K. Restructuring

Cabot’s restructuring activities were recorded in the Consolidated Statements of Operations as follows:


	Three months ended				Nine months ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in millions)				(Dollars in millions)
Cost of sales	$	3	$	2	$	24	$	13
Selling and administrative expenses		1		—		4		1
Research and technical expenses		1		—		2		—

Total	$	5	$	2	$	30	$	14

Details of these restructuring activities and the related reserves during the three months ended June 30, 2013 are as follows:


	Severance and Employee Benefits			Environmental Remediation		Asset Impairment and Accelerated Depreciation			Other		Total
	(Dollars in millions)
Reserve at March 31, 2013	$	4		$	2	$	—		$	1	$	7
Charges		3			—		1			1		5
Costs charged against assets/liabilities		—			—		(1	)		—		(1	)
Cash paid		(2	)		—		—			—		(2	)

Reserve at June 30, 2013	$	5		$	2	$	—		$	2	$	9

Details of these restructuring activities and the related reserves during the nine months ended June 30, 2013 are as follows:


	Severance and Employee Benefits			Environmental Remediation		Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2012	$	2		$	1	$	—		$	2		$	5
Charges		9			1		18			2			30
Costs charged against assets / liabilities		(1	)		—		(18	)		(1	)		(20	)
Cash paid		(5	)		—		—			(1	)		(6	)

Reserve at June 30, 2013	$	5		$	2	$	—		$	2		$	9

Closure of Port Dickson, Malaysia Manufacturing Facility

On April 26, 2013, the Company announced that the Board of its joint venture carbon black company, Cabot Malaysia Sdn. Bhd. (“CMSB”), decided to cease carbon black production at its Port Dickson, Malaysia, facility. The facility ceased production in June 2013. The Company holds a 51 percent equity share in CMSB.

The decision, which will affect approximately 90 carbon black employees, was driven by the facility’s manufacturing inefficiencies and raw materials costs.

During fiscal 2013, the consolidated joint venture has recorded pre-tax restructuring costs of approximately $18 million comprised mainly of impairment of assets at the facility and accelerated depreciation of approximately $16 million and severance charges of approximately $2 million. CMSB’s net income or loss is attributable to Cabot Corporation and to the non-controlling interest in its subsidiaries. The portion of the charges that are allocable to the noncontrolling interest in CMSB (49%) are recorded within Net income attributable to noncontrolling interests on the Consolidated Statement of Operations.

The Company expects that the closure of the plant will result in total pre-tax charges to the consolidated joint venture of approximately $27 million. The expected charges are comprised of asset impairments and accelerated depreciation of $16 million, site demolition, clearing and environmental remediation of $9 million, and severance charges of $2 million.

Cumulative net cash outlays related to this plan are expected to be approximately $11 million comprised primarily of $9 million for site demolition, clearing and environmental remediation, and $2 million for severance. Through June 30, 2013, CMSB has not made any material cash payments related to this plan. The CMSB expects to make net cash payments of $1 million during the remainder of fiscal 2013, mainly for severance, and $10 million in fiscal 2014 and thereafter. These amounts exclude any potential proceeds that may be recognized on the sale of land and certain other manufacturing assets.

As of June 30, 2013, Cabot has $2 million of accrued restructuring costs in the Consolidated Balance Sheet related to this closure which is mainly comprised of accrued severance charges.

Closure of Hong Kong, China Manufacturing Facility

In March 2012, the Company ceased manufacturing operations at its specialty compounds plant in Hong Kong and moved these operations primarily to its facility in Tianjin, China, which impacted 64 employees.

The Company expects the closure plan will result in a total pre-tax charge to earnings of approximately $8 million, not including the potential gain on sale of land rights. Through June 30, 2013, the Company has charged approximately $7 million to earnings for this restructuring, comprised mainly of accelerated depreciation, severance and other closure related charges.

Cumulative net cash outlays related to this plan are expected to be approximately $2 million, comprised primarily of severance and other charges. These amounts exclude any potential cash to be received on the sale of land rights. Through June 30, 2013, Cabot has made cash payments of approximately $2 million. The Company expects to make net cash payments of less than $1 million in the remainder of fiscal 2013 and thereafter.

As of June 30, 2013, Cabot has less than $1 million of accrued severance charges in the Consolidated Balance Sheet related to this site closure.

Closure of Thane, India Manufacturing Facility

In fiscal 2010, Cabot ceased manufacturing operations at its carbon black manufacturing facility in Thane, India, which affected approximately 120 employees. The Company continues to maintain a presence in India through its fumed metal oxides manufacturing joint venture and continuing commercial operations in carbon black and other products.

The Company has incurred a total pre-tax charge of approximately $25 million and does not expect to incur significant additional costs related to this plan. These costs are comprised of $7 million for severance and employee benefits, $12 million for accelerated depreciation and asset impairments, $3 million for demolition and site clearing costs and $3 million for other post-closing costs. These amounts exclude any potential gain that may be recognized on the sale of land rights and certain other manufacturing related assets.

Through June 30, 2013, Cabot has made net cash payments of $9 million associated with this restructuring plan including $6 million of severance and employee benefits, $3 million for demolition and site clearing costs, $3 million of post-closing and other costs, partially offset by proceeds of $3 million from asset sales. The Company expects to make additional severance cash payments of less than $1 million in the remainder of fiscal 2013.

As of June 30, 2013, Cabot has less than $1 million of accrued severance costs in the Consolidated Balance Sheet related to this site closure.

2009 Global Restructuring

In fiscal 2009, Cabot initiated its 2009 Global Restructuring Plan. Under this plan, the Company closed three manufacturing sites and implemented operating cost and workforce reductions across a variety of its other operations. In fiscal 2010, the Company consolidated several of its European administrative offices in a new European headquarters office in Switzerland.

The Company has recorded a cumulative pre-tax charge of $124 million related to this plan. The total amounts the Company has recorded for each major type of cost associated with the restructuring plan are: (i) severance and employee benefits of $55 million for approximately 400 employees, (ii) accelerated depreciation and impairment of facility assets of $45 million, net of gains associated with the sale of certain assets, (iii) demolition and site clearing costs of $7 million, and (iv) other post-closing costs of $17 million.

Net cash outlays related to these actions are expected to be approximately $76 million. Through June 30, 2013, Cabot has made net cash payments of $72 million. During the remainder of fiscal 2013 and thereafter, the Company expects to make net payments totaling $4 million, not including potential proceeds from the sale of a former manufacturing site.

As of June 30, 2013, Cabot has $4 million of restructuring costs in accrued expenses in the Consolidated Balance Sheet related to this plan for accrued environmental remediation and other costs.

Other Activities

Through June 30, 2013, the Company has recorded pre-tax charges of $12 million for severance and $2 million for asset write-offs and accelerated depreciation at other locations. Cabot has recorded pre-tax charges of approximately $9 million and less than $1 million during the first nine months of fiscal 2013 and 2012, respectively, related to these actions and anticipates recording additional charges of $3 million during the remainder of fiscal 2013 and $5 million thereafter. Through June 30, 2013, Cabot has made cash payments of $9 million related to these activities and expects to pay $3 million in the remainder of fiscal 2013 and $3 million thereafter for severance and other post close operating costs at the impacted locations. As of June 30, 2013, Cabot has $3 million of accrued severance costs in the Consolidated Balance Sheet related to these activities.