Earnings Per Share

12 Months Ended

Sep. 30, 2023

Note P. Earnings Per Share

The following tables summarize the components of the basic and diluted earnings per common share (“EPS”) computations:


	Years Ended September 30
	2023		2022		2021
	(In millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to Cabot Corporation	$	445	$	209	$	250
Less: Dividends and dividend equivalents to participating securities		1		1		1
Less: Undistributed earnings allocated to participating securities(1)		7		2		2
Earnings (loss) allocated to common shareholders (numerator)	$	437	$	206	$	247

Weighted average common shares and participating securities outstanding		57.3		57.4		57.5
Less: Participating securities(1)		1.2		0.9		0.8
Adjusted weighted average common shares (denominator)		56.1		56.5		56.7

Per share amounts—basic:
Net income (loss) attributable to Cabot Corporation	$	7.79	$	3.65	$	4.35

Diluted EPS:
Earnings (loss) allocated to common shareholders	$	437	$	206	$	247
Plus: Earnings allocated to participating securities		8		3		3
Less: Adjusted earnings allocated to participating securities(2)		8		3		3
Earnings (loss) available to common shares (numerator)	$	437	$	206	$	247

Adjusted weighted average common shares outstanding		56.1		56.5		56.7
Effect of dilutive securities:
Common shares issuable(3)		0.4		0.4		0.1
Adjusted weighted average common shares (denominator)		56.5		56.9		56.8

Per share amounts—diluted:
Net income (loss) attributable to Cabot Corporation	$	7.73	$	3.62	$	4.34

(1)

Participating securities consist of shares underlying unvested time-based restricted stock units (the "TSUs"), earned and unvested performance-based restricted stock units (the "PSUs", and referred to in this note collectively with the TSUs as the "RSUs"), stock units accounted for under the Supplemental 401(k) Plan portion of the Company’s Deferred Compensation and Supplemental Retirement Plan, and stock units and phantom stock units accounted for under the Company’s Non-Employee Directors’ Deferral Plan. The holders of RSUs are entitled to receive dividend equivalents, payable in cash, to the extent dividends are paid on the outstanding shares of Common Stock, and equal in value to the dividends that would have been paid in respect of the Common Stock underlying the RSU. The accounts of holders of stock units and phantom stock units are credited with dividend equivalents, which are payable, in stock or cash, as the case may be, with the distribution of account balances.

Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common and participating shareholders. Undistributed earnings are allocated to common and participating shareholders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:


	Years Ended September 30
	2023		2022		2021
	(In millions)
Calculation of undistributed earnings:
Net income (loss) attributable to Cabot Corporation	$	445	$	209	$	250
Less: Dividends declared on common stock		87		84		80
Less: Dividends and dividend equivalents to participating securities		1		1		1
Undistributed earnings (loss)	$	357	$	124	$	169
Allocation of undistributed earnings:
Undistributed earnings (loss) allocated to common shareholders	$	350	$	122	$	167
Undistributed earnings allocated to participating securities		7		2		2
Undistributed earnings (loss)	$	357	$	124	$	169

(2)

Undistributed earnings (loss) are adjusted for the assumed conversion of dilutive securities, which are described in (3) below, to common shares and then reallocated to participating securities.

(3)

Represents incremental shares of common stock from the assumed exercise of stock options issued under Cabot’s equity incentive plans. For fiscal 2023, 2022 and 2021, respectively, 138,966, 214,180 and 525,131 incremental shares of common stock were excluded from the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.