Cabot Corporation Reports $0.72 EPS and Record $0.95 Adjusted EPS
Higher volumes, robust unit margins and cost controls benefit performance
BOSTON, July 28, 2010 /PRNewswire via COMTEX/ --Cabot Corporation (NYSE: CBT) today announced results for its third quarter of fiscal year 2010.
Key Highlights
- Total business profit increased $72 million from same quarter last year and $22 million sequentially as all businesses performed at a high level
- Third consecutive quarter of strong operating results despite volumes below pre-crisis levels
- Volumes increased 20% from third quarter 2009 as markets recover globally, sequential demand remained solid
- Robust unit margins from increased efficiency, value pricing and cost controls continue to lift performance
(In millions, except per
share amounts) 2010 2009
---- ----
Third First Third First
Quarter 9 months Quarter 9 months
------- -------- ------- --------
Net sales $753 $2,144 $511 $1,633
Net income (loss) per
share attributable to
Cabot Corporation $0.72 $1.81 $(0.19) $(1.06)
Less: Net loss per share
from discontinued
operations -- -- $(0.01) $(0.01)
Less: Certain items per
share $(0.23) $(0.57) $(0.24) $(0.90)
Adjusted earnings (loss)
per share $0.95 $2.38 $0.06 $(0.15)
------------------------ ----- ----- ----- ------
Commenting on the results, Patrick Prevost, Cabot's President and CEO, stated, "We are very pleased to report our best ever adjusted EPS quarter. This performance reflects the strength of our portfolio with every business performing at a high level during the period. Our results over the past three quarters put us solidly on the path of achieving our long-term financial targets.
Prevost continued, "Market demand remained solid across all geographies and the investments we have made to leverage an economic recovery are paying off. Our leading market positions in the fastest growing regions of the world and our multiple efforts over the past eighteen months to increase the efficiency of our global operating network are contributing positively to our results. The continuing focus on our highest value new business opportunities is yielding steady revenue growth and improving financial performance. Our seamless execution in the key strategic areas of margin improvement, emerging market expansion and new business development are driving our strong performance as we work to position Cabot as a top tier global specialty chemicals company. "
Financial Detail
For the third quarter of fiscal 2010, net income attributable to Cabot Corporation was $47 million ($0.72 per diluted common share). Adjusted EPS was $0.95 per common share, excluding $0.23 per common share of certain items principally related to charges from the closure of the Company's carbon black facility in Thane, India.
Segment Results
Core Segment- Third quarter fiscal 2010 profitability in the Rubber Blacks Business increased by $30 million when compared to the same quarter of fiscal 2009. Robust unit margins and 22% higher volumes globally from improved demand in the tire and automotive markets drove the improvement. Volumes in China increased by 32% over the third quarter of fiscal 2009, in South America by 30%, in Asia Pacific, excluding China, by 27%, in North America by 24% and in the Europe, Middle East, Africa region by 2%. Sequentially, profitability rose by $3 million as global volumes increased by 3%, led by improvements in China and Asia Pacific, and results benefited from the achievement of certain milestones in our new business development efforts.
Profitability in the Supermetals Business increased by $11 million compared to the same quarter of fiscal 2009. The improvement was driven by stronger demand from ongoing recovery in the electronics industry that resulted in higher volumes, lower costs from actions taken over the past year to reposition the business and a benefit from lower ore costs associated with LIFO accounting. Sequentially, profit improved by $11 million due primarily to higher volumes associated with the electronics market recovery, higher prices, including an improved product mix, and lower operating costs. During the third quarter of fiscal 2010, the Supermetals Business generated $18 million of cash from improved operating results and reduced working capital.
Performance Segment- Third quarter fiscal 2010 profitability in the Performance Segment increased by $25 million when compared to the same quarter of fiscal 2009. The increase was driven by higher volumes from improved demand in the automotive, construction, infrastructure and electronics markets, robust unit margins and a LIFO benefit. Volumes increased by 18% in Performance Products and by 21% in Fumed Metal Oxides when compared to the third quarter of fiscal 2009. Sequentially, segment profit increased by $3 million from 4% higher volumes in Fumed Metal Oxides and a LIFO benefit, while volumes in Performance Products remained stable.
Specialty Fluids Segment- Profitability in the Specialty Fluids Segment for the third quarter of fiscal 2010 increased by $2 million when compared to the third quarter of fiscal 2009 and by $6 million sequentially. A strong level of drilling activity in the North Sea and higher rental revenues during the third quarter of fiscal 2010 drove the improvements.
New Business Segment- Third quarter fiscal 2010 revenues in the New Business Segment increased by $11 million when compared to the third quarter of fiscal 2009 and by $3 million sequentially. The increases in both periods were driven by improved revenues in the Inkjet Colorants and Aerogel Businesses. During the third quarter of fiscal 2010 the New Business Segment reported positive operating profit, a $4 million improvement over the third quarter of fiscal 2009 and a $6 million improvement year to date.
Cash Performance- The Company ended the third quarter of fiscal 2010 with a cash balance of $295 million despite a $4 million increase in working capital from higher accounts receivable balances related to increased sales levels.
Taxes- During the third quarter of fiscal 2010, the Company recorded a tax provision of $20 million, for an overall tax rate of 29%. This included discrete period specific benefits of approximately $1 million and did not include any benefit from the impact of the closure of the Thane, India carbon black facility. The recurring effective tax rate for the quarter was approximately 25%.
Outlook
Earnings Call
The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on July 29, 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 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 expectations concerning volumes and demand for our products), 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- When explaining factors affecting our performance, we use several terms. The term "LIFO benefit" or "LIFO impact" 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 method, compared to the older costs that would have been included in COGS under a first-in first-out method ("COGS impact"); and (ii) the impact of reductions in inventory quantities, causing historical inventory costs to flow through COGS ("liquidation impact"). The LIFO impact for the Company (including the Rubber Blacks, Performance Products and Supermetals Businesses) for the third quarter of fiscal 2010 was a benefit of $11 million and is comprised of a favorable $8 million liquidation impact and a $3 million favorable COGS impact. This compares to a $4 million unfavorable LIFO impact for the third quarter of fiscal 2009, comprised of an unfavorable $5 million COGS impact, partially offset by a favorable $1 million liquidation impact. During the second quarter of fiscal 2010 the LIFO impact was a favorable $2 million, comprised of a favorable $4 million liquidation impact, partially offset by a $2 million unfavorable COGS impact.
Use of Non-GAAP Financial Measures- The preceding discussion of our results and the accompanying financial tables report adjusted EPS and also include information on our reportable segment sales and segment (or business) operating profit before taxes ("PBT"). Adjusted EPS 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 minority 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 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. 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. Our chief operating decision-maker uses adjusted EPS to evaluate the underlying 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 Reconciliation of Adjusted EPS, and a reconciliation of total segment PBT to income (loss) from operations before taxes, equity in net income of affiliated companies and minority interest is shown in the table titled Summary Results by Segments. The certain items that are excluded from our calculation of adjusted EPS and segment PBT are detailed in the table titled Certain Items and Reconciliation of Adjusted EPS.
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Click here for financial tables.
Third Quarter Earnings Announcement, Fiscal 2010 ------------------------------------------------ CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Periods ended
June 30 Three Months Nine Months
Dollars in
millions, except
per share
amounts
(unaudited) 2010 2009 2010 2009
----------------- ---- ---- ---- ----
Net sales and
other operating
revenues $753 $511 $2,144 $1,633
Cost of sales 599 443 1,714 1,478
--- --- ----- -----
Gross profit 154 68 430 155
Selling and
administrative
expenses 61 50 189 160
Research and
technical
expenses 16 16 53 53
--- --- --- ---
Income (loss)
from operations 77 2 188 (58)
Other income and
(expense)
Interest and
dividend income 1 - 1 2
Interest expense (10) (6) (30) (23)
Other income and
(expense) 2 2 (2) (13)
Total other
income and
(expense) (7) (4) (31) (34)
--- --- --- ---
Income (loss)
from continuing
operations
before income
taxes and equity
in net income of
affiliated
companies 70 (2) 157 (92)
(Provision)
benefit for
income taxes (20) (7) (30) 23
Equity in net
income of
affiliated
companies, net
of tax 1 - 5 2
Net income (loss)
from continuing
operations 51 (9) 132 (67)
Loss from
discontinued
operations, net
of tax (A) - - - -
Net income (loss) 51 (9) 132 (67)
Net income (loss)
attributable to
noncontrolling
interests, net
of tax 4 3 13 (1)
Net income (loss)
attributable to
Cabot
Corporation $47 $(12) $119 $(66)
--- ---- ---- ----
Diluted earnings
(loss) per share
of common stock
attributable to
Cabot
Corporation
Continuing
Operations (B) $0.72 $(0.18) $1.81 $(1.05)
Discontinued
Operations (A),
(B) - $(0.01) - $(0.01)
Net income (loss)
attributable to
Cabot
Corporation (B) $0.72 $(0.19) $1.81 $(1.06)
Weighted average
common shares
outstanding
Diluted 64 63 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.
Third Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
---------------------------------------------
Periods ended June 30 Three Months Nine Months
Dollars in millions,
except per share
amounts (unaudited) 2010 2009 2010 2009
-------------------- ---- ---- ---- ----
SALES
Core Segment $484 $312 $1,375 $1,046
Rubber blacks (A) 437 274 1,247 940
Supermetals (A) 47 38 128 106
Performance Segment 200 152 587 436
Performance products
(A) 137 100 401 291
Fumed metal oxides (A) 63 52 186 145
New Business Segment 25 14 64 48
Inkjet colorants 15 10 43 32
Aerogel 8 2 16 11
Superior MicroPowders 2 2 5 5
Specialty Fluids
Segment 22 19 52 45
--- --- --- ---
Segment sales (A) 731 497 2,078 1,575
Unallocated and other
(A), (B) 22 14 66 58
--- --- --- ---
Net sales and other
operating revenues $753 $511 $2,144 $1,633
---- ---- ------ ------
SEGMENT PROFIT (LOSS)
Core Segment $55 $14 $145 $15
Rubber blacks (A) 41 11 122 15
Supermetals (A) 14 3 23 -
Performance Segment
(A) 35 10 101 13
New Business Segment - (4) (2) (8)
Specialty Fluids
Segment 11 9 21 17
--- --- --- ---
Total Segment Profit
(Loss) (A), (C) 101 29 265 37
Interest expense (10) (6) (30) (23)
Certain items (D) (15) (19) (41) (67)
Unallocated corporate
costs (9) (7) (30) (22)
General unallocated
expense (A), (E) 4 1 (2) (15)
Less: Equity in net
income of affiliated
companies, net of tax (1) - (5) (2)
--- --- --- ---
Income (loss) from
continuing operations
before income taxes
and equity in net
income of affiliated
companies 70 (2) 157 (92)
(Provision) benefit
for income taxes (20) (7) (30) 23
Equity in net income
of affiliated
companies, net of tax 1 - 5 2
Net income (loss) from
continuing operations 51 (9) 132 (67)
Loss from discontinued
operations, net of
tax (F) - - - -
Net income (loss) 51 (9) 132 (67)
Net income (loss)
attributable to
noncontrolling
interests, net of tax 4 3 13 (1)
Net income (loss)
attributable to Cabot
Corporation $47 $(12) $119 $(66)
--- ---- ---- ----
Diluted earnings
(loss) per share of
common stock
attributable to Cabot
Corporation
Continuing Operations
(G) $0.72 $(0.18) $1.81 $(1.05)
Discontinued
Operations (F), (G) - (0.01) - (0.01)
Net income (loss)
attributable to Cabot
Corporation (G) $0.72 $(0.19) $1.81 $(1.06)
Weighted average
common shares
outstanding
Diluted 64 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",
respectively. 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
Reconciliation of Adjusted EPS 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.
Third Quarter Earnings Announcement, Fiscal 2010
------------------------------------------------
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
--------------------------------------------------
September
June 30, 30,
2010 2009
Dollars in millions, except share and per
share amounts (unaudited) (audited)
----------------------------------------- ----------- ---------
Current assets:
Cash and cash equivalents $295 $304
Short-term marketable securities 1 1
Accounts and notes receivable, net of
reserve for doubtful accounts of $5 and $6 588 452
Inventories:
Raw materials 113 118
Work in process 40 44
Finished goods 173 165
Other 31 31
--- ---
Total inventories 357 358
Prepaid expenses and other current assets 59 53
Deferred income taxes 31 32
Total current assets 1,331 1,200
----- -----
Investments:
Equity affiliates 58 60
Long-term marketable securities and cost
investments 1 1
Total investments 59 61
--- ---
Property, plant and equipment 2,846 3,000
Accumulated depreciation and amortization (1,925) (1,988)
Net property, plant and equipment 921 1,012
--- -----
Goodwill. 35 37
Intangible assets, net of accumulated
amortization of $11 and $11 2 2
Assets held for rent 42 43
Deferred income taxes 231 235
Other assets 83 86
Total assets $2,704 $2,676
====== ======
Third Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
June 30, September 30,
2010 2009
Dollars in millions, except
share and per share amounts (unaudited) (audited)
--------------------------- ----------- ---------
Current liabilities:
Notes payable to banks $42 $29
Accounts payable and accrued
liabilities 396 407
Income taxes payable 19 31
Deferred income taxes 6 5
Current portion of long-term
debt 22 5
Total current liabilities 485 477
--- ---
Long-term debt 601 623
Deferred income taxes 12 11
Other liabilities 265 328
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:
65,357,282 and 65,401,485
shares 65 65
Outstanding: 65,297,295 and
65,309,155 shares Less cost of
59,987 and 92,330 shares of
common treasury stock (2) (2)
Additional paid-in capital 35 18
Retained earnings 1,102 1,018
Deferred employee benefits (21) (25)
Accumulated other comprehensive
income 56 60
Total Cabot Corporation
stockholders' equity 1,235 1,134
Noncontrolling interests 106 103
---
Total equity 1,341 1,237
----- -----
Total liabilities and equity $2,704 $2,676
====== ======
CABOT CORPORATION
Fiscal 2009
-----------
In millions,
except per
share
amounts June Sept.
(unaudited) Dec. Q. Mar. Q. 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) $(0.18) $(1.24)
Discontinued
operations
(F), (G) - - (0.01) - (0.01)
Net income
(loss)
attributable
to Cabot
Corporation
(G) $0.06 $(0.93) $(0.19) $(0.18) $(1.25)
Weighted
average
common
shares
outstanding
Diluted 63 63 63 64 63
------- --- --- --- --- ---
Fiscal 2010
-----------
In millions,
except per share
amounts Sept.
(unaudited) Dec. Q. Mar. Q. June Q. Q. FY
---------------- ------- ------- ------- ------ ---
Sales
Core Segment $445 $446 $484 $1,375
Rubber blacks (A) 399 411 437 1,247
Supermetals (A) 46 35 47 128
Performance
Segment 187 200 200 587
Performance
products (A) 126 138 137 401
Fumed metal oxides
(A) 61 62 63 186
New Business
Segment 17 22 25 64
Inkjet colorants 14 14 15 43
Aerogel 2 6 8 16
Superior
MicroPowders 1 2 2 5
Specialty Fluids
Segment 15 15 22 52
---------------- --- --- --- ---
Segment Sales (A) 664 683 731 2,078
Unallocated and
other (A), (B) 15 29 22 66
--------------- --- --- --- ---
Net sales and
other operating
revenues $679 $712 $753 $2,144
---------------- ---- ---- ---- ------
Segment Profit
(Loss)
Core Segment $49 $41 $55 $145
Rubber blacks (A) 43 38 41 122
Supermetals (A) 6 3 14 23
Performance (A) 34 32 35 101
New Business
Segment (3) 1 - (2)
Specialty Fluids
Segment 5 5 11 21
---------------- --- --- --- ---
Total Segment
Profit (Loss)
(A), (C) 85 79 101 265
Interest expense (9) (11) (10) (30)
Certain items (D) (17) (9) (15) (41)
Unallocated
corporate costs (11) (10) (9) (30)
General
unallocated
expense (A), (E) (3) (3) 4 (2)
Less: Equity in
net income of
affiliated
companies, net of
tax (3) (1) (1) (5)
------------------ --- --- --- ---
Income (loss) from
continuing
operations before
income taxes and
equity in net
income of
affiliated
companies 42 45 70 157
(Provision)
benefit for
income taxes (11) 1 (20) (30)
Equity in net
income of
affiliated
companies, net of
tax 3 1 1 5
------------------ --- --- --- ---
Net income (loss)
from continuing
operations 34 47 51 132
Loss from
discontinued
operations, net
of tax (F) - - - -
---------------- --- --- --- ---
Net income (loss) 34 47 51 132
Net (loss) income
attributable to
noncontrolling
interests, net of
tax 5 4 4 13
------------------ --- --- --- ---
Net income (loss)
attributable to
Cabot Corporation $29 $43 $47 $119
Diluted earnings
(loss) per share
of common stock
attributable to
Cabot Corporation
Continuing
operations (G) $0.44 $0.65 $0.72 $1.81
Discontinued
operations (F),
(G) - - - -
Net income (loss)
attributable to
Cabot Corporation
(G) $0.44 $0.65 $0.72 $1.81
Weighted average
common shares
outstanding
Diluted 64 64 64 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",
respectively. 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
Reconciliation of Adjusted EPS 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.
Third Quarter Earnings Announcement, Fiscal 2010
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS
------------------------------------------------------------------
CERTAIN ITEMS:
Periods ended June 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) $- $-
Recovery of previously impaired
investment - - - -
Long-lived asset impairment (B) - - - -
Write-down of impaired investments - - - -
Restructuring initiatives:
- 2009 Global - - (19) (0.24)
- Closure of Thane, India Facility (14) (0.22) - -
- Other - - - -
Total certain items (15) (0.23) (19) (0.24)
--- ----- --- -----
- Discontinued operations (C) - - - (0.01)
Total certain items and discontinued
operations (15) (0.23) (19) (0.25)
--- ----- --- -----
Tax impact of certain items and
discontinued operations 1 - 3 -
Total certain items after tax $(14) $(0.23) $(16) $(0.25)
---- ------ ---- ------
Periods ended June 30 Nine 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 $(2) $(0.02) $- $-
Recovery of previously impaired
investment 1 0.01 - -
Long-lived asset impairment (B) (2) (0.02) - -
Write-down of impaired investments - - (1) (0.01)
Restructuring initiatives:
- 2009 Global (24) (0.32) (64) (0.87)
- Closure of Thane, India Facility (14) (0.22) - -
- Other - - (2) (0.02)
Total certain items (41) (0.57) (67) (0.90)
--- ----- --- -----
- Discontinued operations (C) - - - (0.01)
Total certain items and discontinued
operations (41) (0.57) (67) (0.91)
--- ----- --- -----
Tax impact of certain items and
discontinued operations 5 - 10 -
Total certain items after tax $(36) $(0.57) $(57) $(0.91)
---- ------ ---- ------
Periods ended June 30 Three Months Nine Months
Dollars in millions
(unaudited) 2010 2009 2010 2009
------------------- ---- ---- ---- ----
Statement of Operations Line
Item
----------------------------
Cost of sales $(12) $(18) $(25) $(59)
Selling and administrative
expenses (3) (1) (16) (6)
Research and technical
expenses - - - (2)
Total certain items $(15) $(19) $(41) $(67)
---- ---- ---- ----
NON-GAAP MEASURE:
Periods ended June 30 Three Months Nine 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 $0.72 $(0.19) $1.81 $(1.06)
Less: Net loss per share
from discontinued
operations - (0.01) - (0.01)
--- ----- --- -----
Net income (loss) per
share from continuing
operations $0.72 $(0.18) $1.81 $(1.05)
Less: Certain items per
share (0.23) (0.24) (0.57) (0.90)
Adjusted earnings (loss)
per share $0.95 $0.06 $2.38 $(0.15)
----- ----- ----- ------
(A) Per share amounts are calculated after tax.
(B) Land related to former carbon black site.
(C) Amount relates to former carbon black facilities.
(C) Amounts relate to legal settlements in connection with our
discontinued operations.
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SOURCE: Cabot Corporation