (46) 22
Equity in net income of affiliated companies, net
of tax 7 5
Net income (loss) from continuing operations 169 (75)
Loss from discontinued operations, net of tax (A) - -
Net income (loss) 169 (75)
Net income (loss) attributable to noncontrolling
interests, net of tax 15 2
Net income (loss) attributable to Cabot
Corporation $154 $(77)
---- ----
Diluted earnings (loss) per share of common stock
attributable to Cabot Corporation
Continuing Operations (B) $2.35 $(1.24)
Discontinued Operations (A), (B) - $(0.01)
Net income (loss) attributable to Cabot
Corporation (B) $2.35 $(1.25)
Weighted average common shares outstanding
Diluted 64 63
(A) Amounts relate to legal settlements in connection with our
discontinued operations.
(B) Prior year earnings per share has been recast due to Cabot's
adoption of an accounting pronouncement in the first quarter of
fiscal 2010 that changes the methodology for allocating earnings
among shareholders. Under this guidance, certain of Cabot's unvested
share-based payment awards must be included in the earnings
allocation process in computing earnings per share. This guidance
has been applied retrospectively so that all periods are shown on a
consistent basis.
Fourth Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
Periods ended September
30 Three Months Twelve Months
Dollars in millions,
except per share
amounts (unaudited) 2010 2009 2010 2009
-------------------- ---- ---- ---- ----
SALES
Core Segment $479 $381 $1,854 $1,427
Rubber blacks (A) 430 347 1,677 1,287
Supermetals (A) 49 34 177 140
Performance Segment 196 184 783 620
Performance products (A) 130 119 531 410
Fumed metal oxides (A) 66 65 252 210
New Business Segment 24 19 88 67
Inkjet colorants 14 14 57 46
Aerogel 8 4 24 15
Superior MicroPowders 2 1 7 6
Specialty Fluids Segment 29 14 81 59
--- --- --- ---
Segment sales (A) 728 598 2,806 2,173
Unallocated and other
(A), (B) 21 12 87 70
--- --- --- ---
Net sales and other
operating revenues $749 $610 $2,893 $2,243
---- ---- ------ ------
SEGMENT PROFIT (LOSS)
Core Segment $40 $18 $185 $33
Rubber blacks (A) 28 19 150 34
Supermetals (A) 12 (1) 35 (1)
Performance Segment (A) 29 28 130 41
New Business Segment - (2) (2) (10)
Specialty Fluids Segment 14 4 35 21
--- --- --- ---
Total Segment Profit
(Loss) (A), (C) 83 48 348 85
Interest expense (10) (7) (40) (30)
Certain items (D) (11) (36) (52) (103)
Unallocated corporate
costs (9) (6) (39) (28)
General unallocated
expense (A), (E) - (6) (2) (21)
Less: Equity in net
income of affiliated
companies, net of tax (2) (3) (7) (5)
--- --- --- ---
Income (loss) from
continuing operations
before income taxes and
equity in net income of
affiliated companies 51 (10) 208 (102)
(Provision) benefit for
income taxes (16) (1) (46) 22
Equity in net income of
affiliated companies,
net of tax 2 3 7 5
Net income (loss) from
continuing operations 37 (8) 169 (75)
Loss from discontinued
operations, net of tax
(F) - - - -
Net income (loss) 37 (8) 169 (75)
Net income (loss)
attributable to
noncontrolling
interests, net of tax 2 3 15 2
Net income (loss)
attributable to Cabot
Corporation $35 $(11) $154 $(77)
--- ---- ---- ----
Diluted earnings (loss)
per share of common
stock
Continuing Operations
(G) $0.54 $(0.19) $2.35 $(1.24)
Discontinued Operations
(F), (G) - - - (0.01)
Net income (loss)
attributable to Cabot
Corporation (G) $0.54 $(0.19) $2.35 $(1.25)
Weighted average common
shares outstanding
Diluted 65 63 64 63
(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 Profit (Loss) in prior periods, have been reclassified to
"Unallocated and other" and "General unallocated expense". Prior
periods have been recast to conform to the new allocation method.
This change had an immaterial impact on segment profit (loss) 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 profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess
segment performance and allocate resources. Segment profit 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
Reconciliations table.
(E) General unallocated expense 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 legal settlements in connection with our
discontinued operations.
(G) Prior year earnings per share has been recast due to Cabot's
adoption of an accounting pronouncement in the first quarter of
fiscal 2010 that changes the methodology for allocating earnings
among shareholders. Under this guidance, certain of Cabot's
unvested share-based payment awards must be included in the
earnings allocation process in computing earnings per share. This
guidance has been applied retrospectively so that all periods are
shown on a consistent basis.
Fourth Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
September September
30, 30,
2010 2009
Dollars in millions, except share and
per share amounts (unaudited) (audited)
------------------------------------- ----------- ---------
Current assets:
Cash and cash equivalents $388 $304
Short-term marketable securities 1 1
Accounts and notes receivable, net of
reserve for doubtful accounts of $4 and
$6 575 452
Inventories:
Raw materials 121 118
Work in process 38 44
Finished goods 178 165
Other 36 31
--- ---
Total inventories 373 358
Prepaid expenses and other current
assets 71 53
Deferred income taxes 33 32
Total current assets 1,441 1,200
----- -----
Investments:
Equity affiliates 61 60
Long-term marketable securities and
cost investments 1 1
Total investments 62 61
--- ---
Property, plant and equipment 2,943 3,000
Accumulated depreciation and
amortization (1,968) (1,988)
Net property, plant and equipment 975 1,012
--- -----
Goodwill 39 37
Intangible assets, net of accumulated
amortization of $12 and $11 4 2
Assets held for rent 40 43
Deferred income taxes 246 235
Other assets 83 86
Total assets $2,890 $2,676
====== ======
Fourth Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
September September
30, 30,
2010 2009
Dollars in millions, except share and
per share amounts (unaudited) (audited)
------------------------------------- ----------- ---------
Current liabilities:
Notes payable to banks $29 $29
Accounts payable and accrued
liabilities 447 407
Income taxes payable 35 31
Deferred income taxes 5 5
Current portion of long-term debt 23 5
Total current liabilities 539 477
--- ---
Long-term debt 600 623
Deferred income taxes 10 11
Other liabilities 326 328
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: 65,429,916 and 65,401,485
shares 65 65
Outstanding: 65,370,220 and
65,309,155 shares
Less cost of 59,696 and 92,330 shares
of common treasury stock (2) (2)
Additional paid-in capital 45 18
Retained earnings 1,125 1,018
Deferred employee benefits (20) (25)
Accumulated other comprehensive
income 87 60
Total Cabot Corporation stockholders'
equity 1,300 1,134
Noncontrolling interests 115 103
---
Total equity 1,415 1,237
----- -----
Total liabilities and equity $2,890 $2,676
====== ======
CABOT CORPORATION
Fiscal 2009
------------
In millions,
except per share
amounts Sept.
(unaudited) Dec. Q. Mar. Q. June Q. Q. FY
---------------- ------- ------- ------- ------ ---
Sales
Core Segment $440 $294 $312 $381 $1,427
Rubber blacks (A) 394 272 274 347 1,287
Supermetals (A) 46 22 38 34 140
Performance
Segment 151 133 152 184 620
Performance
products (A) 100 91 100 119 410
Fumed metal oxides
(A) 51 42 52 65 210
New Business
Segment 18 16 14 19 67
Inkjet colorants 13 9 10 14 46
Aerogel 4 5 2 4 15
Superior
MicroPowders 1 2 2 1 6
Specialty Fluids
Segment 15 11 19 14 59
---------------- --- --- --- --- ---
Segment Sales (A) 624 454 497 598 2,173
Unallocated and
other (A), (B) 28 16 14 12 70
--------------- --- --- --- --- ---
Net sales and
other operating
revenues $652 $470 $511 $610 $2,243
---------------- ---- ---- ---- ---- ------
Segment Profit
(Loss)
Core Segment $25 $(24) $14 $18 $33
Rubber blacks (A) 21 (17) 11 19 34
Supermetals (A) 4 (7) 3 (1) (1)
Performance (A) 3 - 10 28 41
New Business
Segment (3) (1) (4) (2) (10)
Specialty Fluids
Segment 4 4 9 4 21
---------------- --- --- --- --- ---
Total Segment
Profit (Loss)
(A), (C) 29 (21) 29 48 85
Interest expense (9) (8) (6) (7) (30)
Certain items (D) (2) (46) (19) (36) (103)
Unallocated
corporate costs (7) (8) (7) (6) (28)
General
unallocated
expense (A), (E) (8) (8) 1 (6) (21)
Less: Equity in
net income of
affiliated
companies, net of
tax (2) - - (3) (5)
------------------ --- --- --- --- ---
Income (loss) from
continuing
operations before
income taxes and
equity in net
income of
affiliated
companies 1 (91) (2) (10) (102)
(Provision)
benefit for
income taxes (1) 31 (7) (1) 22
Equity in net
income of
affiliated
companies, net of
tax 2 - - 3 5
------------------ --- --- --- --- ---
Net income (loss)
from continuing
operations 2 (60) (9) (8) (75)
Loss from
discontinued
operations, net
of tax (F) - - - - -
---------------- --- --- --- --- ---
Net income (loss) 2 (60) (9) (8) (75)
Net (loss) income
attributable to
noncontrolling
interests, net of
tax (2) (2) 3 3 2
------------------ --- --- --- --- ---
Net income (loss)
attributable to
Cabot Corporation $4 $(58) $(12) $(11) $(77)
Diluted earnings
(loss) per share
of common stock
attributable to
Cabot Corporation
Continuing
operations (G) $0.06 $(0.93) $(0.18) $(0.19) $(1.24)
Discontinued
operations (F),
(G) - - (0.01) - (0.01)
Net income (loss)
attributable to
Cabot Corporation
(G) $0.06 $(0.93) $(0.19) $(0.19) $(1.25)
Weighted average
common shares
outstanding
Diluted 63 63 63 63 63
------- --- --- --- --- ---
Fiscal 2010
------------
In millions,
except per share
amounts Mar. Sept.
(unaudited) Dec. Q. Q. June Q. Q. FY
---------------- ------- ----- ------- ------ ---
Sales
Core Segment $445 $446 $484 $479 $1,854
Rubber blacks (A) 399 411 437 430 1,677
Supermetals (A) 46 35 47 49 177
Performance Segment 187 200 200 196 783
Performance
products (A) 126 138 137 130 531
Fumed metal oxides
(A) 61 62 63 66 252
New Business
Segment 17 22 25 24 88
Inkjet colorants 14 14 15 14 57
Aerogel 2 6 8 8 24
Superior
MicroPowders 1 2 2 2 7
Specialty Fluids
Segment 15 15 22 29 81
---------------- --- --- --- --- ---
Segment Sales (A) 664 683 731 728 2,806
Unallocated and
other (A), (B) 15 29 22 21 87
--------------- --- --- --- --- ---
Net sales and other
operating revenues $679 $712 $753 $749 $2,893
------------------- ---- ---- ---- ---- ------
Segment Profit
(Loss)
Core Segment $49 $41 $55 $40 $185
Rubber blacks (A) 43 38 41 28 150
Supermetals (A) 6 3 14 12 35
Performance (A) 34 32 35 29 130
New Business
Segment (3) 1 - - (2)
Specialty Fluids
Segment 5 5 11 14 35
---------------- --- --- --- --- ---
Total Segment
Profit (Loss) (A),
(C) 85 79 101 83 348
Interest expense (9) (11) (10) (10) (40)
Certain items (D) (17) (9) (15) (11) (52)
Unallocated
corporate costs (11) (10) (9) (9) (39)
General unallocated
expense (A), (E) (3) (3) 4 - (2)
Less: Equity in net
income of
affiliated
companies, net of
tax (3) (1) (1) (2) (7)
------------------- --- --- --- --- ---
Income (loss) from
continuing
operations before
income taxes and
equity in net
income of
affiliated
companies 42 45 70 51 208
(Provision) benefit
for income taxes (11) 1 (20) (16) (46)
Equity in net
income of
affiliated
companies, net of
tax 3 1 1 2 7
------------------ --- --- --- --- ---
Net income (loss)
from continuing
operations 34 47 51 37 169
Loss from
discontinued
operations, net of
tax (F) - - - - -
------------------- --- --- --- --- ---
Net income (loss) 34 47 51 37 169
Net (loss) income
attributable to
noncontrolling
interests, net of
tax 5 4 4 2 15
------------------ --- --- --- --- ---
Net income (loss)
attributable to
Cabot Corporation $29 $43 $47 $35 $154
Diluted earnings
(loss) per share
of common stock
attributable to
Cabot Corporation
Continuing
operations (G) $0.44 $0.65 $0.72 $0.54 $2.35
Discontinued
operations (F),
(G) - - - - -
Net income (loss)
attributable to
Cabot Corporation
(G) $0.44 $0.65 $0.72 $0.54 $2.35
Weighted average
common shares
outstanding
Diluted 64 64 64 65 64
------- --- --- --- --- ---
(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 Profit (Loss) in prior periods, have been reclassified to
"Unallocated and other" and "General unallocated expense". Prior
periods have been recast to conform to the new allocation method.
This change had an immaterial impact on segment profit (loss) 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 profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess
segment performance and allocate resources. Segment profit 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
Reconciliations table.
(E) General unallocated expense 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 legal settlements in connection with our
discontinued operations.
(G) Prior year earnings per share has been recast due to Cabot's
adoption of an accounting pronouncement in the first quarter of
fiscal 2010 that changes the methodology for allocating earnings
among shareholders. Under this guidance, certain of Cabot's
unvested share-based payment awards must be included in the
earnings allocation process in computing earnings per share. This
guidance has been applied retrospectively so that all periods are
shown on a consistent basis.
Fourth Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATIONS
CERTAIN ITEMS:
Periods ended September 30 Three Months
------------
Dollars in millions, except
per share amounts (unaudited) 2010 2010 2009 2009
per per
$ share(A) $ share(A)
--- --------- --- ---------
Certain items before income
taxes
---------------------------
Environmental reserves and
legal settlements $(1) $(0.01) $(7) $(0.07)
Executive transition costs - - (4) (0.04)
Recovery of previously
impaired investment - - - -
Long-lived asset impairment
(B) - - - -
Reserve for respirator claims (2) (0.02) - -
Write-down of impaired
investments - - - -
Restructuring initiatives:
- 2009 Global (6) (0.06) (25) (0.36)
-Closure of Thane, India
Facility (2) (0.03) - -
- Other - - - -
Total certain items (11) (0.12) (36) (0.47)
--- ----- --- -----
-Discontinued operations (C) - - - -
Total certain items and
discontinued operations (11) (0.12) (36) (0.47)
--- ----- --- -----
Tax impact of certain items
and discontinued operations 2 7 -
Total certain items after tax $(9) $(0.12) $(29) $(0.47)
--- ------ ---- ------
CERTAIN ITEMS:
Periods ended September 30 Twelve Months
-------------
Dollars in millions, except per
share amounts (unaudited) 2010 2010 2009 2009
per per
$ share(A) $ share(A)
--- --------- --- ---------
Certain items before income taxes
---------------------------------
Environmental reserves and legal
settlements $(3) $(0.03) $(7) $(0.07)
Executive transition costs - - (4) (0.04)
Recovery of previously impaired
investment 1 0.01 - -
Long-lived asset impairment (B) (2) (0.02) - -
Reserve for respirator claims (2) (0.02) - -
Write-down of impaired investments - - (1) (0.01)
Restructuring initiatives:
- 2009 Global (30) (0.38) (89) (1.23)
-Closure of Thane, India Facility (16) (0.25)
- Other - - (2) (0.02)
Total certain items (52) (0.69) (103) (1.37)
--- ----- ---- -----
- Discontinued operations (C) - - - (0.01)
Total certain items and
discontinued operations (52) (0.69) (103) (1.38)
--- ----- ---- -----
Tax impact of certain items and
discontinued operations 7 17 -
Total certain items after tax $(45) $(0.69) $(86) $(1.38)
---- ------ ---- ------
Twelve
Periods ended September 30 Three Months Months
Dollars in millions
(unaudited) 2010 2009 2010 2009
------------------- ---- ---- ---- ----
Statement of Operations Line
Item
----------------------------
Cost of sales $(13) $(32) $(38) $(91)
Selling and administrative
expenses 2 (4) (14) (10)
Research and technical
expenses - - - (2)
Total certain items $(11) $(36) $(52) $(103)
---- ---- ---- -----
NON-GAAP MEASURE:
Periods ended
September 30 Three Months Twelve Months
------------ -------------
Dollars in millions,
except per share
amounts (unaudited) 2010 2009 2010 2009
per per per per
share(A) share(A) share(A) share(A)
--------- --------- --------- ---------
Reconciliation of
Adjusted EPS to GAAP
EPS
---------------------
Net income (loss) per
share attributable to
Cabot Corporation $0.54 $(0.19) $2.35 $(1.25)
Less: Net loss per
share from
discontinued
operations - - - (0.01)
--- --- --- -----
Net income (loss) per
share from continuing
operations $0.54 $(0.19) $2.35 $(1.24)
Less: Certain items
per share (0.12) (0.47) (0.69) (1.37)
Adjusted earnings
(loss) per share $0.66 $0.28 $3.04 $0.13
----- ----- ----- -----
(A) Per share amounts are calculated after tax.
(B) Land related to former carbon black site.
(C) Amounts relate to legal settlements in connection with our
discontinued operations.
SOURCE Cabot Corporation