UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 29, 2008
CABOT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
| 1-5667 | 04-2271897 | |
| (Commission File Number) | (IRS Employer Identification No.) |
TWO SEAPORT LANE, SUITE 1300, BOSTON, MASSACHUSETTS 02210-2019
| (Address of Principal Executive Offices) (Zip Code) |
(617) 345-0100
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On October 29, 2008, Cabot Corporation issued a press release announcing its operating results for the fiscal quarter and year ended September 30, 2008. A copy of the press release is furnished herewith as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
99.1 Press release issued by Cabot Corporation on October 29, 2008
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 hereunto duly authorized.
| CABOT CORPORATION | ||
| By: | /s/ James P. Kelly | |
| Name: | James P. Kelly | |
| Title: | Controller | |
Date: October 29, 2008
EXHIBIT INDEX
| Exhibit Number |
Title | |
| 99.1 | Press release issued by Cabot Corporation on October 29, 2008 |
Exhibit 99.1
| Contact: | Susannah Robinson | |
| Director, Investor Relations | ||
| 617-342-6129 |
CABOT ANNOUNCES FOURTH QUARTER AND FULL FISCAL YEAR 2008
OPERATING RESULTS
BOSTON (October 29, 2008)- Cabot Corporation (NYSE: CBT) today announced results for its fourth quarter and full fiscal year ended September 30, 2008.
Quarterly Highlights:
| • | Total segment profit improves by $3 million compared to the fourth quarter of 2007: increase in Rubber Blacks driven by solid margin and cost management, despite unprecedented $36 million unfavorable contract lag |
| • | Volumes weaker than seasonal norm: slowing global demand particularly in the automotive and construction sectors |
| • | Positive advances in new business development: signed license agreement with Michelin for commercialization of Cabot Elastomer Composites, successful use of cesium formate in Kazakhstan and Asia Pacific, increased Aerogel oil & gas revenue |
| • | Strong liquidity position: operating cash flow of $94 million during fourth quarter, cash balance of $129 million at fiscal year end, conservative balance sheet a strength in time of current economic uncertainty |
| (In millions, except per share amounts)
|
2008 | 2007 | ||||||||||||||
| Fourth Quarter |
Full Year |
Fourth Quarter |
Full Year |
|||||||||||||
| Net sales |
$ | 853 | $ | 3,191 | $ | 675 | $ | 2,616 | ||||||||
| Diluted earnings per share |
$ | 0.17 | $ | 1.33 | $ | 0.36 | $ | 1.90 | ||||||||
| Less: Certain items per share |
(0.03 | ) | (0.14 | ) | (0.11 | ) | (0.35 | ) | ||||||||
| Less: Discontinued operations per share |
— | — | 0.04 | 0.03 | ||||||||||||
| Adjusted earnings per share |
$ | 0.20 | $ | 1.47 | $ | 0.43 | $ | 2.22 | ||||||||
Commenting on the results, Patrick Prevost, Cabot’s President and CEO, stated, “Although we are not pleased with our operating results this quarter, I am confident in the underlying strength of our businesses. Key drivers of this quarter’s performance are first, as anticipated, the negative time lag effect in our rubber blacks supply contracts was unprecedented. Rubber Blacks nonetheless improved profitability despite the difficult operating environment through strong margin and cost management. Second, the softening economic environment became more global in scope and affected our volumes during the quarter, particularly in the automotive and construction sectors. Third, our other income and expense was unfavorably affected by $9 million from the non-cash translation of intercompany loans, denominated in U.S. dollars, provided to our Brazilian subsidiary, whose currency depreciated during the quarter.”
Prevost continued, “It is clear that the global macroeconomic issues have begun to affect our business results in the form of reduced demand in some of our key industrial sectors. Our conservative financial practices have positioned us with a strong balance sheet to withstand these turbulent conditions and we remain focused on executing our longer term strategies to further advance our position as a global market leader.”
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Summary of Results
For the fourth quarter and full fiscal year 2008, net income was $11 million and $85 million ($0.17 and $1.33 per diluted common share), respectively. Adjusted EPS was $0.20 and $1.47 per diluted common share for the fourth quarter and full fiscal year 2008, respectively, which excludes $1 million and $9 million ($0.03 and $0.14 per diluted common share), respectively, of charges from certain items. This compares to fourth quarter and full fiscal year 2007 net income of $24 million and $129 million ($0.36 and $1.90 per diluted common share), respectively. Adjusted EPS was $0.43 and $2.22 per diluted common share for the fourth quarter and full fiscal year 2007, respectively, which excluded $5 million and $22 million ($0.07 and $0.32 per diluted common share), respectively, of charges from certain items and discontinued operations. Details of the Company’s financial results and certain items are provided in the accompanying tables.
Segment Results
Core Segment
Rubber Blacks profitability increased by $13 million when compared to the fourth quarter of 2007. Solid margin management and lower fixed manufacturing costs allowed the Business to overcome a significant unfavorable contract lag ($36 million) and lower volumes ($8 million). Volumes declined by 7% driven by economic softness in all regions as our tire customers reduced production on weaker demand. The Americas declined by 10%, with North America down 7% and South America down 15%; the Europe, Middle East, Africa region was down 6%; and Asia Pacific was down 6% overall, with China down 16%, in part due to the Olympics, more than offsetting an increase of 3% in the rest of Asia. For the full fiscal year 2008, operating profit before tax (“PBT”) increased despite the unfavorable contract lag and difficult economic conditions, which led to flat volumes. The Business was able to offset the vast majority of these unfavorable factors through solid margin management and strict control on manufacturing spending, and also benefited from foreign currency translation. The time lag of feedstock related pricing adjustments in the Company’s rubber blacks supply contracts had an unfavorable impact of $36 million and $66 million for the fourth quarter and full fiscal year 2008, respectively. This is compared to an unfavorable impact of $13 million and $6 million in the same periods of 2007.
Results in the Supermetals Business for the fourth quarter of 2008 continued to be weak. Volumes increased compared to the third quarter of 2008, but were still below the prior year’s volume levels. Profitability decreased by $6 million compared to the fourth quarter of 2007 as the decline in volumes ($5 million) and an increase in average ore costs ($3 million) could not be fully offset by a favorable product mix ($2 million). For the full fiscal year 2008, the decline in volumes ($14 million) and lower pricing ($12 million) were due, principally, to the expiration of favorable supply contracts in the first quarter of 2007. These factors, combined with higher average ore costs ($4 million), resulted in significantly lower PBT than in the prior year. The Business continued to focus on cash generation through working capital reductions, including reduction of its inventory levels, during the fourth quarter. For the full fiscal year 2008, net working capital improved by $23 million. We remain committed to, and are making progress towards, returning the Business to profitability in 2009.
Performance Segment
Profitability decreased by $9 million when compared to the fourth quarter of 2007, principally as a result of a decline in volumes ($6 million) driven by weakening demand in the construction and automotive industrial sectors. Performance Products volumes were lower by 8%, as significant decreases in developed regions more than offset continued, albeit slowing, growth in emerging markets. Fumed Metal Oxides volumes decreased by 2% compared to the fourth quarter of 2007. For the full fiscal year 2008, profitability was significantly lower due to an unfavorable LIFO impact of $17 million and a rapid rise in raw material and energy costs, not fully recovered
Page 2 of 5
through pricing. Additionally, selling, technical and administrative costs increased as a result of continued investment in geographic expansion and product differentiation to sustain the long term growth of the Segment. These costs were partially offset by volume growth (1% and 2% for Performance Products and Fumed Metal Oxides, respectively) and favorable foreign currency translation.
Specialty Fluids Segment
Business performance remained solid for the fourth quarter and full fiscal year of 2008 when compared to the same periods of 2007. Sales increased over the 2007 periods while PBT decreased slightly over the comparative 2007 periods. Cesium formate was used successfully during the fourth quarter in multiple wells in Kazakhstan and throughout the year in Asia Pacific, which positions the Segment well to continue its geographic growth. During fiscal 2008, the percentage of revenue generated by business outside of the North Sea improved to 21%, compared to 17% in fiscal 2007.
New Business Segment
Sales in the New Business Segment improved for both the fourth quarter and full fiscal year 2008 when compared to the same periods of 2007. In the Inkjet Colorants Business, full year revenues declined, with lower volumes in the OEM market segment. In the fourth quarter, volumes and product mix were favorable when compared to the same period of 2007 and sequentially. Aerogel revenues increased in both periods when compared to 2007, driven by the construction and oil and gas market segments. Superior MicroPowders increased revenues, continuing to supply advanced materials to the security market. The Segment benefited from lower manufacturing and administrative costs in the fourth quarter from steps taken in the third quarter of 2008, including workforce reductions and the elimination of under-performing projects.
Cash Flow
During the fourth quarter of 2008, operations generated $94 million of cash, including a $9 million decrease in working capital on a constant dollar basis. For the full fiscal year 2008, operations generated $138 million in cash, despite a $135 million increase in working capital, principally from higher carbon black feedstock costs. The Company ended the year with a cash balance of $129 million. Capital expenditures were $72 million in the fourth quarter and $199 million for the full fiscal year 2008 and included spending on expansions in China and carbon black energy centers. The Company did not repurchase shares on the open market during the fourth quarter of 2008, ending the fiscal year with 935,400 shares repurchased at an average price of $29.66 per share.
Outlook
Commenting on the outlook for fiscal 2009 and beyond, Prevost said, “I remain confident in Cabot’s strength and in our ability to execute our long term strategy and deliver on our performance commitments. We are, however, concerned about the global economic slowdown and its effect on demand in all of our key businesses. Notwithstanding this softening, the recent unprecedented decline in carbon black raw material costs will provide a significant contract lag benefit in the coming quarter. We have continued to secure orders in key market segments for Inkjet Colorants, Aerogels and Superior MicroPowders, which should lead to revenue growth in the coming fiscal year for the New Business Segment. Our cash position remains strong and will serve us well in the current economic environment. Lower carbon black feedstock costs and initiatives we have undertaken since the beginning of the year will further enhance our strong liquidity position.”
Page 3 of 5
Prevost continued, “Our investors can be confident that we are closely following the impact of the global slowdown on the various industrial sectors that we serve and are taking steps to manage or mitigate the effects on our business. We remain confident in the long term strength and overall health of the Company.”
Earnings Call
The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on October 30, 2008. 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, fumed silica, inkjet colorants, capacitor materials, and cesium formate drilling fluids. The Company’s website 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 market demand, carbon black raw material costs, financial performance in our Supermetals Business and in the New Business Segment, and our liquidity position), 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.
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, minority interest and allocated corporate costs but exclude interest expense, foreign currency translation gains and losses, interest income and dividend income. Our chief operating decision-maker uses adjusted EPS to evaluate the underlying earnings power of the Company. Segment PBT is used to evaluate
Page 4 of 5
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.
The term “LIFO impact” includes two factors: (i) the impact of current, generally higher, inventory cost 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; and (ii) the impact of reductions in inventory quantities, causing historical, generally lower, inventory costs to flow through COGS.
Page 5 of 5
Fourth Quarter Earnings Announcement, Fiscal 2008
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
| Periods ended September 30
Dollars in millions, except per share amounts (unaudited) |
Three Months | Twelve Months | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Net sales and other operating revenues |
$ | 853 | $ | 675 | $ | 3,191 | $ | 2,616 | ||||||||
| Cost of sales |
740 | 564 | 2,706 | 2,111 | ||||||||||||
| Gross profit |
113 | 111 | 485 | 505 | ||||||||||||
| Selling and administrative expenses |
56 | 66 | 246 | 249 | ||||||||||||
| Research and technical expenses |
19 | 20 | 74 | 69 | ||||||||||||
| Income from operations |
38 | 25 | 165 | 187 | ||||||||||||
| Other income and expense |
||||||||||||||||
| Interest and dividend income |
2 | 2 | 4 | 10 | ||||||||||||
| Interest expense |
(10 | ) | (8 | ) | (38 | ) | (34 | ) | ||||||||
| Other income (expense) |
(15 | ) | 1 | (20 | ) | 5 | ||||||||||
| Total other income and expense |
(23 | ) | (5 | ) | (54 | ) | (19 | ) | ||||||||
| Income from continuing operations before income taxes, equity in net income of affiliated companies and minority interest |
15 | 20 | 111 | 168 | ||||||||||||
| Benefit (provision) for income taxes |
(1 | ) | 2 | (14 | ) | (38 | ) | |||||||||
| Equity in net income of affiliated companies, net of tax |
2 | 3 | 8 | 12 | ||||||||||||
| Minority interest in net income, net of tax |
(5 | ) | (4 | ) | (20 | ) | (15 | ) | ||||||||
| Income from continuing operations |
11 | 21 | 85 | 127 | ||||||||||||
| Discontinued operations, net of tax (A) |
— | 3 | — | 2 | ||||||||||||
| Net income |
11 | 24 | 85 | 129 | ||||||||||||
| Dividends on preferred stock, net of tax benefit |
— | — | — | (1 | ) | |||||||||||
| Net income available to common shares |
$ | 11 | $ | 24 | $ | 85 | $ | 128 | ||||||||
| Diluted earnings per share of common stock |
||||||||||||||||
| Income from continuing operations |
$ | 0.17 | $ | 0.32 | $ | 1.33 | $ | 1.87 | ||||||||
| Discontinued operations, net of tax (A) |
— | 0.04 | — | 0.03 | ||||||||||||
| Net income |
$ | 0.17 | $ | 0.36 | $ | 1.33 | $ | 1.90 | ||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Diluted |
64 | 66 | 64 | 68 | ||||||||||||
| (A) |
Amount relates to legal settlements in connection with our discontinued operations, net of tax. |
Fourth Quarter Earnings Announcement, Fiscal 2008
CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS
| CERTAIN ITEMS:
Periods ended September 30
Dollars in millions, except per share amounts (unaudited) |
Three Months | Twelve Months | ||||||||||||||||||||||||||||||
| 2008 $ |
2008 per share(A) |
2007 $ |
2007 per share(A) |
2008 $ |
2008 per share(A) |
2007 $ |
2007 per share(A) |
|||||||||||||||||||||||||
| Certain items before income taxes |
||||||||||||||||||||||||||||||||
| Environmental reserves and legal settlements |
$ | — | $ | — | $ | (2 | ) | $ | (0.02 | ) | $ | (3 | ) | $ | (0.04 | ) | $ | (8 | ) | $ | (0.09 | ) | ||||||||||
| Reserve for respirator claims |
2 | 0.03 | $ | 2 | $ | 0.03 | — | — | ||||||||||||||||||||||||
| Carbon Black federal antitrust litigation |
— | — | — | — | — | — | (10 | ) | (0.09 | ) | ||||||||||||||||||||||
| CEO transition costs |
— | — | — | — | (4 | ) | (0.04 | ) | — | — | ||||||||||||||||||||||
| Debt issuance costs |
(2 | ) | (0.03 | ) | — | — | (2 | ) | (0.03 | ) | — | — | ||||||||||||||||||||
| Acquisition of flamed synthesis technology |
— | (4 | ) | (0.04 | ) | — | — | (4 | ) | (0.04 | ) | |||||||||||||||||||||
| Restructuring initiatives: |
||||||||||||||||||||||||||||||||
| - Global |
(1 | ) | (0.01 | ) | 1 | 0.01 | (6 | ) | (0.06 | ) | (3 | ) | (0.03 | ) | ||||||||||||||||||
| - Altona, Australia |
— | — | — | — | 18 | 0.20 | (1 | ) | (0.01 | ) | ||||||||||||||||||||||
| - North America |
(1 | ) | (0.02 | ) | (5 | ) | (0.06 | ) | (15 | ) | (0.18 | ) | (8 | ) | (0.09 | ) | ||||||||||||||||
| - Europe (B) |
— | — | — | — | (2 | ) | (0.02 | ) | ||||||||||||||||||||||||
| Total certain items |
(2 | ) | (0.03 | ) | (10 | ) | (0.11 | ) | (12 | ) | (0.14 | ) | (34 | ) | (0.35 | ) | ||||||||||||||||
| Discontinued operations(C) |
— | — | 3 | 0.04 | — | — | 2 | 0.03 | ||||||||||||||||||||||||
| Total certain items and discontinued operations |
(2 | ) | (0.03 | ) | (7 | ) | (0.07 | ) | (12 | ) | (0.14 | ) | (32 | ) | (0.32 | ) | ||||||||||||||||
| Tax impact of certain items and discontinued operations |
1 | — | 2 | — | 3 | — | 10 | — | ||||||||||||||||||||||||
| Total certain items and discontinued operations, after tax |
$ | (1 | ) | $ | (0.03 | ) | $ | (5 | ) | $ | (0.07 | ) | $ | (9 | ) | $ | (0.14 | ) | $ | (22 | ) | $ | (0.32 | ) | ||||||||
| Periods ended September 30
|
Three Months | Twelve Months | ||||||||||||||
| Dollars in millions (unaudited) |
2008 | 2007 | 2008 | 2007 | ||||||||||||
| Statement of Operations Line Item |
||||||||||||||||
| Cost of sales |
$ | (2 | ) | $ | (5 | ) | $ | (3 | ) | $ | (16 | ) | ||||
| Selling and administrative expenses |
2 | (1 | ) | (7 | ) | (14 | ) | |||||||||
| Research and technical expenses |
— | (4 | ) | — | (4 | ) | ||||||||||
| Other income and expense |
(2 | ) | — | (2 | ) | — | ||||||||||
| Total certain items |
$ | (2 | ) | $ | (10 | ) | $ | (12 | ) | $ | (34 | ) | ||||
| NON-GAAP MEASURE: Periods ended September 30
Dollars in millions, except per share amounts (unaudited) |
Three Months | Twelve Months | ||||||||||||||
| 2008 per share(A) |
2007 per share(A) |
2008 per share(A) |
2007 per share(A) |
|||||||||||||
| Reconciliation of Adjusted EPS to GAAP EPS |
||||||||||||||||
| Diluted EPS |
$ | 0.17 | $ | 0.36 | $ | 1.33 | $ | 1.90 | ||||||||
| Total certain items |
(0.03 | ) | (0.11 | ) | (0.14 | ) | (0.35 | ) | ||||||||
| Discontinued operations |
— | 0.04 | — | 0.03 | ||||||||||||
| Adjusted EPS |
$ | 0.20 | $ | 0.43 | $ | 1.47 | $ | 2.22 | ||||||||
| (A) |
Per share amounts are calculated after tax. |
| (B) |
Charges relate to former carbon black facilities. |
| (C) |
Amounts relate to legal settlements in connection with our discontinued operations, net of tax. |
Fourth Quarter Earnings Announcement, Fiscal 2008
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
| Periods ended September 30
Dollars in millions, except per share amounts (unaudited) |
Three Months | Twelve Months | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| SALES |
||||||||||||||||
| Core Segment |
$ | 553 | $ | 423 | $ | 2,063 | $ | 1,649 | ||||||||
| Rubber blacks |
505 | 368 | 1,868 | 1,416 | ||||||||||||
| Supermetals |
48 | 55 | 195 | 233 | ||||||||||||
| Performance Segment |
237 | 213 | 933 | 811 | ||||||||||||
| Performance products |
165 | 142 | 646 | 541 | ||||||||||||
| Fumed metal oxides |
72 | 71 | 287 | 270 | ||||||||||||
| New Business Segment |
20 | 12 | 57 | 51 | ||||||||||||
| Inkjet colorants |
13 | 10 | 43 | 46 | ||||||||||||
| Aerogel(A) |
5 | 1 | 10 | 3 | ||||||||||||
| Superior MicroPowders |
2 | 1 | 4 | 2 | ||||||||||||
| Specialty Fluids Segment |
19 | 16 | 68 | 58 | ||||||||||||
| Segment sales |
829 | 664 | 3,121 | 2,569 | ||||||||||||
| Unallocated and other(A), (B) |
24 | 11 | 70 | 47 | ||||||||||||
| Net sales and other operating revenues |
$ | 853 | $ | 675 | $ | 3,191 | $ | 2,616 | ||||||||
| SEGMENT PROFIT |
||||||||||||||||
| Core Segment |
$ | 16 | $ | 9 | $ | 92 | $ | 109 | ||||||||
| Rubber blacks |
21 | 8 | 101 | 93 | ||||||||||||
| Supermetals |
(5 | ) | 1 | (9 | ) | 16 | ||||||||||
| Performance Segment |
21 | 30 | 102 | 131 | ||||||||||||
| New Business Segment |
(4 | ) | (10 | ) | (34 | ) | (33 | ) | ||||||||
| Specialty Fluids Segment |
6 | 7 | 24 | 25 | ||||||||||||
| Total Segment Profit(C) |
39 | 36 | 184 | 232 | ||||||||||||
| Interest expense |
(10 | ) | (8 | ) | (38 | ) | (34 | ) | ||||||||
| General unallocated expense(D) |
(12 | ) | (5 | ) | (27 | ) | (18 | ) | ||||||||
| Less: Equity in net income of affiliated companies, net of tax |
(2 | ) | (3 | ) | (8 | ) | (12 | ) | ||||||||
| Income from continuing operations before income taxes, equity in net income of affiliated companies and minority interest |
15 | 20 | 111 | 168 | ||||||||||||
| Provision for income taxes |
(1 | ) | 2 | (14 | ) | (38 | ) | |||||||||
| Equity in net income of affiliated companies, net of tax |
2 | 3 | 8 | 12 | ||||||||||||
| Minority interest in net income, net of tax |
(5 | ) | (4 | ) | (20 | ) | (15 | ) | ||||||||
| Income from continuing operations |
11 | 21 | 85 | 127 | ||||||||||||
| Discontinued operations, net of tax(E) |
— | 3 | — | 2 | ||||||||||||
| Net Income |
11 | 24 | 85 | 129 | ||||||||||||
| Dividends on preferred stock, net of tax benefit |
— | — | — | (1 | ) | |||||||||||
| Net income available to common shares |
$ | 11 | $ | 24 | $ | 85 | $ | 128 | ||||||||
| Diluted earnings per share of common stock |
||||||||||||||||
| Income from continuing operations |
$ | 0.17 | $ | 0.32 | $ | 1.33 | $ | 1.87 | ||||||||
| Discontinued operations, net of tax(E) |
— | 0.04 | — | 0.03 | ||||||||||||
| Net Income |
$ | 0.17 | $ | 0.36 | $ | 1.33 | $ | 1.90 | ||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Diluted |
64 | 66 | 64 | 68 | ||||||||||||
Note: During the third quarter of fiscal 2008, management changed the way it manages the Company’s businesses. Accordingly, the segment results for all periods presented have been revised to reflect these changes. Management is continuing to review how it evaluates the businesses and the allocation of costs among the segments. As a result, the values reported in the Company’s future SEC filings may vary materially from those presented in this table.
| (A) |
Royalty income received by the Aerogel business, which has been included in Unallocated and other in prior periods, has been reclassified to Segment sales for all periods presented above. |
| (B) |
Unallocated and other reflects an elimination for sales of one equity affiliate, prior to the consolidation of its results beginning April 1, 2008, offset by royalties paid by equity affiliates and other operating revenues and external shipping and handling fees. |
| (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, minority interest and allocated corporate costs. |
| (D) |
General unallocated expense includes foreign currency transaction gains (losses), interest income, dividend income, and the certain items listed in the Certain Items and Reconciliation of Adjusted EPS table. |
| (E) |
Amount relates to legal settlements in connection with our discontinued operations, net of tax. |
Fourth Quarter Earnings Announcement, Fiscal 2008
CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION
| Dollars in millions, except share and per share amounts |
September 30, 2008 (unaudited) |
September 30, 2007 (audited) |
||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 129 | $ | 154 | ||||
| Short-term marketable securities |
1 | 2 | ||||||
| Accounts and notes receivable, net of reserve for doubtful accounts of $5 and $6 |
643 | 563 | ||||||
| Inventories: |
||||||||
| Raw materials |
193 | 154 | ||||||
| Work in process |
58 | 77 | ||||||
| Finished goods |
246 | 184 | ||||||
| Other |
26 | 27 | ||||||
| Total inventories |
523 | 442 | ||||||
| Prepaid expenses and other current assets |
75 | 72 | ||||||
| Deferred income taxes |
42 | 35 | ||||||
| Assets held for sale |
7 | 7 | ||||||
| Total current assets |
1,420 | 1,275 | ||||||
| Investments: |
||||||||
| Equity affiliates |
53 | 65 | ||||||
| Long-term marketable securities and cost investments |
1 | 3 | ||||||
| Total investments |
54 | 68 | ||||||
| Property, plant and equipment |
2,975 | 2,823 | ||||||
| Accumulated depreciation and amortization |
(1,894 | ) | (1,807 | ) | ||||
| Net property, plant and equipment |
1,081 | 1,016 | ||||||
| Other assets: |
||||||||
| Goodwill |
34 | 34 | ||||||
| Intangible assets, net of accumulated amortization of $11 and $10 |
3 | 4 | ||||||
| Assets held for rent |
45 | 42 | ||||||
| Deferred income taxes |
151 | 120 | ||||||
| Other assets |
63 | 77 | ||||||
| Total other assets |
296 | 277 | ||||||
| Total assets |
$ | 2,851 | $ | 2,636 | ||||
Fourth Quarter Earnings Announcement, Fiscal 2008
CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION
| Dollars in millions, except share and per share amounts |
September 30, 2008 (unaudited) |
September 30, 2007 (audited) |
||||||
| Current liabilities: |
||||||||
| Notes payable to banks |
$ | 181 | $ | 67 | ||||
| Accounts payable and accrued liabilities |
426 | 427 | ||||||
| Income taxes payable |
42 | 36 | ||||||
| Deferred income taxes |
2 | 2 | ||||||
| Current portion of long-term debt |
39 | 15 | ||||||
| Total current liabilities |
690 | 547 | ||||||
| Long-term debt |
496 | 503 | ||||||
| Deferred income taxes |
19 | 16 | ||||||
| Other liabilities |
295 | 300 | ||||||
| Minority interest |
111 | 76 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock: |
||||||||
| Authorized: 2,000,000 shares of $1 par value |
||||||||
| Series B ESOP Convertible Preferred Stock 7.75% Cumulative |
||||||||
| Authorized: None and 200,000 shares |
||||||||
| Issued: None and none |
— | — | ||||||
| Outstanding: None and none |
||||||||
| Common stock: |
||||||||
| Authorized: 200,000,000 shares of $1 par value |
||||||||
| Issued: 65,403,100 and 65,424,674 shares |
65 | 65 | ||||||
| Outstanding: 65,277,715 and 65,279,803 shares |
||||||||
| Less cost of 125,385 and 144,871 shares of common treasury stock |
(4 | ) | (5 | ) | ||||
| Additional paid-in capital |
16 | — | ||||||
| Retained earnings |
1,142 | 1,119 | ||||||
| Deferred employee benefits |
(30 | ) | (34 | ) | ||||
| Notes receivable for restricted stock |
(21 | ) | (19 | ) | ||||
| Accumulated other comprehensive income |
72 | 68 | ||||||
| Total stockholders’ equity |
1,240 | 1,194 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,851 | $ | 2,636 | ||||
CABOT CORPORATION
| Fiscal 2007 | Fiscal 2008 | |||||||||||||||||||||||||||||||||||||||
| In millions, except per share amounts (unaudited) |
Dec. Q. | Mar. Q. | June Q. | Sept. Q. | FY | Dec. Q. | Mar. Q. | June Q. | Sept. Q. | FY | ||||||||||||||||||||||||||||||
| Sales | ||||||||||||||||||||||||||||||||||||||||
| Core Segment |
$ | 428 | $ | 399 | $ | 399 | $ | 423 | $ | 1,649 | $ | 463 | $ | 511 | $ | 537 | $ | 553 | $ | 2,063 | ||||||||||||||||||||
| Rubber blacks |
351 | 346 | 351 | 368 | 1,416 | 410 | 454 | 499 | 505 | 1,868 | ||||||||||||||||||||||||||||||
| Supermetals |
77 | 53 | 48 | 55 | 233 | 53 | 57 | 38 | 48 | 195 | ||||||||||||||||||||||||||||||
| Performance Segment |
188 | 202 | 208 | 213 | 811 | 211 | 236 | 247 | 237 | 933 | ||||||||||||||||||||||||||||||
| Performance products |
123 | 134 | 142 | 142 | 541 | 141 | 164 | 175 | 165 | 646 | ||||||||||||||||||||||||||||||
| Fumed metal oxides |
65 | 68 | 66 | 71 | 270 | 70 | 72 | 72 | 72 | 287 | ||||||||||||||||||||||||||||||
| New Business Segment |
11 | 14 | 14 | 12 | 51 | 10 | 14 | 14 | 20 | 57 | ||||||||||||||||||||||||||||||
| Inkjet colorants |
10 | 13 | 13 | 10 | 46 | 8 | 11 | 11 | 13 | 43 | ||||||||||||||||||||||||||||||
| Aerogel (A) |
— | 1 | 1 | 1 | 3 | 1 | 2 | 2 | 5 | 10 | ||||||||||||||||||||||||||||||
| Superior MicroPowders |
1 | — | — | 1 | 2 | 1 | 1 | 1 | 2 | 4 | ||||||||||||||||||||||||||||||
| Specialty Fluids Segment |
16 | 10 | 16 | 16 | 58 | 16 | 16 | 17 | 19 | 68 | ||||||||||||||||||||||||||||||
| Segment Sales |
643 | 625 | 637 | 664 | 2,569 | 700 | 777 | 815 | 829 | 3,121 | ||||||||||||||||||||||||||||||
| Unallocated and other (A), (B) |
12 | 12 | 12 | 11 | 47 | 11 | 9 | 25 | 24 | 70 | ||||||||||||||||||||||||||||||
| Net sales and other operating revenues |
$ | 655 | $ | 637 | $ | 649 | $ | 675 | $ | 2,616 | $ | 711 | $ | 786 | $ | 840 | $ | 853 | $ | 3,191 | ||||||||||||||||||||
| Segment Profit |
||||||||||||||||||||||||||||||||||||||||
| Core Segment |
$ | 56 | $ | 33 | $ | 11 | $ | 9 | $ | 109 | $ | 15 | $ | 25 | $ | 37 | $ | 16 | $ | 92 | ||||||||||||||||||||
| Rubber blacks |
40 | 34 | 11 | 8 | 93 | 14 | 26 | 41 | 21 | 101 | ||||||||||||||||||||||||||||||
| Supermetals |
16 | (1 | ) | — | 1 | 16 | 1 | (1 | ) | (4 | ) | (5 | ) | (9 | ) | |||||||||||||||||||||||||
| Performance Segment |
34 | 36 | 31 | 30 | 131 | 27 | 26 | 27 | 21 | 102 | ||||||||||||||||||||||||||||||
| New Business Segment |
(11 | ) | (4 | ) | (8 | ) | (10 | ) | (33 | ) | (12 | ) | (9 | ) | (9 | ) | (4 | ) | (34 | ) | ||||||||||||||||||||
| Specialty Fluids Segment |
8 | 3 | 7 | 7 | 25 | 7 | 5 | 5 | 6 | 24 | ||||||||||||||||||||||||||||||
| Total Segment Profit (C) |
87 | 68 | 41 | 36 | 232 | 37 | 47 | 60 | 39 | 184 | ||||||||||||||||||||||||||||||
| Interest expense |
(9 | ) | (9 | ) | (8 | ) | (8 | ) | (34 | ) | (9 | ) | (9 | ) | (9 | ) | (10 | ) | (38 | ) | ||||||||||||||||||||
| General unallocated income (expense) (D) |
— | (15 | ) | 1 | (5 | ) | (18 | ) | 8 | (13 | ) | (10 | ) | (12 | ) | (27 | ) | |||||||||||||||||||||||
| Less: Equity in net income of affiliated companies, net of tax |
(3 | ) | (3 | ) | (3 | ) | (3 | ) | (12 | ) | (2 | ) | (2 | ) | (2 | ) | (2 | ) | (8 | ) | ||||||||||||||||||||
| Income from continuing operations before income taxes, equity in net income of affiliated companies and minority interest |
75 | 41 | 31 | 20 | 168 | 34 | 23 | 39 | 15 | 111 | ||||||||||||||||||||||||||||||
| Benefit (provision) for income taxes |
(19 | ) | (11 | ) | (9 | ) | 2 | (38 | ) | 6 | (11 | ) | (8 | ) | (1 | ) | (14 | ) | ||||||||||||||||||||||
| Equity in net income of affiliated companies, net of tax |
3 | 3 | 3 | 3 | 12 | 2 | 2 | 2 | 2 | 8 | ||||||||||||||||||||||||||||||
| Minority interest in net income, net of tax |
(5 | ) | (2 | ) | (4 | ) | (4 | ) | (15 | ) | (6 | ) | (3 | ) | (6 | ) | (5 | ) | (20 | ) | ||||||||||||||||||||
| Income from continuing operations |
54 | 31 | 21 | 21 | 127 | 36 | 11 | 27 | 11 | 85 | ||||||||||||||||||||||||||||||
| Discontinued operations, net of tax (E) |
— | — | (1 | ) | 3 | 2 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Net income |
54 | 31 | 20 | 24 | 129 | 36 | 11 | 27 | 11 | 85 | ||||||||||||||||||||||||||||||
| Dividends on preferred stock, net of tax benefit |
— | (1 | ) | — | — | (1 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
| Net income available to common shares |
$ | 54 | $ | 30 | $ | 20 | $ | 24 | $ | 128 | $ | 36 | $ | 11 | $ | 27 | $ | 11 | $ | 85 | ||||||||||||||||||||
| Diluted earnings per share of common stock |
||||||||||||||||||||||||||||||||||||||||
| Income from continuing operations |
$ | 0.79 | $ | 0.45 | $ | 0.31 | $ | 0.32 | $ | 1.87 | $ | 0.56 | $ | 0.17 | $ | 0.43 | $ | 0.17 | $ | 1.33 | ||||||||||||||||||||
| Discontinued operations, net of tax (E) |
— | — | (0.01 | ) | 0.04 | 0.03 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Net income |
$ | 0.79 | $ | 0.45 | $ | 0.30 | $ | 0.36 | $ | 1.90 | $ | 0.56 | $ | 0.17 | $ | 0.43 | $ | 0.17 | $ | 1.33 | ||||||||||||||||||||
| Weighted average common shares outstanding |
||||||||||||||||||||||||||||||||||||||||
| Diluted |
69 | 69 | 68 | 66 | 68 | 64 | 64 | 63 | 64 | 64 | ||||||||||||||||||||||||||||||
Note: During the third quarter of fiscal 2008, management changed the way it manages the Company’s businesses. Accordingly, the segment results for all periods presented have been revised to reflect these changes. Management is continuing to review how it evaluates the businesses and the allocation of costs among the segments. As a result, the values reported in the Company’s future SEC filings may vary materially from those presented in this table.
| (A) |
Royalty income received by the Aerogel business, which has been included in Unallocated and other in prior periods, has been reclassified to Segment sales for all periods presented above. |
| (B) |
Unallocated and other reflects an elimination for sales of one equity affiliate, prior to the consolidation of its results beginning April 1, 2008, offset by royalties paid by equity affiliates and other operating revenues and external shipping and handling fees. |
| (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, minority interest and allocated corporate costs. |
| (D) |
General unallocated expense includes foreign currency transaction gains (losses), interest income, dividend income and certain items listed in the Certain Items and Reconciliation of Adjusted EPS table. |
| (E) |
Amounts relate to legal and tax settlements in connection with our discontinued operations, net of tax. |