Cabot Announces Fourth Quarter and Fiscal Year Operating Results
BOSTON, Nov. 1 /PRNewswire-FirstCall/ -- Cabot Corporation (NYSE: CBT) today announced net income of $27 million ($0.39 per diluted common share) for the fourth quarter of 2006 and net income of $88 million ($1.28 per diluted common share) for the full fiscal year 2006. This is compared to a net loss of $59 million (a loss of $1.02 per common share) for the fourth quarter of fiscal 2005 and a net loss of $48 million (a loss of $0.84 per common share) for the full fiscal year 2005. These results are discussed in further detail below.
In commenting on the results, Kennett F. Burnes, Cabot's Chairman and CEO, said, "On the whole, we are pleased with our fourth quarter financial results and we were able to manage the significant challenges we faced during the year, specifically the volatility in feedstock and energy prices. Demand for products in all of our businesses remained strong during the quarter and we continued the trend of improving cash generation. During the quarter we also faced the difficult task of reducing costs by eliminating jobs within the Company. These actions are never easy and not something we take lightly, but we felt it was a necessary step in reducing the overall costs in the Company, particularly in the carbon black product lines."
During the fourth quarter, rubber blacks and performance products returned to more normal levels of operations and profitability. Volume growth in rubber blacks remained strong with continued growth in our developing regions and a less than typical seasonal slowdown. Unit margins in performance products continued to improve due to price increases throughout the year and both rubber blacks and performance products benefited from lower feedstock prices, which positively impacted the business, principally in North America. Additionally, over the course of the past 12 to 18 months rubber blacks and performance products operated with significantly fewer days of inventory. During the fourth quarter of fiscal 2005 these efforts, along with other inventory charges, resulted in a $16 million unfavorable impact on profitability. As the inventory reduction was essentially completed by the fourth quarter of fiscal 2006, there was not a similar expense during the quarter. Cabot Japan had a positive impact on the Company's operating profits during both the fourth quarter and full fiscal year.
Once complete, cost reduction actions taken during the fourth quarter of 2006 are anticipated to yield savings of approximately $20 million annually. These efforts include a formal staffing reduction initiative, savings from open positions that will not be refilled, and savings achieved through other cost elimination activities. These initiatives resulted in a pre-tax charge of $10 million during the fourth quarter.
The inkjet colorants product line had somewhat weaker profitability during the fourth quarter but a solid full fiscal year 2006. During the fourth quarter, volumes increased 21% compared to the same period in 2005 driven primarily by growth in the OEM market segment. For the full year, volumes increased 36% with growth in both the OEM and aftermarket segments. An OEM inventory drawdown in the fourth quarter, along with softening demand in the aftermarket segment, unfavorably impacted the product line's results in the quarter. We were successful during the quarter at qualifying our new manufacturing line for the high-speed inkjet market in anticipation of commercial product launches in the spring of 2007. However, unfavorable price mix and costs related to this new production capacity, which is not yet being fully commercially utilized, impacted the profitability of the product line during the quarter.
Fumed silica volumes grew by 20% in the fourth quarter when compared to the same period in fiscal 2005 driven by the niche and electronics segments. For the full fiscal year, volume growth of 9% and high plant utilization more than offset higher hydrogen and natural gas costs and startup costs associated with our new fumed silica plant in China, which is operating at nearly 90% of its designed capacity.
As anticipated, for the full fiscal year, the ongoing transition from fixed price, fixed volume contracts to market based arrangements unfavorably impacted the profitability of the Supermetals Business compared to fiscal year 2005. We were successful during the year in replacing our lost contracted volumes with open market volumes, albeit at significantly lower prices. The Business experienced significant benefits from its previous cost reduction efforts leading to lower costs of nearly $40 million during 2006. Additionally, we made significant progress toward reducing inventory levels, which decreased by $55 million during the fiscal year against our multi-year target of $100 million.
The reduction in profitability in the Specialty Fluids Business during the fourth quarter and fiscal year 2006 was driven by reduced activity in the North Sea, specifically one larger than average job in 2005 that was not replicated during 2006. We were encouraged, however, that our first well in Argentina was successfully completed during the quarter.
Detailed Financial Information
For the fourth quarter and full fiscal year the Company reported segment income as follows (amounts shown are in millions of dollars):
Fourth quarter Fourth quarter Fiscal year Fiscal year
2006 2005 2006 2005
Carbon Black $ 35 $ (4) $ 105 $ 94
Metal Oxides 5 1 18 16
Supermetals 9 7 41 52
Specialty Fluids 3 7 16 17
In addition to the items listed below, other unallocated items are fully described in the "Summary Results by Segment" table of the press release.
Net income included the following (amounts shown are pre-tax except per share amounts, which are after-tax):
Fourth quarter fiscal 2006 $, per diluted
millions common share
(Charges) / Income
Restructuring activities related
to staffing reductions $ (10) $ (0.10)
Charges related to closing carbon
black facility in Australia (7) (0.11)
Recognition of asset retirement
obligations (FIN 47) (6) (0.07)
Tax benefit related to settlement of
various tax audits 14 0.21
Tax settlement from discontinued
liquified natural gas business 2 0.03
Fourth quarter fiscal 2005 $, per
millions common share
(Charges) / Income
Writeoff of long-lived assets in the
Supermetals Business $ (121) $ (1.12)
Supermetals cost reduction initiatives (15) (0.19)
Charges related to closing carbon black
facility in Australia (3) (0.05)
Full fiscal year 2006 $, per diluted
millions common share
(Charges) / Income
Restructuring activities related to
staffing reductions $ (10) $ (0.10)
Charges related to closing carbon black
facility in Australia (11) (0.15)
Supermetals cost reduction initiatives (3) (0.04)
Lump sum payment related to termination
of supply agreement (27) (0.25)
Recognition of asset retirement
obligations (FIN 47) (6) (0.07)
Tax benefit related to settlement of
various tax audits 22 0.32
Tax settlement from discontinued
liquified natural gas business 2 0.03
Impact of stock-based compensation (FAS 123R) 4 0.04
Full fiscal year 2005 $, per
millions common share
(Charges) / Income
Writeoff of assets, including goodwill,
in Supermetals Business $ (211) $ (2.44)
Supermetals cost reduction initiatives (15) (0.19)
Charges related to closing carbon black
facility in Australia (16) (0.19)
Outlook
With respect to the future, Burnes said, "While we continue to remain concerned about the volatility of energy prices because of the impact that they inevitably have on our business, we are confident that we have positioned the Company well to withstand these types of disruptions on a long-term basis. We remain cautious given our current understanding of North American carbon black demand and announced plant closures in the tire industry, and we will continue to follow demand in this important region closely. We face another step down in profitability in the Supermetals Business in the second quarter of fiscal 2007 as the last of our significant long-term supply contracts expires in December 2006. We are confident this business will remain profitable and we must continue to work hard to improve its performance going forward."
Burnes continued, "We anticipate continued healthy growth in demand overall and remain pleased with our strong position in emerging markets which are proving to be our most profitable regions. If market conditions remain stable and energy prices remain at their current levels, we are optimistic that we will see continued benefits in the carbon black product lines. We are pleased with the strong demand we are seeing in the fumed silica product line and anticipate that the high utilization of our plants will continue through at least the first half of fiscal 2007. We are excited about the prospects for our inkjet colorants product line, particularly as high speed inkjet printing is commercialized. With the success of the well in Argentina, we are also increasingly optimistic that we will see significant business for our cesium formate drilling fluids outside of the North Sea in the relatively near future. We remain as convinced as ever that our strategy of optimizing our core businesses and nurturing new business opportunities with patience and persistence is the best way to increase shareholder value."
For those interested in more detailed information regarding Cabot's fourth quarter and full fiscal year 2006 results, please see the Supplemental Business Information available on the Company's website in the Investor Relations section: http://investor.cabot-corp.com. Further details concerning certain items, cumulative effects of accounting changes and discontinued operations are included in Exhibit I of the press release.
Included above are forward-looking statements relating to management's expectations regarding demand for our products; the savings we expect to achieve from cost reduction initiatives; our overall business performance and prospects; our ability to replace lost contract volumes with open market volumes in the Supermetals Business and maintain that Business's profitability; utilization of new capacity for fumed metal oxides and inkjet colorants; carbon black feedstock and natural gas prices; and acceptance of our cesium formate drilling fluids outside of the North Sea. The following are some of the factors that could cause Cabot's actual results to differ materially from those expressed in the forward-looking statements: a continuing rise in feedstock costs and a higher than expected increase in natural gas prices; lower than expected demand for our products; our inability to maintain cost savings from restructuring activities; our inability to maintain and grow our position in the small office, home office printing market and to participate in the growth in emerging inkjet applications; unexpected delays in drilling operations at wells recently awarded to the Specialty Fluids Business and the success of this Business in gaining wider acceptance by the energy industry of cesium formate as a drilling fluid and to penetrate new markets (including development of the required logistics to reach remote markets); and the timely customer acceptance of products from recent capacity expansion projects. Other factors and risks are discussed in the Company's 2005 Annual Report on Form 10-K with the Securities and Exchange Commission.
Cabot Corporation is a global specialty chemicals and materials company headquartered in Boston, MA. Cabot's major products are carbon black, fumed silica, inkjet colorants, capacitor materials, and cesium formate drilling fluids.
Contact: Susannah R. Robinson
Director, Investor Relations
(617) 342-6129
Fourth Quarter Earnings Announcement, Fiscal 2006
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Periods ended September 30 Three Months Twelve Months
Dollars in millions, except per share
amounts (unaudited) 2006 2005 2006 2005
Net sales and other operating revenues $663 $558 $2,543 $2,125
Cost of sales 550 490 2,124 1,692
Gross profit $113 $68 $419 $433
Selling and administrative expenses 59 67 235 240
Research and technical expenses 17 16 58 59
Goodwill asset impairment - - - 90
Long-lived asset impairment - 121 - 121
Income (loss) from operations $37 $(136) $126 $(77)
Other income and expense
Interest and dividend income 2 1 5 6
Interest expense (8) (5) (27) (29)
Other income (7) 1 (7) 7
Total other income and expense (13) (3) (29) (16)
Income (loss) from continuing
operations before income taxes 24 (139) 97 (93)
Benefit (provision) for income taxes 4 76 (9) 45
Equity in net income of affiliated
companies, net of tax 4 6 12 12
Minority interest in net income, net
of tax (3) (2) (12) (12)
Net income (loss) from continuing
operations 29 (59) 88 (48)
Cumulative effect of accounting
changes, net of tax (4) - (2) -
Discontinued Operations, net of tax 2 - 2 -
Net income (loss) 27 (59) 88 (48)
Dividends on preferred stock, net of
tax benefit - (1) (2) (3)
Net income (loss) available to common
shares $27 $(60) $86 $(51)
Diluted earnings per share of common
stock
Net income (loss) from continuing
operations $0.43 $(1.02) $1.28 $(0.84)
Cumulative effect of accounting
change, net of tax (0.07) - (0.03) $-
Discontinued Operations 0.03 0.03
Net income (loss) $0.39 $(1.02) $1.28 $(0.84)
Weighted average common shares
outstanding, in millions
Diluted (A) 68 59 68 60
(A) The weighted average common shares outstanding for the quarter and
year ending September 30, 2005 excludes approximately
9 million and 8 million shares, respectively, as those shares would
be antidilutive due to the Company's net loss position.
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
Periods ended September 30 Three Months Twelve Months
Dollars in millions, except per share
amounts (unaudited) 2006 2005 2006 2005
SALES
Carbon Black Business $508 $389 $1,917 $1,490
Rubber blacks 367 264 1,378 976
Performance products 128 113 488 469
Inkjet colorants 12 11 47 39
Superior MicroPowders 1 1 4 6
Metal Oxides Business 69 56 254 231
Fumed metal oxides 69 56 253 231
Aerogel - - 1 -
Supermetals Business 66 90 292 346
Specialty Fluids Business 11 14 44 40
Segment sales (A) 654 549 2,507 2,107
Unallocated and other (B) 9 9 36 18
Net sales and other operating
revenues $663 $558 $2,543 $2,125
SEGMENT PROFIT (LOSS)
Carbon Black Business $35 $(4) $105 $94
Metal Oxides Business 5 1 18 16
Supermetals Business 9 7 41 52
Specialty Fluids Business 3 7 16 17
Total Segment Profit (C) 52 11 180 179
Interest expense (8) (5) (27) (29)
General unallocated expense (D) (16) (139) (44) (231)
Less: Equity in net income of
affiliated companies, net of tax (4) (6) (12) (12)
Income (loss) from continuing
operations before income taxes 24 (139) 97 (93)
Benefit (provision) for income taxes 4 76 (9) 45
Equity in net income of affiliated
companies, net of tax 4 6 12 12
Minority interest in net income, net
of tax (3) (2) (12) (12)
Net income (loss) from continuing
operations 29 (59) 88 (48)
Cumulative effect of accounting
changes, net of taxes (E) (4) - (2) -
Discontinued Operations (F) 2 - 2 -
Net income (loss) 27 (59) 88 (48)
Dividends on preferred stock, net of
tax benefit - (1) (2) (3)
Net income (loss) available to common
shares $27 $(60) $86 $(51)
Diluted earnings per share of common
stock
Income (loss) from continuing
operations $0.43 $(1.02) $1.28 $(0.84)
Cumulative effect of accounting
changes, net of tax (E) $(0.07) $- $(0.03) $-
Discontinued Operations (F) $0.03 $- $0.03 $-
Net income (loss) $0.39 $(1.02) $1.28 $(0.84)
Weighted average common shares
outstanding, in millions
Diluted (G) 68 59 68 60
(A) Segment sales for certain operating segments within the Carbon Black
Business include 100% of sales of one equity affiliate at market-
based prices.
(B) Unallocated and other reflects an elimination of sales for one equity
affiliate offset by royalties paid by equity affiliates and external
shipping and handling fees.
(C) Segment profit is a measure used by Cabot's operating decision-makers
to measure consolidated operating results and assess segment
performance. Segment profit includes equity in net income of
affiliated companies, royalties paid by equity affiliates, minority
interest and allocated corporate costs.
(D) General unallocated expense includes foreign currency transaction
gains (losses), interest income, dividend income, and the certain
items listed in Exhibit I, including charges in the Supermetals
Business of $90 million of goodwill impairment in the second quarter
of 2005, $121 million of long-lived asset impairment charges recorded
in the fourth quarter of 2005 and the $27 million Gwalia settlement
payment in the second quarter of 2006.
(E) Amounts related to the cumulative benefit resulting from the adoption
of FAS 123(R) in the first quarter of 2006, net of tax are $0.04 and
amounts related to the cumulative expense resulting from the adoption
of FIN 47 in the fourth quarter of 2006, net of tax are $(0.07).
(F) Amount relates to a favorable tax settlement recognized during the
period related to our discontinued liquified natural gas
business.
(G) The weighted average common shares outstanding for the quarter and
year ending September 30, 2005 excludes approximately
9 million and 8 million shares, respectively, as those shares would
be antidilutive due to the Company's net loss position.
CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION
September 30, September 30,
2006 2005
Dollars in millions, except share
and per share amounts (unaudited)
Current assets:
Cash and cash equivalents $189 $181
Short-term marketable securities
investments 1 30
Accounts and notes receivable, net
of reserve for doubtful accounts
of $6 and $4 533 430
Inventories:
Raw materials 131 169
Work in Process 109 134
Finished goods 139 151
Other 41 39
Total inventories 420 493
Prepaid expenses and other current
assets 75 66
Assets held for sale - 5
Deferred income taxes 36 41
Total current assets 1,254 1,246
Investments:
Equity affiliates 59 63
Long-term marketable securities and
cost investments 3 6
Total investments 62 69
Property, plant and equipment 2,531 2,264
Accumulated depreciation and
amortization (1,567) (1,430)
Net property, plant and
equipment 964 834
Other assets:
Goodwill 31 25
Intangible assets, net of
accumulated amortization of $10
and $9 5 6
Assets held for rent 40 37
Deferred income taxes 99 108
Other assets 77 49
Total other assets 252 225
Total assets $2,532 $2,374
CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION
September 30, September 30,
2006 2005
Dollars in millions, except share
and per share amounts (unaudited)
Current liabilities:
Notes payable to banks $58 $34
Accounts payable and accrued
liabilities 384 321
Income taxes payable 23 30
Deferred income taxes 2 1
Current portion of long-term debt 34 47
Total current liabilities 501 433
Long-term debt 459 463
Deferred income taxes 20 15
Other liabilities 288 307
Minority interest 68 57
Stockholders' equity:
Preferred stock:
Authorized: 2,000,000 shares of
$1 par value Series B ESOP
Convertible Preferred Stock
7.75% Cumulative issued:
75,336 shares; outstanding:
55,895 and 61,068 shares
(aggregate Redemption value
of $39 and $44) 56 61
Less cost of shares of preferred
treasury stock (38) (38)
Common stock:
Authorized: 200,000,000 shares
of $1 par value Issued and
outstanding: 63,579,040 and
62,971,872 64 63
Less cost of shares of common
treasury stock (5) (5)
Additional paid-in capital 7 32
Retained earnings 1,160 1,127
Unearned compensation - (41)
Deferred employee benefits (38) (42)
Notes receivable for restricted stock (20) (19)
Accumulated other comprehensive
income (loss) 10 (39)
Total stockholders' equity 1,196 1,099
Total liabilities and stockholders'
equity $2,532 $2,374
CABOT CORPORATION
Fiscal 2005
In millions,
except per share amounts (unaudited) Dec.Q. Mar.Q. June Q. Sept.Q. FY
Sales
Carbon Black Business $345 $369 $387 $389 $1,490
Rubber blacks 225 235 252 264 976
Performance products 110 123 123 113 469
Inkjet colorants 9 9 10 11 39
Superior MicroPowders 1 2 2 1 6
Metal Oxides Business 60 58 57 56 231
Fumed metal oxides 60 58 57 56 231
Aerogel - - - - -
Supermetals Business 77 86 93 90 346
Specialty Fluids Business 7 8 11 14 40
Segment Sales (A) 489 521 548 549 2,107
Unallocated and other (B) 6 6 (3) 9 18
Net sales and other operating
revenues $495 $527 $545 $558 $2,125
Segment Profit (Loss)
Carbon Black Business $30 $41 $26 $(4) $94
Metal Oxides Business 6 5 4 1 16
Supermetals Business 16 16 13 7 52
Specialty Fluids 2 4 5 7 17
Total segment profit (C) 54 66 48 11 179
Income (Loss) from operations
Interest expense (8) (8) (8) (5) (29)
General unallocated income
(expense) (D) 1 (91) (2) (139) (231)
Less: Equity in net income of
affiliated companies, net of tax (2) (2) (2) (6) (12)
-
Income (Loss) from Continuing
Operations before income taxes 45 (35) 36 (139) (93)
(Provision) benefit for income taxes (9) (13) (9) 76 45
Equity in net income of affiliated
companies, net of tax 2 2 2 6 12
Minority interest in net income, net
of tax (3) (4) (3) (2) (12)
Net income (Loss) from Continuing
Operations 35 (50) 26 (59) (48)
Cumulative effect of accounting
changes, net of taxes (E) - - - - -
Discontinued Operations (F) - - - - -
Net income (loss) 35 (50) 26 (59) (48)
Dividends on preferred stock, net of
tax benefit (1) - (1) (1) (3)
Net income (loss) available to
common shares $34 $(50) $25 $(60) $(51)
Net income (Loss) per common share
Net income (loss) from Continuing
Operations $0.51 $(0.84) $0.39 $(1.02) $(0.84)
Cumulative Effects of Accounting
Changes, net of tax (E) - - - - -
Discontinued Operations (F) - - - - -
Net income (loss) $0.51 $(0.84) $0.39 $(1.02) $(0.84)
Weighted average common shares
outstanding, in millions
Diluted (G) 69 60 69 59 60
CABOT CORPORATION
Fiscal 2006
In millions,
except per share amounts (unaudited) Dec.Q. Mar.Q. June Q. Sept.Q. FY
Sales
Carbon Black Business $419 $476 $514 $508 $1,917
Rubber blacks 298 346 367 $367 1,378
Performance products 109 117 134 $128 488
Inkjet colorants 11 12 12 $12 47
Superior MicroPowders 1 1 1 $1 4
Metal Oxides Business 57 62 66 $69 254
Fumed metal oxides 57 62 65 $69 253
Aerogel - - 1 - 1
Supermetals Business 93 67 66 $66 292
Specialty Fluids Business 10 11 12 $11 44
Segment Sales (A) 579 616 658 654 2,507
Unallocated and other (B) 8 11 8 9 36
Net sales and other operating
revenues $587 $627 $666 $663 $2,543
Segment Profit (Loss)
Carbon Black Business $21 $26 $23 $35 $105
Metal Oxides Business 2 5 6 5 18
Supermetals Business 11 12 9 9 41
Specialty Fluids 4 4 5 3 16
Total segment profit (C) 38 47 43 52 180
Income (Loss) from operations
Interest expense (6) (7) (6) (8) (27)
General unallocated income (expense)
(D) (2) (24) (2) (16) (44)
Less: Equity in net income of
affiliated companies, net of tax (3) (4) (1) (4) (12)
-
Income (Loss) from Continuing
Operations before income taxes 27 12 34 24 97
(Provision) benefit for income taxes (4) (1) (8) 4 (9)
Equity in net income of affiliated
companies, net of tax 3 4 1 4 12
Minority interest in net income, net
of tax (4) (3) (2) (3) (12)
Net income (Loss) from Continuing
Operations 22 12 25 29 88
Cumulative effect of accounting
changes, net of taxes (E) 2 - - (4) (2)
Discontinued Operations (F) - - - 2 2
Net income (loss) 24 12 25 27 88
Dividends on preferred stock, net of
tax benefit (1) - (1) - (2)
.
Net income (loss) available to
common shares $23 $12 $24 $27 $86
Net income (Loss) per common share
Net income (loss) from Continuing
Operations $0.31 $0.17 $0.37 $0.43 $1.28
Cumulative Effects of Accounting
Changes, net of tax (E) 0.04 - - (0.07) (0.03)
Discontinued Operations (F) - - - 0.03 0.03
Net income (loss) $0.35 $0.17 $0.37 $0.39 $1.28
Weighted average common shares
outstanding, in millions
Diluted (G) 68 69 69 68 68
(A) Segment sales for certain operating segments within the Carbon Black
Business include 100% of sales of one equity affiliate at market-based
prices.
(B) Unallocated and other reflects an elimination for sales for one equity
affiliate offset by royalties paid by equity affiliates, external
shipping and handling fees.
(C) Segment profit is a measure used by Cabot's operating decision-makers
to measure consolidated operating results and assess segment
performance. Segment profit includes equity in net income of
affiliated companies and excludes royalties paid by equity affiliates,
minority interest and allocated corporate costs.
(D) General unallocated income (expense) includes foreign currency
transaction gains (losses), interest income, dividend income and
certain items listed in Exhibit I. These amounts also include the
following charges in the Supermetals Business: $90 million of goodwill
impairment charges recorded in the second quarter of 2005, $121
million of long-lived asset impairment charges recorded in the fourth
quarter of fiscal 2005 and the $27 million settlement payment in the
second quarter of 2006.
(E) Amounts relate to the cumulative benefit resulting from the adoption
of FAS 123(R) in the first quarter of 2006, net of tax of $0.04 and
amounts related to the cumulative expense resulting from the adoption
of FIN 47 in the fourth quarter of 2006, net of tax of ($0.07).
(F) Amount relates to a favorable tax settlement recognized during the
period related from our liquified natural gas discontinued business.
(G) The weighted average common shares outstanding for the quarter and
year ending September 30, 2005 excludes approximately 9 million and 8
million shares, respectively, as those shares would be antidilutive
due to the Company's net loss position.
CABOT CORPORATION CERTAIN ITEMS - Exhibit I
Periods ended September 30 Three Months
Dollars in millions, except per share
amounts (unaudited) 2006 2006 2005 2005
$ per $ per
share(A) share(A)
Certain items before income taxes
Restructuring initiatives - Global $(10) $(0.10) $- $-
Restructuring initiatives - Altona (7) (0.11) (3) (0.05)
Cost reduction initiatives - - (15) (0.19)
Goodwill asset impairment - - - -
Long-lived asset impairment - - (121) (1.12)
Gwalia settlement payment - - - -
Impact of changes in shares for net
loss (B) - - - (0.13)
Total certain items (17) (0.21) (139) (1.49)
Cumulative effect of accounting
changes (C) (6) (0.07) - -
Discontinued Operations (D) 2 0.03 - -
Total certain items and cumulative
effect of accounting changes (21) (0.25) (139) (1.49)
Tax impact of certain items and
cumulative effect of accounting
changes (E) 5 - 47 -
Total certain items and cumulative
effect of accounting change, after
tax $(16) $(0.25) $(92) $(1.49)
Periods ended September 30 Twelve Months
Dollars in millions, except per share
amounts (unaudited) 2006 2006 2005 2005
$ per $ per
share(A) share(A)
Certain items before income taxes
Restructuring initiatives - Global $(10) $(0.10) $- $-
Restructuring initiatives - Altona (11) (0.15) (16) (0.19)
Cost reduction initiatives (3) (0.04) (15) (0.19)
Goodwill asset impairment - - (90) (1.32)
Long-lived asset impairment - - (121) (1.12)
Gwalia settlement payment (27) (0.25) - -
Impact of changes in shares for net
loss (B) - - - (0.13)
Total certain items (51) (0.54) (242) (2.95)
Cumulative effect of accounting
changes (C) (2) (0.03) - -
Discontinued Operations (D) 2 0.03 - -
Total certain items and cumulative
effect of accounting changes (51) (0.54) (242) (2.95)
Tax impact of certain items and
cumulative effect of accounting
changes (E) 15 - 52 0.04
Total certain items and cumulative
effect of accounting change, after
tax $(36) $(0.54) $(190) $(2.91)
Periods ended September 30 Three Months Twelve Months
Dollars in millions (unaudited) 2006 2005 2006 2005
Statement of Operations Line Item
Net sales and other operating
revenues $- - $1 -
Cost of sales (5) $(14) (35) $(26)
Selling and administrative expenses (4) (2) (9) (3)
Research and technical service - (2) - (2)
Goodwill asset impairment - - - (90)
Long-lived asset impairment - (121) - (121)
Other (8) - (8) -
Total certain items $(17) $(139) $(51) $(242)
(A) Per share amounts are calculated after tax for certain items that are
taxable.
(B) Due to the Company's net loss for the quarter and year ending
September 30, 2005, common shares totaling 9 million for the quarter
and 8 million for the year are required to be excluded from the
calculation of diluted earnings per share, as including them would
have an antidilutive effect. However, in order to consistently
present the per share impact of the certain items on the Company's
results from period to period, the certain items are calculated using
the Company's fully diluted weighted average common shares outstanding
of 68 million. The impact of this change in the weighted average
common shares outstanding on both income from continuing operations
and certain items is reflected in this line.
(C) Cumulative expense of $(6) million resulting from adoption of FIN 47
in the fourth quarter of 2006 and a benefit of $4 million resulting
from adoption of FAS 123(R) in the first quarter of 2006.
(D) Amount relates to a favorable tax settlement recognized during the
period related from our liquified natural gas discontinued business.
(E) Represents tax impact of certain items and cumulative effect of
accounting change.
SOURCE Cabot Corporation 11/01/2006 CONTACT: Susannah R. Robinson, Director, Investor Relations, +1-617-342-6129 Web site: http://www.cabot-corp.com
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