1 FORM 10-Q ____________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended JUNE 30, 1994 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ COMMISSION FILE NUMBER 1-5667 CABOT CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 04-2271897 (State of Incorporation) (I.R.S. Employer Identification No.) 75 STATE STREET 02109-1806 BOSTON, MASSACHUSETTS (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (617) 345-0100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---------- -------------- Indicate the number of shares outstanding of each of the classes of Common Stock, as of the latest practicable date. AS OF JUNE 30, 1994, THE COMPANY HAD 18,798,647 SHARES OF COMMON STOCK, PAR VALUE $1 PER SHARE, OUTSTANDING. -1- 2 CABOT CORPORATION INDEX TO FINANCIAL STATEMENTS Part I. Financial Information Page No. -------- Item 1. Financial Statements (Unaudited) Consolidated Statements of Income Three Months Ended June 30, 1994 and 1993 3 Consolidated Statements of Income Nine Months Ended June 30, 1994 and 1993 4 Consolidated Balance Sheets June 30, 1994 and September 30, 1993 5 Consolidated Statements of Cash Flows Nine Months Ended June 30, 1994 and 1993 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II. Other Information Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 -2- 3 CABOT CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, 1994 and 1993 (Dollars in thousands, except per share amounts) UNAUDITED
The accompanying notes are an integral part of these financial statements. -3-1994 1993 ---- ---- Revenues: Net sales and other operating revenues $ 428,805 $ 418,780 Interest and dividend income 1,248 787 ------------ ----------- Total revenues 430,053 419,567 ------------ ----------- Costs and expenses: Cost of sales 312,277 311,553 Selling and administrative expenses 56,127 51,761 Research and technical service 11,620 11,009 Interest expense 10,806 11,230 Other (income) expense, net 7,204 2,798 ------------ ----------- Total costs and expenses 398,034 388,351 ------------ ----------- Income before income taxes 32,019 31,216 Provision for income taxes (12,167) (12,648) Equity in net income (loss) of affiliated companies 2,151 (119) ------------ ----------- Net income 22,003 18,449 ------------- ------------- Dividends on preferred stock, net of tax benefit of $482 and $473, respectively (895) (918) -------------- -------------- Income applicable to primary common shares $ 21,108 $ 17,531 ============= ============= Weighted average common shares outstanding (000) (See Note D for information on effective stock split): Primary 19,093 18,705 Fully diluted (Note A) 20,648 20,331 Income per common share: Primary $ 1.11 $ 0.94 ============== ============== Fully diluted (Note A) $ 1.04 $ 0.88 ============== ============== Dividends per common share $ 0.26 $ 0.26 ============== ============== 4 CABOT CORPORATION CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended June 30, 1994 and 1993 (Dollars in thousands, except per share amounts) UNAUDITED
The accompanying notes are an integral part of these financial statements. -4-1994 1993 ---- ---- Revenues: Net sales and other operating revenues $ 1,262,140 $ 1,222,464 Interest and dividend income 3,282 3,139 ------------ ----------- Total revenues 1,265,422 1,225,603 ------------ ----------- Costs and expenses: Cost of sales 928,349 917,855 Selling and administrative expenses 160,011 152,565 Research and technical service 35,527 31,513 Interest expense 31,370 33,719 Other (income) expense, net 17,135 13,785 ------------ ----------- Total costs and expenses 1,172,392 1,149,437 ------------ ----------- Income before income taxes 93,030 76,166 Provision for income taxes (35,351) (31,113) Equity in net income (loss) of affiliated companies 2,630 (721) ------------ ----------- Income before cumulative effect of accounting changes 60,309 44,332 Cumulative effect of accounting changes - (26,109) ------------ ----------- Net income 60,309 18,223 ------------ ----------- Dividends on preferred stock, net of tax benefit of $1,449 and $1,420, respectively (2,691) (2,758) ------------ ----------- Income applicable to primary common shares $ 57,618 $ 15,465 ============= ============= Weighted average common shares outstanding (000) (See Note D for information on effective stock split): Primary 19,096 18,660 Fully diluted (Note A) 20,650 20,294 Income (loss) per common share: Primary Continuing operations $ 3.02 $ 2.23 Cumulative effect of accounting changes - (1.40) -------------- ------------- Income per share $ 3.02 $ 0.83 ============== ============== Fully diluted (Note A) Continuing operations $ 2.83 $ 2.23 Cumulative effect of accounting changes - (1.40) -------------- -------------- Income per share $ 2.83 $ 0.83 ============== ============== Dividends per common share $ 0.78 $ 0.78 ============== ============== 5 CABOT CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 1994 and September 30, 1993 (Dollars in thousands) ASSETS
The accompanying notes are an integral part of these financial statements. -5-June 30 September 30 1994 1993 (Unaudited) ------------- ---------------- Current assets: Cash and cash equivalents $ 41,356 $ 40,267 Accounts and notes receivable (net of reserve for doubtful accounts of $6,954 and $6,321) 284,945 258,057 Inventories: Raw materials 51,092 45,589 Work in process 33,119 36,923 Finished goods 96,287 77,747 Other 37,603 35,091 ------------- ------------ Total inventories 218,101 195,350 Prepaid expenses 12,568 8,771 Deferred income taxes 28,420 41,761 ------------- ------------ Total current assets 585,390 544,206 ------------- ------------ Investments: At equity 157,129 166,669 At cost 1,783 7,911 ------------- ------------ Total investments 158,912 174,580 ------------- ------------ Property, plant and equipment: At cost 1,310,902 1,250,228 Accumulated depreciation and amortization (660,133) (603,708) ------------- ------------ Net property, plant and equipment 650,769 646,520 Other assets: Intangible assets, net of amortization 74,477 78,873 Deferred income taxes 5,697 5,752 Other assets 33,021 39,542 ------------- ------------ Total other assets 113,195 124,167 ------------- ------------ Total assets $ 1,508,266 $ 1,489,473 ============= ============= 6 CABOT CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 1994 and September 30, 1993 (Dollars in thousands) LIABILITIES & STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of these financial statements. -6-June 30 September 30 1994 1993 (Unaudited) -------------- --------------- Current liabilities: Notes payable to banks $ 33,022 $ 1,501 Current portion of long-term debt 157,444 29,205 Accounts payable and accrued liabilities 268,907 297,201 U.S. and foreign income taxes payable 17,140 25,029 Deferred income taxes 1,216 1,285 ------------ ------------ Total current liabilities 477,729 354,221 Long-term debt 293,364 459,275 Deferred income taxes 94,832 86,344 Other liabilities 136,163 147,360 Commitments and contingencies (Note C) Stockholders' Equity: (Note D) Preferred stock: Authorized: 2,000,000 shares of $1 par value Series A Junior Participating Preferred Stock Issued and outstanding: none Series B ESOP Convertible Preferred Stock 7.75% Cumulative Issued: 75,336 shares (aggregate redemption value $73,832 and $74,982) 75,336 75,336 Less cost of shares of preferred treasury stock (3,716) (3,003) Common stock (See Note D for information on effective stock split): Authorized: 80,000,000 shares of $1 par value Issued: 33,887,484 shares 33,887 33,887 Additional paid-in capital 39,721 33,621 Retained earnings 904,768 861,803 Less cost of common treasury stock (including unearned amounts of $9,933 and $7,321) (483,607) (483,184) Deferred employee benefits (67,758) (68,781) Foreign currency translation adjustments 7,547 (7,406) ------------ ------------ Total stockholders' equity 506,178 442,273 ------------ ------------ Total liabilities and stockholders' equity $ 1,508,266 $ 1,489,473 =========== ============ 7 CABOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, 1994 and 1993 (Dollars in thousands) UNAUDITED
The accompanying notes are an integral part of these financial statements. -7-1994 1993 ----- ----- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 60,309 $ 18,223 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 63,949 63,055 Deferred tax provision 9,352 2,609 Gain on sale of investments - (2,841) Effects of accounting changes - 26,109 Equity in net income/loss of affiliated companies, net of dividends received 1,312 5,338 Other, net 3,099 1,990 Changes in assets and liabilities: Increase in accounts receivable (20,886) (35,547) (Increase) decrease in inventory (17,765) 5,694 (Decrease) increase in accounts payable and accruals (34,181) 8,373 Decrease in prepayments and intangible assets 2,366 11,379 Other, net 1,208 (1,019) ---------- ---------- Cash provided by operating activities 68,763 103,363 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (46,984) (45,186) Investments and acquisitions (284) (40,405) Sales of investments and property, plant and equipment 545 3,065 ---------- ---------- Cash used by investing activities (46,723) (82,526) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt - 8,866 Reduction in long-term debt (16,387) (5,013) Increase (decrease) in short-term debt 9,390 (19,678) Sales of treasury stock, net 2,365 7,646 Cash dividends paid to stockholders (17,344) (17,183) ---------- ---------- Cash used by financing activities (21,976) (25,362) Effect of exchange rate changes on cash 1,025 (3,951) ---------- ---------- Increase (decrease) in cash and cash equivalents 1,089 (8,476) Cash and cash equivalents at beginning of period 40,267 30,656 ---------- ---------- Cash and cash equivalents at end of period $ 41,356 $ 22,180 ========== ========== 8 CABOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1994 A. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Cabot Corporation and all majority-owned and controlled domestic and foreign subsidiaries. Investments in majority-owned affiliates where control is temporary and investments in 20 percent- to 50 percent-owned affiliates are accounted for on the equity method. All significant intercompany transactions have been eliminated. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required by Form 10-K. Additional information may be obtained by referring to the Company's Form 10-K for the year ended September 30, 1993. The financial information submitted herewith is unaudited and reflects all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods ended June 30, 1994 and 1993. All such adjustments are of a normal recurring nature, except for adjustments discussed in Note B. The results for interim periods are not necessarily indicative of the results to be expected for the fiscal year. During the fourth quarter of fiscal 1993, the Company adopted two new accounting standards related to postretirement benefits and income taxes. Both of these standards were adopted as of October 1, 1992, and as a result, the income statement and the statement of cash flows for the nine months ending June 30, 1993 were restated. Earnings Per Share The computation of fully diluted earnings per share considers the conversion of the Company's Series B ESOP Convertible Preferred Stock held by the Company's Employee Stock Ownership Plan, and also includes the potentially dilutive effects of the Company's Equity Incentive Plan. B. SPECIALTY CHEMICALS AND MATERIALS ASSET IMPAIRMENT AND RESTRUCTURING RESERVE Previously reported unfavorable conditions in Japan have worsened resulting in ongoing significant losses at the Company's Japanese carbon black equity affiliate. Operating losses are expected to continue into the foreseeable future. As a result, the Company has determined that its investment in this affiliate has been permanently impaired. The Company has recorded a $6,150,000 charge for the impairment of its investment in its Japanese affiliate. In addition, the Company has revised its Specialty Chemicals and Materials restructuring reserves, recorded in 1993, downward based on actual cost incurred during the closing of a carbon black plant in Germany on June 30, 1994 and revised estimates of remaining costs. The Company will continue to evaluate its remaining reserve as new data become available. A $4,000,000 benefit from the revision of the 1993 estimated restructuring reserve was recorded. C. CONTINGENCIES The Company is a defendant in various lawsuits and is involved in other gas contract issues and environmental proceedings wherein substantial amounts are claimed. In the opinion of the Company's management, these suits and claims should not result in final judgments or settlements which, in the aggregate, would have a material adverse effect on the Company's financial condition. Fumed silica supplied by Cabot was used by others in the manufacture of silicone breast implant envelopes. There are currently pending more than 10,000 lawsuits in state and federal courts alleging injuries arising from the use of silicone breast implants. The federal cases have been consolidated in the Multi-District Litigation pending in the United States District Court for the Northern District of Alabama. Generally, the various state cases have been similarly consolidated in each jurisdiction. In addition, arrangements have been made for consolidated discovery in all actions. Cabot has been named as a defendant in fewer than 100 of those lawsuits, although additional lawsuits have been threatened and are expected to be brought in due -8- 9 CABOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) June 30, 1994 course. Cabot believes that it has adequate defenses in each of the lawsuits in which it is a defendant. However, the scientific, legal and societal issues raised by these cases are complex and the outcome is uncertain. Cabot is still evaluating the litigation and therefore cannot predict with any assurance the course this litigation will take, the number of cases to which Cabot will be added as a defendant, the amount of damages, if any, that may be assessed against Cabot or the defense costs that will be incurred by Cabot. D. STOCKHOLDERS' EQUITY On July 27, 1994, the executive committee of the board of directors authorized a two-for-one stock split, in the form of a stock dividend. One additional share of common stock is expected to be distributed on August 17, 1994, for each share of common stock of the Company held by stockholders of record on August 9, 1994. Once effective, the Company will reclassify $33,887,484 from the additional paid in capital account to the common stock account. Proforma earnings per share, weighted average common shares outstanding, and cash dividends per share restated to reflect the stock split are as follows:
-9-Three Months Ended Nine Months Ended ------------------ ----------------- 6/30/94 6/30/93 6/30/94 6/30/93 ------- ------- ------- ------- Income (loss) per common share: Primary Continuing operations $ 0.55 $ 0.47 $ 1.51 $ 1.11 Cumulative effect of accounting changes - - - (0.70) -------- ------- ------- ------- Income per share $ 0.55 $ 0.47 $ 1.51 $ 0.41 ======= ======= ======= ======== Fully Diluted Continuing operations $ 0.52 $ 0.44 $ 1.42 $ 1.11 Cumulative effect of accounting changes - - - (0.70) -------- ------- ------- ------- Income per share $ 0.52 $ 0.44 $ 1.42 $ 0.41 ======= ======= ======= ======== Weighted average common shares outstanding (000): Primary 38,186 37,410 38,192 37,320 Fully diluted 41,296 40,662 41,300 40,588 Dividends per common share $ 0.13 $ 0.13 $ 0.39 $ 0.39 ======= ======= ======= ======= 10 CABOT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) June 30, 1994 UNAUDITED D. STOCKHOLDERS' EQUITY (CONTINUED) The following table summarizes the changes in stockholders' equity for the nine months ended June 30, 1994. (Dollars in thousands)
Preferred Stock Preferred Common Stock --------------- Treasury Stock ------------ Additional Shares --------------- Shares Paid-In Retained Issued Value Shares Cost Issued Value Capital Earnings ------- ----- ------ ---- ------ ----- ---------- -------- Balance at September 30, 1993 75,336 $75,336 3,686 $(3,003) 33,887,484 $33,887 $33,621 $861,803 Net income 60,309 Common stock dividends paid (14,653) Net issuance of treasury stock under employee compensation plans 5,467 Purchase of treasury stock-preferred 572 (713) Sale of treasury stock to Profit Sharing and Savings Plan 633 Preferred stock dividends paid to Employee Stock Ownership Plan, net of tax (2,691) Principal payment by Employee Stock Ownership Plan under guaranteed loan Amortization of unearned compensation Foreign currency translation adjustments ------ ------- ----- -------- ---------- ------- ------- -------- Balance at June 30, 1994 75,336 $75,336 4,258 $(3,716) 33,887,484 $33,887 $39,721 $904,768 ====== ======= ===== ======== ========== ======= ======= ======== -10-
Common Foreign Total Treasury Stock Deferred Currency Stock- --------------------- Unearned Employee Translation holders' Shares Cost Compensation Benefits Adjustments Equity ---------- --------- ------------ --------- ----------- ------- Balance at September 30, 1993 15,161,103 $(475,863) $(7,321) $(68,781) $(7,406) $ 442,273 Net income 60,309 Common stock dividends paid (14,653) Net issuance of treasury stock under employee compensation plans (52,476) 1,564 (5,211) 1,820 Purchase of treasury stock-preferred (713) Sale of treasury stock to Profit Sharing and Savings Plan (19,790) 625 1,258 Preferred stock dividends paid to Employee Stock Ownership Plan, net of tax (2,691) Principal payment by Employee Stock Ownership Plan under guaranteed loan 1,023 1,023 Amortization of unearned compensation 2,599 2,599 Foreign currency translation adjustments 14,953 14,953 ---------- ---------- -------- --------- -------- --------- Balance at June 30, 1994 15,088,837 $(473,674) $(9,933) $(67,758) $ 7,547 $ 506,178 ========== ========== ======== ========= ======== ========= 11 CABOT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations I. RESULTS OF OPERATIONS Sales and operating profit by industry segment are shown in the accompanying table on page 13. Three Months Ended June 30, 1994 versus Three Months Ended June 30, 1993 Net income for the third quarter of fiscal year 1994 was $22.0 million ($1.11 per primary common share), compared with $18.4 million ($0.94 per primary common share) in the same quarter a year ago. Net sales and other operating revenues rose 2.4% to $428.8 million from $418.8 million in the year-ago quarter. Total operating profit of $49.5 million is flat compared to $49.4 million in the prior year. Operating profit includes a $6.2 million write off of the Company's interest in its Japanese carbon black affiliate, and a $4.0 million favorable reserve adjustment associated with the closing of its carbon black plant in Germany. Total operating profit before these one-time adjustments was $51.7 million, a 4.7% increase from the same period a year ago. In the Specialty Chemicals and Materials Group, net sales and other operating revenues rose 3.0% in the third quarter to $328.9 million from $319.3 million last year. Operating profit of $50.8 million, before the one-time adjustments mentioned above, advanced 10.2% from last year's $46.1 million. The improved operating profit reflects volume growth in all businesses except performance materials (tantalum), with average volume growth of 7%. Stronger margins in some businesses also contributed to the improved profits. Globally, the Group benefitted from continuing strength in North and South America, and an improving European economy. With the exception of Japan, the comparison in the Pacific region was also favorable. In the Company's Energy Group, sales of $99.9 million were flat with last year's $99.5 million and operating profit declined to $0.9 million from $3.3 million. The prior year's operating profits were unusually strong, reflecting higher prices than were experienced in the third quarter this year. Nine Months Ended June 30, 1994 versus Nine Months Ended June 30, 1993 For the nine months ended June 30, 1994 net income was $60.3 million ($3.02 per primary common share) compared to $18.2 million ($0.83 per primary common share) in the same period a year ago. Net income for the nine months, before one-time adjustments, was $61.7 million ($3.09 per primary common share) compared to $44.3 million, before accounting changes, ($2.23 per primary common share) last year. Net sales and other operating revenues increased 3.2% to $1,262.2 million from $1,222.5 million last year. In the Specialty Chemicals and Materials Group, revenues increased slightly during the first nine months to $912.9 million from $903.9 million last year. Operating profits, before one-time adjustments, grew 12.7% to $127.0 million reflecting volume growth in most business segments. Of particular note was a 17% volume increase in the Company's Cab-O-Sil (fumed silica) division, and positive comparisons in the Company's European carbon black division. In addition, favorable material costs improved margins in many of the Specialty Chemicals and Materials businesses. Performance in Japan continues to be adversely affected by recession and high costs in that region. The Company does not believe that conditions will improve soon. Therefore, the Company has written off its $6.2 million equity investment in its Japanese carbon black affiliate. In the Company's Energy Group, sales for the first nine months of fiscal year 1994 grew 9.6% to $349.3 million from $318.6 million in the same period a year ago. Operating profit increased 31.0% to $18.6 million from $14.2 million. The improvement is primarily due to a strong second quarter in the Company's LNG business where an unusually cold winter in the northeast boosted energy demand and prices. -11- 12 CABOT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Equity in net income of affiliated companies was $2.6 million compared to a loss of $0.7 million for the first nine months of fiscal 1993, due primarily to better performance at several of the Company's carbon black affiliates. The Company maintained its effective income tax rate at 38%. The Company is encouraged by economic improvement in the U.S. and Europe and confident it is positioned to participate in further economic recovery in those regions. The Company's LNG business may experience reductions in supplies of LNG over the next year or so due to the previously announced refurbishment of its Algerian supplier's liquefaction facility. The effect on the Company will depend on the extent and timing of reductions. Other gas supply opportunities are being explored. The political uncertainties in Algeria have not, to date, adversely affected the Company's LNG supplies. On June 30, 1994, the Company owned a 34.4% interest in American Oil and Gas Corporation (AOG/NYSE), whose operating results are reflected in Cabot's equity in net income of affiliates. On July 13, 1994, American Oil and Gas Corporation ("AOG") was merged into a subsidiary of K N Energy, Inc. ("KNE"). As a result, all outstanding shares of AOG were converted into shares of KNE common stock at a rate of 0.47 shares of KNE for each share of AOG. On completion of the merger, Cabot was the largest stockholder of KNE with 15.2% of the outstanding common stock. Cabot's investment in KNE will be accounted for on a cost basis. The Company has also announced a two-for-one stock split and an approximately 8% increase in its quarterly common stock dividend, from $0.26 per share to $0.28 per share on a pre-split basis. On August 17, 1994, the Company is expected to distribute one additional share of common stock for each share of common stock held by stockholders of record on August 9, 1994. The next quarterly dividend on the split shares will be $0.14 per share payable on September 9, 1994 to stockholders of record on August 26, 1994. II. CASH FLOWS AND LIQUIDITY During the first nine months of fiscal 1994, the Company's operations provided $68.8 million of cash. This represents a 33.5% decrease from the same period last year reflecting the continued rebuilding of inventory levels by the Company's TUCO business and a decrease in accounts payable and accrued expenses due to the settlement of the last significant, and previously reserved for, take-or-pay case. Capital spending on investments and acquisitions declined significantly to $0.3 million from $40.4 million last year. In 1993, the Company invested $17.8 million in the acquisition of the remaining interest of its Brazilian subsidiary and smaller amounts in its Czech Republic, Mexican and Indonesian carbon black affiliates, and to purchase the remaining interest in a Canadian affiliate. The Company anticipates that spending for property, plant and equipment will be somewhat higher in the fourth quarter than in the prior three quarters. Cabot decreased its borrowings by $7.0 million during the first nine months of the year. At June 30, 1994, there were no amounts borrowed under a $250 million line of credit available to the Company. The Company's ratio of total debt (including short term debt net of cash) to capital improved to 46.6% from 50.4% at fiscal 1993 year end. Management expects cash from operations and present financing arrangements, including the Company's unused line of credit, to be sufficient to meet the Company's cash requirements for the foreseeable future. -12- 13 CABOT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts)
-13-Three Months Ended Nine Months Ended ------------------ ----------------- 6/30/94 6/30/93 6/30/94 6/30/93 ------- ------- ------- ------- Industry Segment Data - --------------------- Sales: Specialty Chemicals and Materials $ 328.9 $ 319.3 $ 912.9 $ 903.9 Energy 99.9 99.5 349.3 318.6 --------- --------- --------- --------- Net Sales $ 428.8 $ 418.8 $1,262.2 $1,222.5 ========= ========= ========= ========= Operating Profit: Specialty Chemicals and Materials $ 48.6 $ 46.1 $ 124.8 $ 112.7 Energy 0.9 3.3 18.6 14.2 ----------- ----------- ---------- ---------- Total operating profit $ 49.5 $ 49.4 $ 143.4 $ 126.9 Interest expense (10.8) (11.2) (31.4) (33.7) General corporate expense (6.6) (7.0) (19.0) (17.1) ----------- ---------- ---------- ---------- Income from continuing operations before income taxes 32.1 31.2 93.0 76.1 Provision for income taxes (12.2) (12.7) (35.3) (31.1) Equity in net income (loss) of affiliated companies 2.1 (0.1) 2.6 (0.7) ----------- ---------- ---------- ---------- Net income before the cumulative effect of accounting changes 22.0 18.4 60.3 44.3 Cumulative effect of accounting changes - - - (26.1) ----------- ---------- ----------- ---------- Net income $ 22.0 $ 18.4 $ 60.3 $ 18.2 Dividends on preferred stock (0.9) (0.9) (2.7) (2.7) ----------- ---------- ---------- ---------- Income applicable to primary common shares $ 21.1 $ 17.5 $ 57.6 $ 15.5 ========== ========= ========== ========= Income per common share: Primary Continuing operations $ 1.11 $ 0.94 $ 3.02 $ 2.23 Cumulative effect of accounting changes - - - (1.40) ------------ ----------- ------------ ----------- Income per share $ 1.11 $ 0.94 $ 3.02 $ 0.83 =========== ========== =========== =========== Fully Diluted Continuing operations $ 1.04 $ 0.88 $ 2.83 $ 2.23 Cumulative effect of accounting changes - - - (1.40) ------------ ----------- ------------ ----------- Income per share $ 1.04 $ 0.88 $ 2.83 $ 0.83 =========== =========== =========== ========== 14 Part II. Other Information Item 5. Other Information - -------------------------- On July 29, 1994, the Company announced a two-for-one stock split of its common stock in the form of a stock dividend. On August 17, 1994, the Company expects to distribute one additional share of common stock for each share of common stock held by stockholders of record on August 9, 1994. The Company also announced an increase of approximately 8% in its quarterly common stock dividend. The $0.14 per share dividend on post-split shares will be paid on September 9, 1994 to common stockholders of record on August 26, 1994. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits The Exhibit number corresponds to the number assigned to such Exhibits in the Exhibit Table of Item 601 of Regulation S-K. (b) Reports on Form 8-K ------------------- No report on Form 8-K was filed by the Company during the three months ended June 30, 1994. -14-
Exhibit Number Description ------ ----------- 11 Statements regarding Computation of Per Share Earnings filed herewith. 12 Statement regarding Computation of Ratio of Earnings to Fixed Charges filed herewith. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CABOT CORPORATION Date: August 15, 1994 /s/ John G.L. Cabot ---------------------------- John G.L. Cabot Vice Chairman and Chief Financial Officer Date: August 15, 1994 /s/ William R. Thompson ----------------------------- William R. Thompson Vice President and Controller (Chief Accounting Officer) -15-
1 EXHIBIT 11 CABOT CORPORATION Earnings per Common Share for the Three Month Period Ended June 30, 1994 Statement Regarding Computation of Per Share Earnings (In thousands, except per share amounts)
Primary Fully Diluted ------- ------------- Shares of common stock outstanding at April 1, 1994, less treasury stock 18,788 18,788 Plus net weighted shares of treasury stock issued 6 7 Plus common stock equivalents: Effect of convertible preferred stock conversion - 1,554 Effect of equity incentive awards 299 299 --------- --------- Weighted average shares outstanding 19,093 20,648 ========= ========= Income applicable to common shares $ 21,108 $ 21,108 Dividends on preferred stock - 895 Preferred stock conversion compensation shortfall - (623) --------- --------- Earnings applicable to common shares $ 21,108 $ 21,380 ========= ========= Earnings per common share $ 1.11 $ 1.04 ========= ========= 2 EXHIBIT 11 CABOT CORPORATION Earnings per Common Share for the Nine Month Period Ended June 30, 1994 Statement Regarding Computation of Per Share Earnings (In thousands, except per share amounts)
Primary Fully Diluted ------- ------------- Shares of common stock outstanding at October 1, 1993, less treasury stock 18,726 18,726 Plus net weighted shares of treasury stock issued 52 52 Plus common stock equivalents: Effect of convertible preferred stock conversion - 1,554 Effect of equity incentive awards 318 318 --------- --------- Weighted average shares outstanding 19,096 20,650 ========= ========= Income applicable to common shares $ 57,618 $ 57,618 Dividends on preferred stock - 2,691 Preferred stock conversion compensation shortfall - (1,873) --------- --------- Earnings applicable to common shares $ 57,618 $ 58,436 ========= ========= Earnings per common share $ 3.02 $ 2.83 ========= =========
1 EXHIBIT 12 CABOT CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollar amounts in thousands)
Nine Months Ended Years ended September 30 June 30 ------------------------------------------------ 1994 1993 1992 1991 1990 1989 ------------- ---- ---- ---- ---- ---- Earnings: Pre-tax income from continuing operations $93,030 $67,900 $116,599 $62,362 $63,983 $(25,480) Distributed income of affiliated companies 3,942 5,988 5,766 4,688 3,607 1,704 Add fixed charges: Interest on indebtedness 31,370 44,043 41,714 38,661 41,145 34,059 Portion of rents representative of the interest factor 3,864 4,838 4,933 5,715 5,226 4,764 -------- -------- -------- -------- -------- -------- Income as adjusted $132,206 $122,769 $169,012 $111,426 $113,961 $ 15,047 Fixed charges: Interest on indebtedness $31,370 $44,043 $41,714 $38,661 $41,145 $34,059 Capitalized interest -- -- 3,963 8,745 -- -- Portion of rents representative of the interest factor 3,864 4,838 4,933 5,715 5,226 4,764 -------- -------- -------- -------- -------- -------- Total fixed charges $ 35,234 $ 48,881 $ 50,610 $ 53,121 $ 46,371 $ 38,823 -------- -------- -------- -------- -------- -------- Ratio of earnings to fixed charges 3.75 2.51 3.34 2.10 2.46 * ======== ======== ======== ======== ======== * Earnings in fiscal 1989 were inadequate to cover fixed charges by $23,776. Operating profit for 1989 includes a $71,716 loss associated with the Energy Group restructuring and aggregate charges of $18,933 related to the reorganization of the Company's carbon black operations, streamlining of the ceramic packaging business, and provisions for environmental issues. Without these charges, the ratio of earnings to fixed charges would be 2.72 for 1989.