Note P. Restructuring

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

	Years Ended September 30
	2015		2014		2013
	(Dollars in millions)
Cost of sales	$	10	$	12	$	28
Selling and administrative expenses		11		17		7
Total	$	21	$	29	$	35

Details of these restructuring activities and the related reserves for fiscal 2015 and 2014 were 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		18			1			4			1			5			29
Costs charged against assets and other		—			—			(4	)		—			—			(4	)
Cash paid		(8	)		(1	)		—			(1	)		(5	)		(15	)
Foreign currency translation adjustment		(1	)		—			—			—			—			(1	)
Reserve at September 30, 2014	$	16		$	2		$	—		$	—		$	1		$	19
Charges		9			—			5			—			7			21
Costs charged against assets and other		—			—			(5	)		—			—			(5	)
Cash paid		(18	)		—			—			—			(6	)		(24	)
Foreign currency translation adjustment		(2	)		—			—			—			—			(2	)
Reserve at September 30, 2015	$	5		$	2		$	—		$	—		$	2		$	9

2016 Plan

On October 20, 2015, in response to challenging macroeconomic conditions, the Company announced its intention to restructure its operations subject to local consultation requirements and processes in certain locations.

In addition, on November 11, 2015, the Company announced that it had committed to a plan to close its carbon black manufacturing facility in Merak, Indonesia. It is anticipated that manufacturing operations at this location will cease by the end of January 2016 and the production in Asia will be consolidated in the Company’s Cilegon, Indonesia and other global carbon black production sites to meet demand. As proposed, these combined 2016 plan actions would result in a reduction of approximately 370 positions across the Company’s global locations. In response to current market conditions, these actions are intended to result in a more competitive cost structure.

Business Service Center Transition

In January 2014, the Company announced its intention to open a new Europe, Middle East and Africa (“EMEA”) business 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 actions were developed following an extensive evaluation of the Company’s business service capabilities in the EMEA region and a determination that the future EMEA business service center will enable the Company to provide the highest quality of service at the most competitive cost.

During fiscal 2015 and 2014, the Company has recorded pre-tax restructuring charges of $6 million and $18 million, respectively, comprised primarily of employee severance costs and other transition costs. The majority of actions related to the transition of the business service center have been completed and have resulted in total charges of approximately $24 million comprised of $16 million of severance charges and $8 million of other transition costs including training costs and redundant salaries. Through September 30, 2015, the Company has made $20 million in cash payments related to this plan, comprised of $13 million of severance payments and $7 million of other transition related costs, and expects to make cash payments of approximately $2 million, comprised mainly of severance, in fiscal 2016. The difference between the initial accrual and subsequent cash payments was due to changes in foreign exchange rates.

As of September 30, 2015, 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 Port Dickson, Malaysia Manufacturing Facility

On April 26, 2013, the Company announced that the Board of its carbon black joint venture, Cabot Malaysia Sdn. Bhd. (“CMSB”), decided to cease production at its Port Dickson, Malaysia facility. The facility ceased production in June 2013. The Company holds a 50.1 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.

During fiscal 2015, 2014 and 2013, the Company recorded pre-tax restructuring charges related to this plan of less than $1 million, $2 million and $18 million, respectively. These pre-tax restructuring costs were 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 (49.9%) are recorded within Net income (loss) attributable to noncontrolling interests, net of tax, in the Consolidated Statements of Operations. The majority of actions related to closure of the plant were completed in fiscal 2014.

Cumulative net cash outlays related to this plan are expected to be approximately $4 million comprised primarily of $1 million for site demolition, clearing and environmental remediation, $2 million for severance, and $1 million for other closure related charges and does not include any gain expected to be recorded on the sale of land. Through September 30, 2015, 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 $1 million during fiscal 2016 and thereafter mainly comprised of site demolition, clearing and environmental remediation costs. Approximately $8 million is expected to be received from the sale of land in fiscal 2016, pending the completion of certain activities.

As of September 30, 2015, Cabot has less than $1 million of accrued restructuring costs in the Consolidated Balance Sheets related to this closure which is mainly comprised of accrued environmental and other charges.

Other Activities

The Company has recorded pre-tax charges of approximately $13 million, $8 million and $13 million during fiscal 2015, 2014 and 2013, respectively, related to restructuring activities at several other locations. Fiscal 2015 charges are comprised of $7 million of severance charges, $4 million of assets write-offs and accelerated depreciation and $2 million of other costs and were comprised of charges at the Company’s corporate headquarters in Boston, Massachusetts and Specialty Fluids facility in Bergen, Norway, as well as other locations. Fiscal 2014 charges are comprised of accelerated depreciation and asset write-offs of $5 million and severance charges of $3 million and were comprised of charges at the Company’s carbon black facilities in Port Dickson, Malaysia and Maua, Brazil, as well as other locations. Fiscal 2013 costs are comprised of $8 million of severance charges, $3 million of accelerated depreciation and asset write-offs and $2 million of other expenses and were comprised of charges at the Company’s research and development facility in Billerica, Massachusetts, certain Purification Solutions sites, and other locations. The Company anticipates that it will record additional charges of less than $1 million in fiscal 2016 related to these actions.

Through September 30, 2015, Cabot has made cash payments of $23 million related to these activities and expects to pay $5 million in fiscal 2016 mainly for severance and other closure related costs at the impacted locations.

As of September 30, 2015, Cabot has $5 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, and Hong Kong. The Company has incurred total cumulative pre-tax charges of approximately $165 million related to these plans through September 30, 2015, comprised of $67 million for severance charges, $66 million for accelerated depreciation and asset impairments, $10 million for environmental, demolition and site clearing costs, and $23 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 or Hong Kong.

Pre-tax restructuring expenses related to these plans were approximately $2 million, $1 million and $3 million during fiscal 2015, 2014 and 2013, respectively. Fiscal 2015 charges are comprised mainly of severance, accelerated depreciation and other expenses. Fiscal 2014 charges are comprised mainly of environmental charges and other post closure costs. Fiscal 2013 charges are comprised mainly of severance, accelerated depreciation and other expenses. Since fiscal 2009, Cabot has made net cash payments of $87 million related to these plans and expects to pay approximately $1 million in fiscal 2016 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 or Hong Kong.

As of September 30, 2015, Cabot has $2 million of accrued environmental, severance and other closure related costs in the Consolidated Balance Sheets related to these activities.