Financial Information by Segment

9 Months Ended

Jun. 30, 2012

Financial Information by Segment

N. Financial Information by Segment

Cabot is organized into four business segments: the Core Segment, the Performance Segment, the New Business Segment and the Specialty Fluids Segment. While the Chief Operating Decision Maker uses a number of performance measures to manage the performance of the segments and allocate resources to them, segment earnings before interest and taxes (“EBIT”) is the measure that is most consistently used and is, therefore, the measure presented in the table below.

	Core Segment		Performance Segment		New Business Segment		Specialty Fluids Segment		Segment Total		Unallocated and Other			Consolidated Total
	(Dollars in millions)
Three months ended June 30, 2012
Revenues from external customers(1)	$	517	$	247	$	29	$	28	$	821	$	25		$	846
Income (loss) before taxes(2)	$	59	$	38	$	1	$	11	$	109	$	(31	)	$	78
Three months ended June 30, 2011
Revenues from external customers(1)	$	528	$	240	$	33	$	12	$	813	$	23		$	836
Income (loss) before taxes(2)	$	57	$	43	$	3	$	3	$	106	$	(44	)	$	62
Nine months ended June 30, 2012
Revenues from external customers(1)	$	1,540	$	687	$	84	$	69	$	2,380	$	72		$	2,452
Income (loss) before taxes(2)	$	186	$	94	$	1	$	32	$	313	$	(104	)	$	209
Nine months ended June 30, 2011
Revenues from external customers(1)	$	1,424	$	652	$	89	$	42	$	2,207	$	62		$	2,269
Income (loss) before taxes(2)	$	145	$	113	$	7	$	10	$	275	$	(119	)	$	156

⁽¹⁾  Unallocated and Other reflects royalties paid by equity affiliates, external shipping and handling fees, and other operating revenues, which includes the impact of the corporate adjustment for unearned revenue.

⁽²⁾  Unallocated and Other includes certain items and eliminations that are not allocated to the operating segments. Management does not consider these items necessary for an understanding of the operating results of these segments and such amounts are excluded in the segment reporting to the Chief Operating Decision Maker. Income (loss) from continuing operations before taxes that are categorized as Unallocated and Other includes:

	Three Months Ended June 30						Nine Months Ended June 30
	2012			2011			2012			2011
	(Dollars in millions)
Interest expense	$	(11	)		(9	)		(30	)		(29	)
Total certain items, pre-tax(a)		(7	)		(5	)		(21	)		(16	)
Equity in net earnings of affiliated companies(b)		(4	)		(2	)		(8	)		(6	)
Unallocated corporate costs(c)		(12	)		(13	)		(44	)		(40	)
General unallocated income (expense)(d)		3			(15	)		(1	)		(28	)
Total	$	(31	)	$	(44	)	$	(104	)	$	(119	)

^(a) Certain items are items that management does not consider to be representative of segment results and they are, therefore, excluded from segment EBIT. Certain items, pre-tax, for the three months ended June 30, 2012 include costs associated with the acquisition of Norit of $5 million as discussed in Note O and global restructuring charges of $2 million as discussed in Note I. Certain items, pre-tax, for the nine months ended June 30, 2012 include costs associated with the acquisition of Norit of $5 million as discussed in Note O, global restructuring charges of $14 million as discussed in Note I and $2 million for environmental reserves and legal settlements. Certain items, pre-tax, for the three and nine months ended June 30, 2011 primarily relate to global restructuring charges as discussed in Note I.

^(b) Equity in net earnings of affiliated companies is included in segment EBIT and is removed from Unallocated and Other to reconcile to segment EBIT.

^(c) Unallocated corporate costs are not controlled by the segments and primarily benefit corporate interests.

^(d) General unallocated expense consists of gain (losses) arising from foreign currency transactions, net of other foreign currency risk management activities, the impact of accounting for certain inventory on a LIFO basis, and the profit or loss related to the corporate adjustment for unearned revenue.

The Performance Segment is comprised of two product lines: specialty grades of carbon black and masterbatch products (referred to together as “Performance Products”); and fumed silica, fumed alumina and dispersions thereof (referred to together as “Fumed Metal Oxides”). The net sales from each of these businesses for the three and nine months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30				Nine Months Ended June 30
	2012		2011		2012		2011
	(Dollars in millions)
Performance Products Business	$	181	$	173	$	505	$	464
Fumed Metal Oxides Business		66		67		182		188
Total Performance Segment	$	247	$	240	$	687	$	652

The New Business Segment is comprised of the Inkjet Colorants, Aerogel, Cabot Superior MicroPowders, and Cabot Elastomer Composites Businesses. The net sales from each of these businesses for the three and nine months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended June 30				Nine Months Ended June 30
	2012		2011		2012		2011
	(Dollars in millions)
Inkjet Colorants Business	$	18	$	20	$	48	$	50
Aerogel Business		3		8		12		19
Cabot Superior MicroPowders Business		2		2		7		8
Cabot Elastomer Composites Business		6		3		17		12
Total New Business Segment	$	29	$	33	$	84	$	89