Cabot Announces Fourth Quarter and Fiscal Year Operating Results
BOSTON, Oct 31, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Cabot Corporation (NYSE: CBT) today announced net income of $24 million ($0.36 per diluted common share) for the fourth quarter of 2007, including $5 million after-tax ($0.07 per diluted common share) of charges from certain items and discontinued operations. For the full fiscal year 2007, the Company announced net income of $129 million ($1.90 per diluted common share), including $22 million after-tax ($0.32 per diluted common share) of charges from certain items and discontinued operations. This is compared to net income of $27 million ($0.39 per diluted common share) for the fourth quarter of fiscal 2006, which included $16 million after-tax ($0.25 per diluted common share) of charges from certain items, discontinued operations and the cumulative effect of an accounting change. For the full fiscal year 2006, the Company reported net income of $88 million ($1.28 per diluted common share), which included $36 million after-tax ($0.54 per diluted common share) of charges from certain items, discontinued operations and the cumulative effect of accounting changes. Details of financial results, certain items, discontinued operations and the cumulative effect of accounting changes included in net income are provided in the accompanying tables.
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In commenting on the results, Kennett F. Burnes, Cabot's Chairman and CEO, said, "We are pleased to have delivered improved financial results for the fiscal year, capitalizing on the favorable conditions existing in some of our businesses and managing through difficult circumstances in others. We were able to manage the significant volatility in feedstock costs that occurred during the year in our carbon black product lines and were successful at growing profitability through volume increases and cost discipline. We grew our fumed metal oxides product line to record profitability during the fiscal year due to strong demand in our niche market segment and the incremental margin generated from operating our facility in China. The Specialty Fluids Business experienced a significant increase in profitability and we made progress in expanding our global presence during the year, seeing the first real signs of expansion outside of the North Sea. We also took steps to improve our capital structure through our share repurchase program. Less favorably, the inkjet colorants product line experienced weak financial results during the year, amidst a significant downturn in the aftermarket segment. The Supermetals Business faced difficult conditions with the expiration during the year of the last of our fixed price, fixed volume supply contracts, operating at or near breakeven for a majority of the year, but continued its strong cash generation performance.
Given the increases in feedstock costs during the fourth quarter of 2007, our carbon black product lines performed very solidly. We experienced solid Metal Oxides and strong Specialty Fluids results during the quarter, however we continued to see weak financial results in the Supermetals Business and inkjet colorants product line."
Product Line Performance
During the fourth quarter of 2007, volumes in the rubber blacks product line grew in all regions outside of North America, but could not offset the impact of lower unit margins. Unit margins declined in our contracted business compared to the fourth quarter of 2006 due to lower pricing from the feedstock related pricing mechanism in our contracts as compared to raw material costs. This time lag of our feedstock related contract pricing mechanism negatively impacted our profitability by $13 million during the quarter with an additional $1 million negative impact from the immediate recognition of feedstock costs in North America. These factors more than offset higher unit margins in our non-contracted business. Solid volume growth in the performance products product line and higher unit margins from higher selling prices combined to improve the performance of the product line during the fourth quarter of 2007, when compared to the same period of 2006. For the full fiscal year 2007, performance in both product lines improved significantly when compared to fiscal 2006 due to strong volumes, particularly in emerging markets, the impact of cost reduction efforts and price management in our non-contracted business throughout the year as feedstock costs rose.
Performance in our inkjet colorants product line was significantly weaker in both the fourth quarter and full year of 2007. Growth in the high speed and OEM market segments was offset by continued softness in the aftermarket segment, with volumes in the aftermarket segment down by 37% for the fourth quarter of 2007 and by 34% for the full year, compared to the same periods of 2006. Additionally, increased spending related to future high speed inkjet opportunities, including the costs of our new production unit, unfavorably impacted performance.
When compared to the fourth quarter of 2006, fumed metal oxides volumes declined slightly as growth in the niche segment was more than offset by declines in both the silicones and electronics segments. Additionally, lower utilization due to the timing of plant shutdowns unfavorably impacted performance during the period. For the full fiscal year, profitability improved significantly primarily due to strong volumes supported by our new capacity in China.
Profitability declined significantly in the Supermetals Business during both the fourth quarter and full year of 2007, when compared to the same periods of 2006, due to the transition from fixed price, fixed volume supply contracts to market based sales, which was completed in December 2006. Additionally, we were unfavorably impacted during the year by higher raw material costs under our long term ore agreement. Although its first quarter's performance enabled the Business to be solidly profitable for the full fiscal year 2007, lower volumes, primarily with one customer, and a less profitable product mix resulted in the Business operating at a breakeven level for the fourth quarter. Despite these difficulties, the Business was successful at generating significant cash during the year, contributing $36 million in 2007, led by a $30 million reduction in inventory.
The increase in profitability in the Specialty Fluids Business during the fourth quarter of 2007, when compared to the fourth quarter of 2006, was driven by an increase in drilling activity in the North Sea. For the full fiscal year 2007, a significant increase in rental revenue drove strong performance when compared to 2006. Specifically, our fluid utilization rate rose to 15% for fiscal 2007, compared to 12% in 2006, and our fluid was used in 31 wells in 2007, compared with 23 in 2006. We also made progress in expanding our drilling activity beyond the North Sea, completing 6 wells outside of the North Sea in 2007, up from 2 wells in 2006.
Outlook
With respect to the future, Burnes said, "We are pleased to have continued strong volumes in our carbon black product lines outside of North America and look forward to the added volume from our new performance products unit in China. We are watching the significant increases in oil prices closely, as we know they inevitably raise our carbon black feedstock costs and affect the performance of our business in the short term. In fumed metal oxides, demand remains strong and we are optimistic that the high plant utilization we have experienced will continue. We remain cautious about the outlook for the Supermetals Business as we face a complex ore situation and a highly competitive market environment.
We remain encouraged with our new business prospects as we have achieved significant milestones during the course of the fiscal year that we believe will provide a strong platform for future growth. Although we remain concerned about continued near term volume weakness in the aftermarket segment of the inkjet colorants product line, we are confident that we are well positioned to benefit from an eventual rebound in the aftermarket and from growth in the high speed market. We are optimistic that the success we had in 2007 at expanding our Specialty Fluids Business outside of the North Sea will continue in the coming years. We continue to be pleased with the progress made by Superior MicroPowders in product development activities and by the many opportunities for future revenue generation that exist in that business."
For those interested in more detailed information regarding Cabot's fourth quarter and full fiscal year 2007 results, please see the accompanying Supplemental Business Information.
This press release includes forward-looking statements, particularly under the outlook section, relating to management's expectations regarding volume growth in our carbon black product lines; demand for our fumed silica products; raw material costs; performance in the Supermetals Business and profitability of that Business; markets for our inkjet products; growth prospects for our Specialty Fluids Business; and Superior MicroPowders business development opportunities. 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: changes in feedstock and other raw material costs; lower than expected demand for our products; our inability to achieve savings from cost reduction activities; our inability to participate in the growth in emerging inkjet applications; the success of the Specialty Fluids 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); a disruption or delay in the commercialization of new products from Superior MicroPowders. Other factors and risks are discussed in the Company's 2006 Annual Report on Form 10-K and subsequent filings 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. The Company's website is: http://www.cabot-corp.com.
Susannah R. Robinson
Director, Investor Relations
(617)-342-6129
CABOT CORPORATION SUPPLEMENTAL BUSINESS INFORMATION FOURTH QUARTER AND FULL FISCAL YEAR 2007
The following discussion of our results includes information on our reportable segment sales and operating profit before taxes ("PBT"). We use segment PBT to measure our consolidated operating results and to assess segment performance. When explaining the changes in our PBT period on period, we use several terms. The term "fixed costs" means fixed manufacturing costs, including utilities. The term "inventory related charges" means differences attributable to items such as (i) inventory obsolescence and valuation reserves; (ii) utilization variances; and (iii) other increases or decreases in costs associated with the production of inventory. The term "product mix" refers to the various types and grades of products sold by a particular business or product line during the quarter, and the positive or negative impact of that mix on the variable margin and profitability of the business or product line.
BUSINESS SEGMENT DETAIL Volume Detail The following chart details the percentage change in volume by product line for the fourth quarter of 2007 as compared to the fourth quarter of 2006 and the third quarter of 2007, as well as for the full year 2007 compared to the full year 2006. Fourth quarter 2007 Fourth quarter 2007 FY 2007 vs. vs. vs. FY 2006 Fourth quarter 2006 Third quarter 2007 Rubber Blacks 3 % (2)% 4 % North America (9)% (7)% (11)% South America 5 % 2 % 5 % Europe (4)% (11)% 3 % Asia Pacific 3 % 5 % 6 % China 28 % 9 % 27 % Performance Products 4 % flat volumes 2 % Inkjet Colorants (12)% (14)% (4)% Fumed Metal Oxides (1)% 6 % 5 %
Profit Before Tax (PBT) Detail
Following is a quantification of the key factors impacting PBT for the Business reporting segments for the fourth quarter of 2007, as compared to both the fourth quarter of 2006 and the third quarter of 2007.
Carbon Black Business-
-- Fourth quarter 2007 vs. fourth quarter 2006: pricing (unfavorable $18
million); currency (unfavorable $2 million); volume (favorable $5
million); inventory related charges and timing of certain costs
(favorable $4 million); raw material costs (less than $1 million
impact)
-- Fourth quarter 2007 vs. third quarter 2007 - raw material costs
(unfavorable $26 million); volume (unfavorable $3 million); pricing
(favorable $16 million); inventory related charges and timing of
certain costs (favorable $8 million)
Variability in carbon black feedstock costs significantly impacts financial results for both the Carbon Black Business segment and the Company as a whole on a quarterly basis. The table below quantifies, in millions of dollars, the impact on PBT of both the time lag of our feedstock related pricing adjustments on our contracted rubber blacks business and the immediate recognition of feedstock costs in North America.
Fiscal Year 2005 Fiscal Year 2006 Fiscal Year 2007 Quarter 1 (3) (11) 13 Quarter 2 4 1 5 Quarter 3 (15) (7) (16) Quarter 4 (19) 10 (14) Full year impact (33) (7) (12) Metal Oxides Business -- Fourth quarter 2007 vs. fourth quarter 2006: roughly flat with favorable product mix being offset by lower plant utilization -- Fourth quarter 2007 vs. third quarter 2007: roughly flat with increased volumes being offset by inventory related charges and lower plant utilization Supermetals Business -- Fourth quarter 2007 vs. fourth quarter 2006 - pricing (unfavorable $9 million); raw materials (unfavorable $2 million); volumes (unfavorable $2 million); fixed costs (favorable $6 million) -- Fourth quarter 2007 vs. third quarter 2007 - volumes (favorable $2 million); product mix (unfavorable $3 million) Revenue Detail The following charts quantify, in millions of dollars, the key factors impacting sales revenue for the Business reporting segments for the fourth quarter of 2007, as compared to both the fourth quarter of 2006 and the third quarter of 2007. Fourth quarter 2007 vs. Fourth quarter 2006 Volume Price/ Product Mix Foreign Currency Carbon Black Business 14 (24) 20 Metal Oxides Business (2) 2 2 Supermetals Business (2) (9) - Fourth quarter 2007 vs. Third quarter 2007 Volume Price/ Product Mix Foreign Currency Carbon Black Business (7) 15 4 Metal Oxides Business 3 1 - Supermetals Business 10 (3) -
CORPORATE DETAIL
Capital Expenditures- Cabot spent approximately $62 million in capital expenditures during the fourth quarter of 2007. For the full year, capital expenditures were $146 million, compared to $236 million for the full year 2006.
Open Market Share Repurchases- During the fourth quarter and full year 2007, the Company repurchased approximately 4 million and 4.6 million shares, respectively, of its common stock on the open market for a cash cost of approximately $164 million and $190 million, respectively.
Working Capital- Working capital decreased by $3 million on a constant dollar basis (an increase of $34 million at actual exchange rates) during fiscal 2007. On a constant dollar basis, the decrease was driven by an increase in payables and accruals partially offset by an increase in receivables.
Effective Tax Rate- The Company's effective tax rate for net income from continuing operations was a 12% benefit for the fourth quarter and a 23% provision for the full year 2007. During the fourth quarter and full year 2007 the Company recorded tax benefits in continuing operations from the settlement of various tax audits of approximately $5 million ($0.07 per diluted common share) and $3 million ($0.05 per diluted common share), respectively. The Company also recorded a tax benefit of $3 million ($0.04 per diluted common share) during the fourth quarter for the cumulative tax rate adjustment. Excluding the impact of these tax benefits, the Company's effective tax rate would have been approximately 25% for both the fourth quarter and full fiscal year 2007.
CABOT CORPORATION CERTAIN ITEMS - Exhibit I Periods ended September 30 Three Months Dollars in millions, except per share amounts (unaudited) 2007 2007 2006 2006 $ per share(A) $ per share(A) Certain items before income taxes Environmental reserves/settlement $ - $ - $ - $ - Restructuring initiatives - Global 1 0.01 (10) (0.10) Restructuring initiatives - Altona - - (7) (0.11) Cost reduction initiatives - - - - Restructuring - North America (5) (0.06) - - Legal reserves/settlements (2) (0.02) - - Acquisition of flamed synthesis technology (4) (0.04) - - Gwalia settlement payment - - - - Total certain items (10) (0.11) (17) (0.21) Discontinued operations (B) 3 0.04 2 0.03 Cumulative effect of an accounting change (C) - - (6) (0.07) Total certain items, cumulative effect of an accounting change and discontinued operations (7) (0.07) (21) (0.25) Tax impact of certain items, cumulative effect of an accounting change and discontinued operations 2 - 5 - Total certain items, cumulative effect of an accounting change and discontinued operations, after tax $ (5) $ (0.07) $ (16) $ (0.25) Periods ended September 30 Twelve Months Dollars in millions, except per share amounts (unaudited) 2007 2007 2006 2006 $ per share(A) $ per share(A) Certain items before income taxes Environmental reserves/settlement $ (6) $ (0.07) $ - $ - Restructuring initiatives - Global (3) (0.03) (10) (0.10) Restructuring initiatives - Altona (1) (0.01) (11) (0.15) Cost reduction initiatives - - (3) (0.04) Restructuring - North America (8) (0.09) - - Legal reserves/settlements (12) (0.11) - - Acquisition of flamed synthesis technology (4) (0.04) - - Gwalia settlement payment - - (27) (0.25) Total certain items (34) (0.35) (51) (0.54) Discontinued operations (B) 2 0.03 2 0.03 Cumulative effect of an accounting change (C) - - (2) (0.03) Total certain items, cumulative effect of an accounting change and discontinued operations (32) (0.32) (51) (0.54) Tax impact of certain items, cumulative effect of an accounting change and discontinued operations 10 - 15 - Total certain items, cumulative effect of an accounting change and discontinued operations, after tax $(22) $ (0.32) $ (36) $ (0.54) Periods ended September 30 Three Months Twelve Months Dollars in millions (unaudited) 2007 2006 2007 2006 Statement of Operations Line Item Net sales and other operating revenues $- $- $- $1 Cost of sales (5) (5) (16) (35) Selling and administrative expenses (1) (4) (14) (9) Research and technical expenses (4) - (4) - Other - (8) - (8) Total certain items $(10) $(17) $(34) $(51) Periods ended September 30 Three Months Twelve Months Dollars in millions (unaudited) 2007 2006 2007 2006 Certain items by Segment Carbon Black Business $(6) $(17) $(26) $(21) Supermetals Business (4) - (6) (30) Other - - (2) - Total certain items $(10) $(17) $(34) $(51) (A) Per share amounts are calculated after tax. (B) Amount relates to legal and tax settlements in connection with our discontinued operations. (C) Amounts relate to the cumulative benefit resulting from the adoption of FAS 123(R) in the first quarter of 2006 of $0.04 and the cumulative expense resulting from the adoption of FIN 47 in the fourth quarter of 2006 of ($0.07). CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Periods ended September 30 Three Months Twelve Months Dollars in millions, except per share amounts (unaudited) 2007 2006 2007 2006 Net sales and other operating revenues $675 $663 $2,616 $2,543 Cost of sales 564 550 2,111 2,124 Gross profit 111 113 505 419 Selling and administrative expenses 66 59 249 235 Research and technical expenses 20 17 69 58 Income from operations 25 37 187 126 Other income and expense Interest and dividend income 2 2 10 5 Interest expense (8) (8) (34) (27) Other income (expense) 1 (7) 5 (7) Total other income and expense (5) (13) (19) (29) Income from continuing operations before income taxes 20 24 168 97 Benefit (provision) for income taxes 2 4 (38) (9) Equity in net income of affiliated companies, net of tax 3 4 12 12 Minority interest in net income, net of tax (4) (3) (15) (12) Income from continuing operations 21 29 127 88 Discontinued operations, net of tax (A) 3 2 2 2 Cumulative effect of an accounting change, net of tax (B) - (4) - (2) Net income 24 27 129 88 Dividends on preferred stock, net of tax benefit - - (1) (2) Net income available to common shares $24 $27 $128 $86 Diluted earnings per share of common stock Income from continuing operations $0.32 $0.43 $1.87 $1.28 Discontinued operations, net of tax (A) 0.04 0.03 0.03 0.03 Cumulative effect of an accounting change, net of tax (B) - (0.07) - (0.03) Net income $0.36 $0.39 $1.90 $1.28 Weighted average common shares outstanding Diluted 66 68 68 68 (A) Amount relates to legal and tax settlements in connection with our discontinued operations. (B) Amounts relate to the cumulative benefit resulting from the adoption of FAS 123(R) in the first quarter of 2006 of $0.04 and the cumulative expense resulting from the adoption of FIN 47 in the fourth quarter of 2006 of ($0.07). CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS Periods ended September 30 Three Months Twelve Months Dollars in millions, except per share amounts (unaudited) 2007 2006 2007 2006 SALES Carbon Black Business (A) $521 $508 $2,005 $1,917 Rubber blacks 368 367 1,416 1,378 Performance products 142 128 541 488 Inkjet colorants 10 12 46 47 Superior MicroPowders 1 1 2 4 Metal Oxides Business 71 69 271 254 Fumed metal oxides 71 69 270 253 Aerogel - - 1 1 Supermetals Business 55 66 233 292 Specialty Fluids Business 16 11 58 44 Segment sales 663 654 2,567 2,507 Unallocated and other (B) 12 9 49 36 Net sales and other operating revenues $675 $663 $2,616 $2,543 SEGMENT PROFIT Carbon Black Business (C) $20 $31 $156 $101 Metal Oxides Business (C) 8 9 36 22 Supermetals Business 1 9 15 41 Specialty Fluids Business 7 3 25 16 Total Segment Profit (D) 36 52 232 180 Interest expense (8) (8) (34) (27) General unallocated expense (E) (5) (16) (18) (44) Less: Equity in net income of affiliated companies, net of tax (3) (4) (12) (12) Income from continuing operations before income taxes 20 24 168 97 Benefit (provision) for income taxes 2 4 (38) (9) Equity in net income of affiliated companies, net of tax 3 4 12 12 Minority interest in net income, net of tax (4) (3) (15) (12) Income from continuing operations 21 29 127 88 Discontinued operations, net of tax (F) 3 2 2 2 Cumulative effect of an accounting change, net of tax (G) - (4) - (2) Net income 24 27 129 88 Dividends on preferred stock, net of tax benefit - - (1) (2) Net income available to common shares $24 $27 $128 $86 Diluted earnings per share of common stock Income from continuing operations $0.32 $0.43 $1.87 $1.28 Discontinued Operations, net of tax (F) 0.04 0.03 0.03 0.03 Cumulative effect of an accounting change, net of tax (G) - (0.07) - (0.03) Net income $0.36 $0.39 $1.90 $1.28 Weighted average common shares outstanding Diluted 66 68 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 of one equity affiliate offset by royalties paid by equity affiliates and external shipping and handling fees. (C) The fourth quarter and fiscal year end 2006 amounts include a reclassification of $4 million of profit from the Carbon Black segment to the Metal Oxides segment. This reclassification was deemed to be immaterial for purposes of the annual segment reporting in the September 30, 2006 consolidated financial statements. (D) 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. (E) General unallocated expense includes foreign currency transaction gains (losses), interest income, dividend income, and the certain items listed in Exhibit I. The amount for the twelve months ended September 30, 2006 also includes the $27 million settlement payment to the Sons of Gwalia. (F) Amounts relate to legal and tax settlements in connection with our discontinued operations. (G) Amounts relate to the cumulative benefit resulting from the adoption of FAS 123(R) in the first quarter of 2006 of $0.04 and the cumulative expense resulting from the adoption of FIN 47 in the fourth quarter of 2006 of ($0.07). CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION September 30 September 30, 2007 2006 Dollars in millions, except share and per share amounts (unaudited) (audited) Current assets: Cash and cash equivalents $154 $189 Short-term marketable securities 2 1 Accounts and notes receivable, net of reserve for doubtful accounts of $6 and $6 576 534 Inventories: Raw materials 154 131 Work in process 77 109 Finished goods 173 139 Other 27 41 Total inventories 431 420 Prepaid expenses and other current assets 79 75 Deferred income taxes 35 36 Total current assets 1,277 1,255 Investments: Equity affiliates 65 59 Long-term marketable securities and cost investments 3 3 Total investments 68 62 Property, plant and equipment 2,823 2,531 Accumulated depreciation and amortization (1,807) (1,567) Net property, plant and equipment 1,016 964 Other assets: Goodwill 34 31 Intangible assets, net of accumulated amortization of $11 and $10 4 5 Assets held for rent 42 40 Deferred income taxes 115 100 Other assets 78 77 Total other assets 273 253 Total assets $2,634 $2,534 CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION September 30 September 30, 2007 2006 Dollars in millions, except share and per share amounts (unaudited) (audited) Current liabilities: Notes payable to banks $67 $58 Accounts payable and accrued liabilities 429 384 Income taxes payable 36 27 Deferred income taxes 2 2 Current portion of long-term debt 15 34 Total current liabilities 549 505 Long-term debt 503 459 Deferred income taxes 16 20 Other liabilities 307 286 Minority interest 77 68 Stockholders' equity: Preferred stock: Authorized: 2,000,000 shares of $1 par value Series B ESOP Convertible Preferred Stock 7.75% Cumulative Authorized: 200,000 shares Issued: None and 55,895 shares - 56 Outstanding: None and 38,734 shares (aggregate redemption value of $39 at $1,000 per share) Less cost of zero and 17,161 shares of preferred treasury stock - (38) Common stock: Authorized: 200,000,000 shares of $1 par value Issued: 65,424,674 and 63,579,040 shares 65 64 Outstanding: 65,279,803 and 63,432,651 shares Less cost of 144,871 and 146,389 shares of common treasury stock (5) (5) Additional paid-in capital - 7 Retained earnings 1,107 1,160 Deferred employee benefits (34) (38) Notes receivable for restricted stock (19) (20) Accumulated other comprehensive income 68 10 Total stockholders' equity 1,182 1,196 Total liabilities and stockholders' equity $2,634 $2,534 CABOT CORPORATION Fiscal 2006 In millions, except per share amounts (unaudited) Dec.Q. Mar.Q. June Q. Sept.Q. FY Sales Carbon Black Business (A) $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 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 Carbon Black Business(C) $21 $26 $23 $31 $101 Metal Oxides Business(C) 2 5 6 9 22 Supermetals Business 11 12 9 9 41 Specialty Fluids Business 4 4 5 3 16 Total Segment Profit (D) 38 47 43 52 180 Interest expense (6) (7) (6) (8) (27) General unallocated income (expense) (E) (2) (24) (2) (16) (44) Less: Equity in net income of affiliated companies, net of tax (3) (4) (1) (4) (12) Income from continuing operations before income taxes 27 12 34 24 97 Benefit (provision) 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 from continuing operations 22 12 25 29 88 Discontinued operations, net of tax (F) - - - 2 2 Cumulative effect of accounting changes, net of tax (G) 2 - - (4) (2) Net income 24 12 25 27 88 Dividends on preferred stock, net of tax benefit (1) - (1) - (2) Net income available to common shares $23 $12 $24 $27 $86 Diluted earnings per share of common stock Net income from continuing operations $0.31 $0.17 $0.37 $0.43 $1.28 Discontinued operations, net of tax (F) - - - 0.03 0.03 Cumulative effects of accounting changes, net of tax (G) 0.04 - - (0.07) (0.03) Net income $0.35 $0.17 $0.37 $0.39 $1.28 Weighted average common shares outstanding Diluted 68 69 69 68 68 Fiscal 2007 In millions, except per share amounts (unaudited) Dec.Q. Mar.Q. June Q. Sept.Q. FY Sales Carbon Black Business (A) $485 $493 $506 $521 $2,005 Rubber blacks 351 346 351 368 1,416 Performance products 123 134 142 142 541 Inkjet colorants 10 13 13 10 46 Superior MicroPowders 1 - - 1 2 Metal Oxides Business 65 68 67 71 271 Fumed metal oxides 65 68 66 71 270 Aerogel - - 1 - 1 Supermetals Business 77 53 48 55 233 Specialty Fluids Business 16 10 16 16 58 Segment Sales 643 624 637 663 2,567 Unallocated and other (B) 12 13 12 12 49 Net sales and other operating revenues $655 $637 $649 $675 $2,616 Segment Profit Carbon Black Business(C) $54 $57 25 $20 $156 Metal Oxides Business(C) 9 10 9 8 36 Supermetals Business 16 (2) - 1 15 Specialty Fluids Business 8 3 7 7 25 Total Segment Profit (D) 87 68 41 36 232 Interest expense (9) (9) (8) (8) (34) General unallocated income (expense) (E) - (15) 1 (5) (18) Less: Equity in net income of affiliated companies, net of tax (3) (3) (3) (3) (12) Income from continuing operations before income taxes 75 41 31 20 168 Benefit (provision) for income taxes (19) (11) (9) 2 (38) Equity in net income of affiliated companies, net of tax 3 3 3 3 12 Minority interest in net income, net of tax (5) (2) (4) (4) (15) Net income from continuing operations 54 31 21 21 127 Discontinued operations, net of tax (F) - - (1) 3 2 Cumulative effect of accounting changes, net of tax (G) - - - - - Net income 54 31 20 24 129 Dividends on preferred stock, net of tax benefit - (1) - - (1) Net income available to common shares $54 $30 $20 $24 $128 Diluted earnings per share of common stock Net income from continuing operations $0.79 $0.45 $0.31 $0.32 $1.87 Discontinued operations, net of tax (F) - - (0.01) 0.04 0.03 Cumulative effects of accounting changes, net of tax (G) - - - - - Net income $0.79 $0.45 $0.30 $0.36 $1.90 Weighted average common shares outstanding Diluted 69 69 68 66 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 and external shipping and handling fees. (C) The fourth quarter and fiscal year end 2006 amounts include a reclassification of $4 million of profit from the Carbon Black segment to the Metal Oxides segment. This reclassification was deemed to be immaterial for purposes of the annual segment reporting in the September 30, 2006 consolidated financial statements. (D) 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. (E) General unallocated expense includes foreign currency transaction gains (losses), interest income, dividend income and certain items listed in Exhibit I. These amounts also include the $27 million settlement payment to the Sons of Gwalia in the second quarter of 2006. (F) Amounts relate to legal and tax settlements in connection with our discontinued operations. (G) Amounts relate to the cumulative benefit resulting from the adoption of FAS 123(R) in the first quarter of 2006 of $0.04 and the cumulative expense resulting from the adoption of FIN 47 in the fourth quarter of 2006 of ($0.07).Downloadable Earnings Tables and Supplemental Infomation
SOURCE Cabot Corporation
http://www.cabot-corp.com