EX-99.1 2 v182576_ex99-1.htm Unassociated Document
Exhibit 99.1
:
Contact:
Susannah Robinson
     
Director, Investor Relations
     
617-342-6129
     
susannah_robinson@cabot-corp.com


CABOT ANNOUNCES SECOND QUARTER FISCAL 2010 OPERATING RESULTS
Strong performance from emerging market volume and overall margin management

BOSTON (April 28, 2010)-  Cabot Corporation (NYSE: CBT) today announced results for its second quarter of fiscal year 2010.

Key Highlights
§
Volumes increase 30-40% from second quarter 2009 as market demand stabilizes near first quarter 2010 levels

§
Emerging markets and robust unit margins continue to be main drivers of recovery

§
Supermetals Business profits stabilizing from restructured operations and tantalum market rebound

§
New Business Segment continues to show steady improvement

             
(In millions, except per share amounts)
 
2010
   
2009
 
   
Second
   
First
   
Second
   
First
 
   
Quarter
   
6 months
   
Quarter
   
6 months
 
                         
Net sales
  $ 712     $ 1,391     $ 470     $ 1,122  
Net income (loss) per share attributable to Cabot Corporation
  $ 0.66     $ 1.10     $ (0.93 )   $ (0.87 )
Less:  Certain items per share
  $ (0.13 )   $ (0.34 )   $ (0.63 )   $ (0.65 )
Adjusted earnings (loss) per share
  $ 0.79     $ 1.44     $ (0.30 )   $ (0.22 )

Commenting on the results, Patrick Prevost, Cabot’s President and CEO, stated, “Cabot’s second quarter results confirm the momentum of demand recovery and robustness of our business across all segments.  Our overall efforts in the key strategic areas of margin improvement, emerging market expansion and new business development were instrumental in this strong performance.  Market demand has stabilized slightly ahead of first quarter 2010 levels with emerging markets continuing to show significant strength.  New emerging market capacity and technology investments in energy recovery and yield enhancement are contributing positively to our results.  The New Business Segment continues to show steady progress.  Our focus over the past eighteen months on our highest value new business opportunities has yielded a significant improvement in the segment’s financial performance.”

Financial Detail
For the second quarter of fiscal 2010, net income attributable to Cabot Corporation was $43 million ($0.66 per diluted common share).  Adjusted EPS was income of $0.79 per common share, excluding $0.13 per common share of certain items related to restructuring charges.  These amounts included $14 million ($0.21 per diluted common share) of discrete tax benefits primarily associated with audit settlements during the quarter.
 
Page 1 of 4

 
 
Segment Results
Core Segment-  Second quarter fiscal 2010 profitability in the Rubber Blacks Business increased by $56 million when compared to the same quarter of fiscal 2009.  Volumes increased by 28% globally driven by improved demand in the tire and automotive markets. Volumes in Asia Pacific and China increased by 50% over the second quarter of fiscal 2009, South America by 31%, North America by 14% and Europe, Middle East, Africa by 8%.  Unfavorable high cost inventory effects in the second quarter of fiscal 2009, that did not reoccur in the same period of fiscal 2010, benefited results by $31 million.  The absence of $7 million of one time revenue recognition benefits from the first quarter was partially offset by expanded unit margins and 1% higher volumes leading to a $3 million decrease in sequential profitability.

Second quarter fiscal 2010 profitability in the Supermetals Business increased by $11 million compared to the same quarter of fiscal 2009.  The increase was principally due to higher volumes from stronger demand in the electronics market, lower raw material costs and reduced fixed costs.  When compared to the first quarter of fiscal 2010, profitability decreased by $1 million principally due to timing of shipments.

Performance Segment-  Second quarter fiscal 2010 profitability in the Performance Segment increased by $32 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 and increased unit margins.  Volumes increased by 33% in Performance Products and by 47% in Fumed Metal Oxides when compared to the second quarter of fiscal 2009.  Unfavorable high cost inventory effects in the second quarter of fiscal 2009 did not reoccur in the same period of fiscal 2010, benefiting results by $11 million.  Sequentially, profitability decreased by $3 million.  Volume increases of 9% in Performance Products and 3% in Fumed Metal Oxides were more than offset by the absence of $2 million of one time revenue recognition benefits from the first quarter and a $3 million unfavorable LIFO impact.

New Business Segment-  Second quarter fiscal 2010 revenues in the New Business Segment increased by $6 million when compared to the second quarter of fiscal 2009 driven principally by improved revenues in Inkjet Colorants and the Aerogel Business.  During the second quarter of fiscal 2010 the New Business Segment reported $1 million of profit, a $2 million improvement over the second quarter of fiscal 2009 and a $4 million increase sequentially.

Specialty Fluids Segment-  Profitability in the Specialty Fluids Segment for the second quarter of fiscal 2010 increased by $1 million when compared to the second quarter of fiscal 2009 due to increased rental activity and a favorable service mix.  Sequentially, profitability was flat as a favorable service mix was offset by decreased rental activity.  The business continues to expand its activity outside of the core North Sea region, with 38% of revenue in the second quarter of fiscal 2010 coming from other regions, compared to 9% in the second quarter of fiscal 2009 and 22% in the first quarter of fiscal 2010.

Cash Performance-  The Company ended the second quarter of fiscal 2010 with a cash balance of $248 million despite a $38 million increase in working capital from higher accounts receivable balances.  Capital expenditures for the second quarter of fiscal 2010 were $18 million.

Taxes-  During the second quarter of fiscal 2010, the Company recorded a tax benefit of $1 million including $14 million of discrete tax benefits primarily associated with favorable audit settlements during the quarter.  Excluding discrete items, the operating tax rate for the quarter was approximately 25%.
 
Page 2 of 4


Outlook
Commenting on the outlook for the Company, Prevost said, “We are optimistic about the remainder of fiscal 2010 and beyond.  As market demand has stabilized, we have been successful at leveraging the actions we have taken over the past year.  The Company is now positioned with a solid level of earnings and a strong balance sheet, which allows us to continue focusing on our earnings growth strategy.  We remain on track to meet our long term financial goals.”

Earnings Call
The Company will host a conference call with industry analysts at 2:00 p.m. Eastern time on April 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 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 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 second quarter of fiscal 2010 was a benefit of $2 million and is comprised of a favorable $4 million liquidation impact partially offset by a $2 million unfavorable COGS impact.  The term “service mix” refers to the positive or negative impact on revenue or profitability during a period from changes in the combination of customers and prices in the Specialty Fluids Business.
 
Page 3 of 4


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.


 
 
Page 4 of 4
 
 

 
Exhibit 99.1
 
Second Quarter Earnings Announcement, Fiscal 2010
             
                   
                   
CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
       
                   
 
Periods ended March 31
 
Three Months
   
Six Months
 
Dollars in millions, except per share amounts (unaudited)
 
2010
   
2009
   
2010
   
2009
 
                         
Net sales and other operating revenues
  $ 712     $ 470     $ 1,391     $ 1,122  
                                 
Cost of sales
    572       475       1,115       1,035  
     Gross profit
    140       (5 )     276       87  
                                 
Selling and administrative expenses
    61       54       128       110  
Research and technical expenses
    19       19       37       37  
     Income (loss) from operations
    60       (78 )     111       (60 )
                                 
Other income and expense
                               
     Interest and dividend income
    -       1       -       2  
     Interest expense
    (11 )     (8 )     (20 )     (17 )
     Other expense
    (4 )     (6 )     (4 )     (15 )
          Total other income and (expense)
    (15 )     (13 )     (24 )     (30 )
                                 
Income (loss) from continuing operations before income taxes and equity in net
                 
     income of affiliated companies
    45       (91 )     87       (90 )
Benefit (provision) for income taxes
    1       31       (10 )     30  
Equity in net income of affiliated companies, net of tax
    1       -       4       2  
     Net income (loss)
  $ 47     $ (60 )   $ 81     $ (58 )
                                 
Net income (loss) attributable to noncontrolling interests, net of tax
    4       (2 )     9       (4 )
     Net income (loss) attributable to Cabot Corporation
  $ 43     $ (58 )   $ 72     $ (54 )
                                 
                                 
Diluted earnings per share of common stock
                               
     Net income (loss) attributable to Cabot Corporation (A)
  $ 0.66     $ (0.93 )   $ 1.10     $ (0.87 )
Weighted average common shares outstanding
                               
     Diluted
    64       63       64       63  
 
 
(A)
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.
           
           
           
           
           
 

 
 
Second Quarter Earnings Announcement, Fiscal 2010
             
                   
                   
CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS
       
                   
 
Periods ended March 31
 
Three Months
   
Six Months
 
Dollars in millions, except per share amounts (unaudited)
 
2010
   
2009
   
2010
   
2009
 
                         
SALES
                       
                         
Core Segment
  $ 453     $ 295     $ 894     $ 739  
     Rubber blacks
    417       272       813       671  
     Supermetals
    36       23       81       68  
                                 
Performance Segment
    200       132       384       289  
     Performance products
    138       90       260       195  
     Fumed metal oxides
    62       42       124       94  
                                 
New Business Segment
    22       16       39       34  
     Inkjet colorants
    14       9       28       22  
     Aerogel
    6       5       8       9  
     Superior MicroPowders
    2       2       3       3  
                                 
Specialty Fluids Segment
    15       11       30       26  
                                 
     Segment sales
    690       454       1,347       1,088  
                                 
Unallocated and other (A)
    22       16       44       34  
                                 
     Net sales and other operating revenues
  $ 712     $ 470     $ 1,391     $ 1,122  
                                 
SEGMENT PROFIT (LOSS)
                               
                                 
Core Segment
  $ 43     $ (24 )   $ 90     $ 3  
                                 
     Rubber blacks
    39       (17 )     81       7  
     Supermetals
    4       (7 )     9       (4 )
                                 
Performance Segment
    31       (1 )     65       2  
                                 
New Business Segment
    1       (1 )     (2 )     (4 )
                                 
Specialty Fluids Segment
    5       4       10       8  
                                 
     Total Segment Profit (Loss) (B)
    80       (22 )     163       9  
                                 
Interest expense
    (11 )     (8 )     (20 )     (17 )
Certain items (C)
    (9 )     (46 )     (26 )     (48 )
Unallocated corporate costs
    (10 )     (8 )     (21 )     (15 )
General unallocated expense (D)
    (4 )     (7 )     (5 )     (17 )
Less: Equity in net income of affiliated companies, net of tax
    (1 )     -       (4 )     (2 )
                                 
Income (loss) from continuing operations before income taxes and equity in
                         
     net income of affiliated companies
    45       (91 )     87       (90 )
                                 
Benefit (provision) for income taxes
    1       31       (10 )     30  
                                 
Equity in net income of affiliated companies, net of tax
    1       -       4       2  
     Net income (loss)
  $ 47     $ (60 )   $ 81     $ (58 )
                                 
Net income (loss) attributable to noncontrolling interests, net of tax
    4       (2 )     9       (4 )
                                 
     Net income (loss) attributable to Cabot Corporation
  $ 43     $ (58 )   $ 72     $ (54 )
                                 
Diluted earnings per share of common stock
                               
                                 
Net income (loss) attributable to Cabot Corporation (E)
  $ 0.66     $ (0.93 )   $ 1.10     $ (0.87 )
                                 
Weighted average common shares outstanding
                               
                                 
     Diluted
    64       63       64       63  
 
           
(A)
Unallocated and other reflects royalties paid by equity affiliates and other operating revenues and external shipping and handling fees.
           
(B)
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.
           
(C)
Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS table.
           
(D)
General unallocated expense includes foreign currency transaction gains (losses), interest income, and dividend income.
           
(E)
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.
 

 
 
Second Quarter Earnings Announcement, Fiscal 2010
             
                   
                   
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
       
                   
 
 
   
March 31,
   
September 30,
 
   
2010
   
2009
 
Dollars in millions, except share and per share amounts
 
(unaudited)
   
(audited)
 
             
Current assets:
           
             
     Cash and cash equivalents
  $ 248     $ 304  
     Short-term marketable securities
    1       1  
     Accounts and notes receivable, net of reserve for doubtful accounts of $5 and $6
    548       452  
     Inventories:
               
          Raw materials
    128       118  
          Work in process
    40       44  
          Finished goods
    174       165  
          Other
    32       31  
               Total inventories
    374       358  
     Prepaid expenses and other current assets
    65       53  
     Deferred income taxes
    32       32  
                    Total current assets
    1,268       1,200  
                 
Investments:
               
     Equity affiliates
    59       60  
     Long-term marketable securities and cost investments
    1       1  
          Total investments
    60       61  
                 
Property, plant and equipment
    2,939       3,000  
Accumulated depreciation and amortization
    (1,983 )     (1,988 )
     Net property, plant and equipment
    956       1,012  
                 
Goodwill
    36       37  
Intangible assets, net of accumulated amortization of $11 and $11
    2       2  
Assets held for rent
    41       43  
Deferred income taxes
    240       235  
Other assets
    84       86  
                 
     Total assets
  $ 2,687     $ 2,676  
 
 

 
 
Second Quarter Earnings Announcement, Fiscal 2010
             
                   
                   
CABOT CORPORATION CONSOLIDATED FINANCIAL POSITION
       
                   
 
 
   
March 31,
   
September 30,
 
   
2010
   
2009
 
Dollars in millions, except share and per share amounts
 
(unaudited)
   
(audited)
 
             
Current liabilities:
           
             
     Notes payable to banks
  $ 38     $ 29  
     Accounts payable and accrued liabilities
    377       407  
     Income taxes payable
    23       31  
     Deferred income taxes
    5       5  
     Current portion of long-term debt
    21       5  
          Total current liabilities
    464       477  
                 
Long-term debt
    602       623  
Deferred income taxes
    11       11  
Other liabilities
    309       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: 65,412,119 and 65,401,485 shares
    65       65  
          Outstanding: 65,351,880 and 65,309,155 shares
               
          Less cost of 60,239 and 92,330 shares of common treasury stock
    (2 )     (2 )
Additional paid-in capital
    32       18  
Retained earnings
    1,067       1,018  
Deferred employee benefits
    (22 )     (25 )
Accumulated other comprehensive income
    55       60  
     Total Cabot Corporation stockholders' equity
    1,195       1,134  
     Noncontrolling interests
    106       103  
               Total equity
    1,301       1,237  
Total liabilities and equity
  $ 2,687     $ 2,676  
 
 

 
CABOT CORPORATION
   
Fiscal 2009
   
Fiscal 2010
 
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
  $ 444     $ 295     $ 310     $ 377     $ 1,426     $ 441     $ 453         $ 894  
     Rubber blacks
    399       272       272       343       1,286       396       417           813  
     Supermetals
    45       23       38       34       140       45       36           81  
Performance Segment
    157       132       149       183       621       184       200           384  
     Performance products
    105       90       98       118       411       122       138           260  
     Fumed metal oxides
    52       42       51       65       210       62       62           124  
New Business Segment
    18       16       14       19       67       17       22           39  
     Inkjet colorants
    13       9       10       14       46       14       14           28  
     Aerogel
    4       5       2       4       15       2       6           8  
     Superior MicroPowders
    1       2       2       1       6       1       2           3  
Specialty Fluids Segment
    15       11       19       14       59       15       15           30  
     Segment Sales 
    634       454       492       593       2,173       657       690           1,347  
Unallocated and other (A)
    18       16       19       17       70       22       22           44  
                                                                     
Net sales and other operating revenues
  $ 652     $ 470     $ 511     $ 610     $ 2,243     $ 679     $ 712         $ 1,391  
                                                                     
Segment Profit (Loss)
                                                                   
Core Segment
  $ 27     $ (24 )   $ 14     $ 16     $ 33     $ 47     $ 43         $ 90  
     Rubber blacks
    24       (17 )     11       16       34       42       39           81  
     Supermetals
    3       (7 )     3       -       (1 )     5       4           9  
Performance Segment
    3       (1 )     10       28       40       34       31           65  
New Business Segment
    (3 )     (1 )     (4 )     (2 )     (10 )     (3 )     1           (2 )
Specialty Fluids Segment
    4       4       9       4       21       5       5           10  
     Total Segment Profit (Loss) (B)
    31       (22 )     29       46       84       83       80           163  
                                                                     
                                                                     
Interest expense
    (9 )     (8 )     (6 )     (7 )     (30 )     (9 )     (11 )         (20 )
Certain items (C)
    (2 )     (46 )     (19 )     (36 )     (103 )     (17 )     (9 )         (26 )
Unallocated corporate costs
    (7 )     (8 )     (7 )     (6 )     (28 )     (11 )     (10 )         (21 )
General unallocated expense (D)
    (10 )     (7 )     1       (4 )     (20 )     (1 )     (4 )         (5 )
Less: Equity in net income of affiliated companies, net of tax
    (2 )     -       -       (3 )     (5 )     (3 )     (1 )         (4 )
                                                                     
                                     
Income (loss) before income taxes and equity in net income of affiliated companies
    1       (91 )     (2 )     (10 )     (102 )     42       45           87  
(Provision) benefit for income taxes
    (1 )     31       (7 )     (1 )     22       (11 )     1           (10 )
Equity in net income of affiliated companies, net of tax
    2       -       -       3       5       3       1           4  
                                                                     
Income (loss) from continuing operations
    2       (60 )     (9 )     (8 )     (75 )     34       47           81  
                                                                     
Loss from discontinued operations, net of tax (E)
    -       -       -       -       -       -       -           -  
                                                                     
     Net income (loss)
    2       (60 )     (9 )     (8 )     (75 )     34       47           81  
                                                                     
Net (loss) income attributable to noncontrolling interests, net of tax
    (2 )     (2 )     3       3       2       5       4           9  
                                                                     
     Net income (loss) attributable to Cabot Corporation
  $ 4     $ (58 )   $ (12 )   $ (11 )   $ (77 )   $ 29     $ 43         $ 72  
                                                                     
 
Diluted earnings (loss) per share of common stock attributable to Cabot Corporation
                                                                   
                                                                     
     Continuing operations (F)
  $ 0.06     $ (0.93 )   $ (0.18 )   $ (0.18 )   $ (1.24 )   $ 0.44     $ 0.66         $ 1.10  
                                                                     
     Discontinued operations (E), (F)
    -       -       (0.01 )     -       (0.01 )     -       -           -  
                                                                     
     Net income (loss) attributable to Cabot Corporation (F)
  $ 0.06     $ (0.93 )   $ (0.19 )   $ (0.18 )   $ (1.25 )   $ 0.44     $ 0.66         $ 1.10  
                                                                     
Weighted average common shares outstanding
                                                                   
Diluted
    63       63       63       64       63       64       64           64  
 
(A)
Unallocated and other reflects royalties paid by equity affiliates and other operating revenues and external shipping and handling fees.
(B)
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.
(C)
Details of certain items are presented in the Certain Items and Reconciliation of Adjusted EPS table.
     
                                             
(D)
General unallocated expense includes foreign currency transaction gains (losses), interest income, and dividend income.
(E)
Amounts relate to legal settlements in connection with our discontinued operations.
               
                                             
(F)
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.
 
 

 
Second Quarter Earnings Announcement, Fiscal 2010
             
                               
                               
CABOT CORPORATION  CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS
   
                               
 
CERTAIN ITEMS:
Periods ended March 31
 
Three Months
   
Six Months
 
Dollars in millions, except per share amounts (unaudited)
 
2010
   
2010
   
2009
   
2009
   
2010
   
2010
   
2009
   
2009
 
   
$
   
per share(A)
   
$
   
per share(A)
   
$
   
per share(A)
   
$
   
per share(A)
 
                                                         
Certain items before income taxes
                                                       
Environmental reserves and legal settlements
  $ -     $ -     $ -     $ -     $ (1 )   $ (0.01 )   $ -     $ -  
Recovery of previously impaired investment
    -       -       -       -       1       0.01       -       -  
Long-lived asset impairment (B)
    -       -       -       -       (2 )     (0.02 )     -       -  
Write-down of impaired investments
    -       -       (1 )     (0.01 )     -       -       (1 )     (0.01 )
Restructuring initiatives:
                                                               
- 2009 Global
    (9 )     (0.13 )     (45 )     (0.62 )     (24 )     (0.32 )     (45 )     (0.62 )
- 2008 Global
    -       -       1       0.01       -       -       (1 )     (0.01 )
- North America
    -       -       (1 )     (0.01 )     -       -       (2 )     (0.02 )
- Europe (C)
    -       -       -       -       -       -       1       0.01  
Total certain items
    (9 )     (0.13 )     (46 )     (0.63 )     (26 )     (0.34 )     (48 )     (0.65 )
                                                                 
Tax impact of certain items
    1       -       6       -       4       -       7       -  
Total certain items after tax
  $ (8 )   $ (0.13 )   $ (40 )   $ (0.63 )   $ (22 )   $ (0.34 )   $ (41 )   $ (0.65 )
 
 
Periods ended March 31
 
Three Months
   
Six Months
 
Dollars in millions (unaudited)
 
2010
   
2009
   
2010
   
2009
 
                         
Statement of Operations Line Item
       
                         
Cost of sales
  $ (5 )   $ (40 )   $ (13 )   $ (41 )
                                 
Selling and administrative expenses
    (4 )     (4 )     (13 )     (5 )
                                 
Research and technical expenses
    -       (2 )     -       (2 )
                                 
Total certain items
  $ (9 )   $ (46 )   $ (26 )   $ (48 )
 
NON-GAAP MEASURE:
Periods ended March 31
 
Three Months
   
Six Months
 
Dollars in millions, except per share amounts (unaudited)
 
2010
   
2009
   
2010
   
2009
 
   
per share(A)
   
per share(A)
   
per share(A)
   
per share(A)
 
Reconciliation of Adjusted EPS to GAAP EPS
                       
Total Diluted EPS
  $ 0.66     $ (0.93 )   $ 1.10     $ (0.87 )
Certain items
    (0.13 )     (0.63 )     (0.34 )     (0.65 )
Adjusted EPS
  $ 0.79     $ (0.30 )   $ 1.44     $ (0.22 )
 
 
(A)
Per share amounts are calculated after tax.
(B)
Land related to former carbon black site.
(C)
Amount relates to former carbon black facilities.