Discontinued Operations

9 Months Ended

Jun. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

D. Discontinued Operations

In January 2012, the Company sold its Supermetals Business to Global Advanced Metals Pty Ltd., an Australian company (“GAM”), for $452 million, including cash consideration of $175 million received on the closing date and notes receivable (“GAM Notes”) totaling $277 million payable at various dates through March 2014. In addition, the Company is entitled to receive quarterly cash payments in each calendar quarter that the GAM Notes are outstanding in an amount equal to 50% of cumulative year to date adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of the sold business for the relevant calendar quarter. A minimum payment of $11.5 million was guaranteed in the first year after the sale regardless of the Adjusted EBITDA generated and is included in the $277 million total of GAM Notes. The carrying value of the GAM Notes at June 30, 2013 is $214 million, which is presented as Notes receivable from sale of business on the Consolidated Balance Sheet. These Notes are included in Current assets as they are due no later than March 31, 2014. Through June 30, 2013, Cabot received payments of $63 million under the GAM Notes, of which $10 million and $40 million were received during the three and nine months ended June 30, 2013, respectively.

The after-tax gain from discontinued operations of $1 million for the nine months ended June 30, 2013 primarily relates to a $2 million tax benefit from adjustments in the third quarter of fiscal 2013 for the tax impact of the discontinued operations offset by $1 million of loss from the settlement of pension liabilities of the disposed business recorded in the first quarter of fiscal 2013. The operating results of the Supermetals Business prior to the sale and the gain on the sale of the business are reported within Income from discontinued operations, net of tax, in the Consolidated Statements of Operations and have been excluded from segment results presented in Note O.

The following table summarizes the results from discontinued operations during the three and nine months ended June 30, 2013 and 2012:

	Three months ended					Nine months ended
	June 30					June 30
	2013		2012			2013			2012
	(Dollars in millions)					(Dollars in millions)
Net sales and other operating revenues	$	—	$	—		$	—		$	46
Income from operations before income taxes		—		—			—			21
Provision for income taxes on operations		—		—			—			(7	)
Income from operations, net of tax		—		—			—			14
Gain (loss) on sale of discontinued operations		—		6			(2	)		300
Benefit from (provision for) income taxes on gain (loss) on sale		2		(2	)		3			(110	)
Gain on sale of discontinued operations, net of tax		2		4			1			190
Income from discontinued operations, net of tax	$	2	$	4		$	1		$	204

In connection with the sale of the Supermetals Business, the Company and GAM entered into a tantalum ore supply agreement under which the Company agreed to sell to GAM all of the tantalum ore mined at the Company’s mine in Manitoba, Canada, subject to a maximum amount, for a three-year period commencing in calendar year 2013. In March 2013, the Company and GAM agreed to terminate the agreement and the Company expects to ship the remaining tantalum ore inventory it has on hand to GAM during the remainder of calendar 2013. Revenues, costs and expenses from this agreement during the three and nine months ended June 30, 2013 are included in continuing operations of the Specialty Fluids Business.