L. Restructuring

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


	Three Months Ended June 30				Nine Months Ended June 30
	2014		2013		2014		2013
	(Dollars in millions)
Cost of sales	$	2	$	3	$	11	$	24
Selling and administrative expenses		2		1		13		4
Research and Technical expenses		—		1		—		1

Total	$	4	$	5	$	24	$	29

Details of these restructuring activities and the related reserves during the three months ended June 30, 2014 are as follows:


	Severance and Employee Benefits			Environmental Remediation		Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at March 31, 2014	$	16		$	2	$	—		$	2		$	20
Charges		2			—		1			1			4
Costs charged against assets/liabilities		—			—		(1	)		—			(1	)
Cash paid		(1	)		—		—			(1	)		(2	)

Reserve at June 30, 2014	$	17		$	2	$	—		$	2		$	21

Details of these restructuring activities and the related reserves during the nine months ended June 30, 2014 are as follows:


	Severance and Employee Benefits			Environmental Remediation			Asset Impairment and Accelerated Depreciation			Asset Sales			Other			Total
	(Dollars in millions)
Reserve at September 30, 2013	$	7		$	2		$	—		$	—		$	1		$	10
Charges		15			1			4			1			3			24
Costs charged against assets/liabilities		—			—			(4	)		—			—			(4	)
Cash paid		(5	)		(1	)		—			(1	)		(2	)		(9	)

Reserve at June 30, 2014	$	17		$	2		$	—		$	—		$	2		$	21

Shared Service Center Transition

In January 2014, the Company announced its intention to open a new Europe, Middle East and Africa (“EMEA”) Shared Service Center in Riga, Latvia, and to close its Leuven, Belgium site, subject to the Belgian information and consultation process, which was successfully completed in June 2014. These proposed actions were developed following an extensive evaluation of the Company’s shared service capabilities in the EMEA region and a determination that the proposed future EMEA Shared Service Center will enable the Company to provide the highest quality of service at the most competitive cost.

The Company has recorded $15 million and $1 million of cash charges during the nine and three months ended June 30, 2014, respectively, related to this plan, comprised primarily of employee severance. The Company expects that the majority of actions related to the transition of the shared service center will occur in calendar 2014 and result in total cash charges between $22 million and $26 million. Through June 30, 2014, the Company has made $1 million in cash payments related to this plan, mainly related to transition costs, and expects to make cash payments of $5 million in the fourth quarter of fiscal 2014 and the remainder (between $17 million and $21 million) in fiscal 2015.

As of June 30, 2014, Cabot has $14 million of accrued restructuring costs in the Consolidated Balance Sheet related to this closure which is mainly comprised of accrued severance charges.

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 affected approximately 90 carbon black employees, was driven by the facility’s manufacturing inefficiencies and raw materials costs.

The Company has recorded pre-tax charges of $2 million and $18 million in the nine months ended June 30, 2014 and 2013, respectively, related to this closure and less than $1 million and $2 million for the three months ended June 30, 2014 and 2013, respectively. Fiscal 2014 charges are comprised primarily of site demolition, clearing and environmental remediation whereas fiscal 2013 costs were comprised of asset impairment charges.

Through June 30, 2014, the consolidated joint venture has recorded pre-tax restructuring costs of approximately $20 million comprised mainly of accelerated depreciation and asset write-offs of $15 million, severance charges of $2 million, site demolition, clearing and environmental remediation charges of $2 million, and other closure related charges of $1 million. CMSB’s net income or loss is attributable to Cabot Corporation and to the noncontrolling interest in the joint venture. The portion of the charges that are allocable to the noncontrolling interest in CMSB (49%) are recorded within Net income (loss) attributable to noncontrolling interests, net of tax, in the Consolidated Statements of Operations.

The Company expects that the majority of actions related to closure of the plant will be completed in fiscal 2014 and result in total pre-tax charges to the consolidated joint venture of approximately $23 million. The expected charges are comprised of asset impairments and accelerated depreciation of $15 million, site demolition, clearing and environmental remediation of $5 million, severance charges of $2 million, and other closure related charges of $1 million.

Cumulative net cash outlays related to this plan are expected to be approximately $8 million comprised primarily of $6 million for site demolition, clearing and environmental remediation, $1 million for severance, and $1 million for other closure related charges. Through June 30, 2014, CMSB has made approximately $3 million in cash payments related to this plan related mainly to severance and site demolition and clearing costs.

CMSB expects to make net cash payments of $5 million during the remainder of fiscal 2014 and thereafter mainly comprised of site demolition, clearing and environmental remediation costs. These amounts exclude any proceeds that may be received from the sale of land or other manufacturing assets.

As of June 30, 2014, Cabot has $1 million of accrued restructuring costs in the Consolidated Balance Sheets related to this closure which is mainly comprised of accrued severance and other charges.

Other Activities

The Company has recorded pre-tax charges of approximately $6 million and $7 million during the first nine months of fiscal 2014 and fiscal 2013, respectively, and $2 million for the each of the three months ended June 30, 2014 and 2013 related to restructuring activities at several other locations. Fiscal 2014 charges are comprised mainly of accelerated depreciation and asset write-offs whereas fiscal 2013 costs are comprised mainly of severance-related charges. The Company anticipates recording additional charges of $2 million during the remainder of fiscal 2014 and thereafter related to these actions.

Through June 30, 2014, Cabot has made cash payments of $16 million related to these activities and expects to pay $3 million in the remainder of fiscal 2014 and thereafter mainly for severance and other closure related costs at the impacted locations.

As of June 30, 2014, Cabot has $3 million of accrued severance and other closure related costs in the Consolidated Balance Sheets related to these activities.

Previous Actions and Sites Pending Sale

Beginning in fiscal 2009, the Company entered into several different restructuring plans which have been substantially completed, pending the sale of former manufacturing sites in Thane, India, Stanlow, U.K. and Hong Kong. The Company has incurred total cumulative pre-tax charges of approximately $163 million related to these plans through June 30, 2014 comprised of $67 million for severance charges, $65 million for accelerated depreciation and asset impairments, $10 million for environmental, demolition and site clearing costs, and $22 million of other closure related charges partially offset by gains on asset sales of $1 million. These amounts do not include any gain that may be recorded if the Company successfully sells its land rights and certain manufacturing related assets in India and Hong Kong or its land in the U.K.

Pre-tax restructuring expenses related to these plans were approximately $1 million and $2 million during the first nine months of fiscal 2014 and 2013, respectively, and less than $1 million in each of the three months ended June 30, 2014 and 2013, respectively.

Since fiscal 2009, Cabot has made net cash payments of $85 million related to these plans and expects to pay approximately $2 million in the remainder of fiscal 2014 and thereafter. The remaining payments consist mainly of environmental and other closure related costs. These amounts do not include any proceeds that may be received if the Company successfully sells its land rights and certain manufacturing related assets in India and Hong Kong or its land in the U.K.

As of June 30, 2014, Cabot has $3 million of accrued environmental and other closure related costs in the Consolidated Balance Sheets related to these activities.