10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-5667

Cabot Corporation

(Exact name of registrant as specified in its charter)

Delaware	04-2271897
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Two Seaport Lane Boston, Massachusetts	02210-2019
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 345-0100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o  (Do not check if smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

As of February 3, 2016 the Company had 62,358,741 shares of Common Stock, par value $1.00 per share, outstanding.

CABOT CORPORATION

INDEX

Part I.	Financial Information
	Item 1.	Financial Statements (unaudited)
		Consolidated Statements of Operations for the Three Months Ended December 31, 2015 and 2014	3
		Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended December 31, 2015 and 2014	4
		Consolidated Balance Sheets as of December 31, 2015 and September 30, 2015	5
		Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2015 and 2014	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
	Item 4.	Controls and Procedures	40
Part II.	Other Information
	Item 1.	Legal Proceedings	40
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 6.	Exhibits	41

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Part I. Financial Information

Item 1. Financial Statements

CABOT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	Three Months Ended December 31,
	2015			2014
	(In millions, except share and per share amounts)
Net sales and other operating revenues	$	603		$	812
Cost of sales		504			655
Gross profit		99			157
Selling and administrative expenses		71			78
Research and technical expenses		16			15
Income from operations		12			64
Interest and dividend income		1			1
Interest expense		(13	)		(13	)
Other expense		(8	)		(1	)
(Loss) income from continuing operations		(8	)		51
Benefit (provision) for income taxes		5			(3	)
Equity in earnings of affiliated companies, net of tax		—			1
Net (loss) income		(3	)		49
Net income attributable to noncontrolling interests,    net of tax		4			4
Net (loss) income attributable to Cabot Corporation		(7	)		45
Weighted-average common shares outstanding, in millions:
Basic		62.5			64.1
Diluted		62.5			64.6
Income per common share:
Basic:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.70
Diluted:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.69
Dividends per common share	$	0.22		$	0.22

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

UNAUDITED

	Three Months Ended December 31,
	2015			2014
	(In millions)
Net (loss) income	$	(3	)	$	49
Other comprehensive loss, net of tax
Foreign currency translation adjustment (net of tax benefit of $- and $1)		(47	)		(103	)
Pension and other postretirement benefit liability adjustments
Pension and other postretirement benefit liability adjustments arising during the    period (net of tax provision of $- and $6)		(1	)		21
Other comprehensive loss		(48	)		(82	)
Comprehensive loss		(51	)		(33	)
Net income attributable to noncontrolling interests		4			4
Noncontrolling interests foreign currency translation adjustment, net of tax		(3	)		(2	)
Comprehensive income attributable to noncontrolling interests, net of tax		1			2
Comprehensive loss attributable to Cabot Corporation	$	(52	)	$	(35	)

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

UNAUDITED

	December 31,		September 30,
	2015		2015
	(In millions)
Current assets:
Cash and cash equivalents	$	84	$	77
Accounts and notes receivable, net of reserve for doubtful accounts of $8 and $7		437		477
Inventories:
Raw materials		65		69
Work in process		4		1
Finished goods		261		287
Other		39		40
Total inventories		369		397
Prepaid expenses and other current assets		66		54
Deferred income taxes		43		43
Total current assets		999		1,048
Property, plant and equipment, net		1,315		1,383
Goodwill		153		154
Equity affiliates		54		57
Intangible assets, net		149		153
Assets held for rent		90		86
Deferred income taxes		153		152
Other assets		42		42
Total assets	$	2,955	$	3,075

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT CORPORATION

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

UNAUDITED

	December 31,			September 30,
	2015			2015
	(In millions, except share
	and per share amounts)
Current liabilities:
Notes payable	$	7		$	22
Accounts payable and accrued liabilities		376			389
Income taxes payable		24			28
Deferred income taxes		1			1
Current portion of long-term debt		301			1
Total current liabilities		709			441
Long-term debt		670			970
Deferred income taxes		59			59
Other liabilities		235			240
Redeemable preferred stock		27			27
Commitments and contingencies (Note G)
Stockholders’ equity:
Preferred stock:
Authorized: 2,000,000 shares of $1 par value		—			—
Issued and Outstanding : None and none
Common stock:
Authorized: 200,000,000 shares of $1 par value
Issued:  62,596,786 and 62,704,966 shares
Outstanding: 62,350,493 and 62,458,396 shares		63			63
Less cost of 246,293 and 246,570 shares of common treasury stock		(8	)		(8	)
Additional paid-in capital		—			—
Retained earnings		1,448			1,478
Accumulated other comprehensive loss		(344	)		(299	)
Total Cabot Corporation stockholders' equity		1,159			1,234
Noncontrolling interests		96			104
Total stockholders' equity		1,255			1,338
Total liabilities and stockholders’ equity	$	2,955		$	3,075

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	Three Months Ended
	December 31,
	2015			2014
Cash Flows from Operating Activities:
Net (loss) income	$	(3	)	$	49
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization		41			45
Long-lived asset impairment charge (Note J)		23			—
Deferred tax benefit		—			(7	)
Employee benefit plan settlement		—			18
Equity in net income of affiliated companies		—			(1	)
Non-cash compensation		3			4
Other non-cash (income) expense		8			—
Changes in assets and liabilities:
Accounts and notes receivable		30			23
Inventories		16			7
Prepaid expenses and other current assets		(13	)		(2	)
Accounts payable and accrued liabilities		(6	)		(73	)
Income taxes payable		(6	)		(2	)
Other liabilities		(13	)		(14	)
Cash dividends received from equity affiliates		3			3
Other		—			6
Cash provided by operating activities		83			56
Cash Flows from Investing Activities:
Additions to property, plant and equipment		(24	)		(41	)
Proceeds from the sale of land		7			—
Change in assets held for rent		(1	)		(3	)
Cash used in investing activities		(18	)		(44	)
Cash Flows from Financing Activities:
Repayments under financing arrangements		(3	)		(3	)
Increase (decrease) in notes payable, net		—			1
(Repayments of) proceeds from issuance of commercial paper, net		(11	)		117
Repayments of long-term debt		—			(32	)
Purchases of common stock		(14	)		(47	)
Proceeds from sales of common stock		1			2
Cash dividends paid to common stockholders		(14	)		(14	)
Cash (used in) provided by financing activities		(41	)		24
Effects of exchange rate changes on cash		(17	)		(15	)
Increase in cash and cash equivalents		7			21
Cash and cash equivalents at beginning of period		77			67
Cash and cash equivalents at end of period	$	84		$	88

The accompanying notes are an integral part of these consolidated financial statements.

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CABOT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015

UNAUDITED

A. Basis of Presentation

The consolidated financial statements include the accounts of Cabot Corporation (“Cabot” or the “Company”) and its wholly owned subsidiaries and majority-owned and controlled U.S. and non-U.S. subsidiaries. Additionally, Cabot considers consolidation of entities over which control is achieved through means other than voting rights. Intercompany transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required by Form 10-K. Additional information may be obtained by referring to Cabot’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (“2015 10-K”).

The financial information submitted herewith is unaudited and reflects all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods ended December 31, 2015 and 2014. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of the results to be expected for the fiscal year.

B. Significant Accounting Policies

Revenue Recognition and Accounts Receivable

Cabot recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Cabot generally is able to ensure that products meet customer specifications prior to shipment. If the Company is unable to determine that the product has met the specified objective criteria prior to shipment or if title has not transferred because of sales terms, the revenue is considered “unearned” and is deferred until the revenue recognition criteria are met.

Shipping and handling charges related to sales transactions are recorded as sales revenue when billed to customers or included in the sales price. Taxes collected on sales to customers are excluded from revenues.

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segments.

	Three Months Ended
	December 31,
	2015			2014
Reinforcement Materials		51	%		59	%
Performance Chemicals		36	%		29	%
Purification Solutions		12	%		10	%
Specialty Fluids		1	%		2	%

Cabot derives the substantial majority of its revenues from the sale of products in Reinforcement Materials and Performance Chemicals. Revenue from these products is typically recognized when the product is shipped and title and risk of loss have passed to the customer. The Company offers certain of its customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized and are estimated based on historical experience and contractual obligations. Cabot periodically reviews the assumptions underlying its estimates of discounts and volume rebates and adjusts its revenues accordingly.

Revenue in Purification Solutions is typically recognized when the product is shipped and title and risk of loss have passed to the customer. For major activated carbon injection systems projects, revenue is recognized using the percentage-of-completion method.

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Revenue in Specialty Fluids arises primarily from the rental of cesium formate. This revenue is recognized throughout the rental period based on the contracted rental terms. Customers are also billed and revenue is recognized, typically at the end of the job, for cesium formate product that is not returned. The Company also generates revenues from cesium formate sold outside of a rental process and revenue is recognized upon delivery of the fluid.

Cabot maintains allowances for doubtful accounts based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable and other economic information on both a historical and prospective basis. Customer account balances are charged against the allowance when it is probable the receivable will not be recovered. There were no material changes in the allowance for any of the years presented. There is no material off-balance sheet credit exposure related to customer receivable balances.

Intangible Assets and Goodwill Impairment

The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value assigned to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but is reviewed for impairment annually as of May 31, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value. A reporting unit, for the purpose of the impairment test, is at or below the operating segment level, and constitutes a business for which discrete financial information is available and regularly reviewed by segment management. The reporting units with goodwill balances are Reinforcement Materials, Purification Solutions, and Fumed Metal Oxides. The separate businesses included within Performance Chemicals are considered separate reporting units. As such, the goodwill balance relative to Performance Chemicals is recorded in the Fumed Metal Oxides reporting unit.

For the purpose of the goodwill impairment test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, an additional quantitative evaluation is performed under the two-step impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. If based on the quantitative evaluation the fair value of the reporting unit is less than its carrying amount, the Company performs an analysis of the fair value of all assets and liabilities of the reporting unit. If the implied fair value of the reporting unit’s goodwill is determined to be less than its carrying amount, an impairment is recognized for the difference. The fair value of a reporting unit is based on discounted estimated future cash flows. The fair value is also benchmarked against a market approach using the guideline public companies method. The assumptions used to estimate fair value include management’s best estimates of future growth rates, operating cash flows, capital expenditures and discount rates over an estimate of the remaining operating period at the reporting unit level. Should the fair value of any of the Company’s reporting units decline below its carrying amount because of reduced operating performance, market declines, changes in the discount rate, or other conditions, charges for impairment may be necessary. Based on the Company’s most recent annual goodwill impairment test performed as of May 31, 2015, the fair values of the Reinforcement Materials and Fumed Metal Oxides reporting units were substantially in excess of their carrying values.  The fair value of the Purification Solutions reporting unit was less than its carrying amount and an impairment was recorded in the third fiscal quarter of 2015. Due to the impairment recorded as of June 30, 2015, the fair value of the Purification Solutions reporting unit was insignificantly higher than its carrying value as of the last impairment date. No events occurred subsequent to the last impairment evaluation that would suggest that it is more likely than not that the carrying values of any of our reporting units exceeded their fair value.

Nonetheless, the future growth in the Purification Solutions segment is highly dependent on achieving the expected volumes and margins in the activated carbon based mercury removal business. These volumes and margins are highly dependent on demand for mercury removal products and the Company’s successful realization of its anticipated share of volumes in this business. The expected demand for mercury removal products significantly depends on: (1) the implementation and enforcement of environmental laws and regulations, particularly those that would require U.S. based coal-fired electric utilities to reduce the quantity of air pollutants they release, including mercury, to comply with the Mercury and Air Toxics Standards (“MATS”) issued by the U.S. Environmental Protection Agency (“EPA”) and (2) other factors such as the anticipated usage of activated carbon in the coal-fired energy units. The MATS regulation has been subject to legal challenge and, in June 2015, the U.S. Supreme Court held that the EPA unreasonably failed to consider costs in determining whether it is necessary and appropriate to regulate hazardous air pollutants, including mercury, emitted by coal-fired utilities, and remanded the case back to the United States Court of Appeals for the District of Columbia Circuit Court for further proceedings. On December 15, 2015, the D.C. Circuit Court ruled to keep the MATS

9

regulation in place while the EPA works to address the cost analysis required by the U.S. Supreme Court’s decision. EPA has indicated that it will complete this work by April 2016.

The Company uses assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets requires the use of significant judgment with regard to assumptions used in the valuation model. The Company estimates the fair value of identifiable acquisition-related intangible assets principally based on projections of cash flows that will arise from these assets. The projected cash flows are discounted to determine the fair value of the assets at the dates of acquisition.

Definite-lived intangible assets, which are comprised of trademarks, customer relationships and developed technologies, are amortized over their estimated useful lives and are reviewed for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. The Company recognized an impairment on intangible assets associated with the Purification Solutions business in the third fiscal quarter of 2015 and no events have been subsequently identified that would require an additional impairment evaluation.

Long-lived Assets Impairment

The Company’s long-lived assets primarily include property, plant and equipment, intangible assets, long-term investments and assets held for rent. The carrying values of long-lived assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable.

To test for impairment of assets, the Company generally uses a probability-weighted estimate of the future undiscounted net cash flows of the assets over their remaining lives to determine if the value of the asset is recoverable. Long-lived assets are grouped with other assets and liabilities at the lowest level for which independent identifiable cash flows are determinable.

An asset impairment is recognized when the carrying value of the asset is not recoverable based on the analysis described above, in which case the asset is written down to its fair value. If the asset does not have a readily determinable market value, a discounted cash flow model may be used to determine the fair value of the asset. In circumstances when an asset does not have separate identifiable cash flows, an impairment charge is recorded when the Company no longer intends to use the asset.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful lives. The depreciable lives for buildings, machinery and equipment, and other fixed assets are twenty to twenty-five years, ten to twenty-five years, and three to twenty-five years, respectively. The cost and accumulated depreciation for property, plant and equipment sold, retired, or otherwise disposed of are removed from the Consolidated Balance Sheets and resulting gains or losses are included in earnings in the Consolidated Statements of Operations. Expenditures for repairs and maintenance are charged to expenses as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated.

Income Tax in Interim Periods

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period.

Valuation allowances are provided against the future tax benefits that arise from the deferred tax assets in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Inventory Valuation

Inventories are stated at the lower of cost or market. The cost of all carbon black inventories in the U.S. is determined using the last-in, first-out (“LIFO”) method. Had the Company used the first-in, first-out (“FIFO”) method instead of the LIFO method for

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such inventories, the value of those inventories would have been $28 million and $30 million higher as of December 31, 2015 and September 30, 2015, respectively. The cost of Specialty Fluids inventories, which are classified as assets held for rent, is determined using the average cost method. The cost of other U.S. and non-U.S. inventories is determined using the first-in, first-out (“FIFO”) method.

Cabot reviews inventory for both potential obsolescence and potential declines in anticipated selling prices. In this review, the Company makes assumptions about the future demand for and market value of the inventory, and based on these assumptions estimates the amount of any obsolete, unmarketable, slow moving, or overvalued inventory. Cabot writes down the value of these inventories by an amount equal to the difference between the cost of the inventory and its estimated net realizable value.

Pensions and Other Postretirement Benefits

The Company recognizes the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The Company is required to recognize as a component of other comprehensive income, net of tax, the actuarial gains/losses and prior service costs/credits that arise but were not previously required to be recognized as components of net periodic benefit cost. Other comprehensive income is adjusted as these amounts are later recognized in income as components of net periodic benefit cost.

Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income, which is included as a component of stockholders’ equity, includes unrealized gains or losses on available-for-sale marketable securities and derivative instruments, currency translation adjustments in foreign subsidiaries, translation adjustments on foreign equity securities and minimum pension liability adjustments.

Recent Accounting Pronouncements

In May 2014, the FASB issued a new standard related to the “Revenue from Contracts with Customers” which amends the existing accounting standards for revenue recognition. The standard requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This standard is applicable for fiscal years beginning after December 15, 2017 and for interim periods within those years and early adoption is permitted for the fiscal years beginning after December 15, 2016. The Company expects to adopt this standard on October 1, 2018. The Company is currently evaluating the impact the adoption of this standard may have on its consolidated financial statements.

In April 2015, the FASB issued a new standard simplifying the presentation of debt issuance costs by requiring debt issuance costs to be presented as a reduction of the corresponding debt liability. This will make the presentation of debt issuance costs consistent with the presentation of debt discounts or premiums. This standard is applicable for fiscal years beginning after December 15, 2015 and for interim periods within those years and early adoption is permitted. The Company expects to adopt this standard on October 1, 2016. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

In November 2015, the FASB issued a new standard that amends the existing accounting standard for Income Taxes and simplifies the presentation of deferred income taxes.  This will require that deferred income tax assets and liabilities be classified as noncurrent on the balance sheet.  This standard is applicable for fiscal years beginning after December 15, 2016 and for interim periods within those years and early adoption is permitted.  The Company is evaluating this standard and the timing of its adoption. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

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C. Employee Benefit Plans

Net periodic defined benefit pension and other postretirement benefit costs include the following:

	Three Months Ended December 31,
	2015						2014						2015					2014
	Pension Benefits												Postretirement Benefits
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign		U.S.			Foreign
	(Dollars in millions)
Service cost	$	—		$	2		$	—		$	2		$	—		$	—	$	—		$	—
Interest cost		1			2			2			3			—			—		—			—
Expected return on plan assets		(3	)		(3	)		(3	)		(4	)		—			—		—			—
Amortization of prior service credit		—			—			—			—			(1)			—		(1	)		—
Amortization of actuarial loss		—			1			—			1			—			—		—			—
Settlement and curtailment cost (credit)		—			—			—			18			(1	)		—		—			—
Net periodic (credit) benefit cost	$	(2	)	$	2		$	(1	)	$	20		$	(2	)	$	—	$	(1	)	$	—

Settlement of employee benefit plan

Effective October 1, 2014, the Company transferred the defined benefit obligations and pension plan assets in one of its foreign defined benefit plans to a multi-employer plan. As a result of the transfer, a pre-tax charge of $18 million was recorded in the three months ended December 31, 2014 as reflected in Settlement costs in the table above. The pre-tax charge consists of $27 million released from Accumulated other comprehensive (loss) income (“AOCI”) and $2 million of employer contributions at the time of the settlement, partially offset by an $11 million release of the pension liability. The settlement charge has been recorded primarily in Cost of sales in the Consolidated Statements of Operations.

D. Goodwill and Intangible Assets

Cabot had goodwill balances of $153 million and $154 million at December 31, 2015 and September 30, 2015, respectively. The carrying amount of goodwill attributable to each reportable segment with goodwill balances and the changes in those balances during the three month period ended December 31, 2015 are as follows:

	Reinforcement Materials			Performance Chemicals		Purification Solutions		Total
	(Dollars in millions)
Balance at September 30, 2015	$	55		$	9	$	90	$	154
Foreign currency impact		(1	)		—		—		(1	)
Balance at December 31, 2015	$	54		$	9	$	90	$	153

The following table provides information regarding the Company’s intangible assets:

	December 31, 2015							September 30, 2015
	Gross Carrying Value		Accumulated Amortization			Net Intangible Assets		Gross Carrying Value		Accumulated Amortization			Net Intangible Assets
	(Dollars in millions)
Intangible assets with finite lives
Developed technologies	$	48	$	(2	)	$	46	$	48	$	(1	)	$	47
Trademarks		15		—			15		16		—			16
Customer relationships		95		(7	)		88		96		(6	)		90
Total intangible assets	$	158	$	(9	)	$	149	$	160	$	(7	)	$	153

Intangible assets are amortized over their estimated useful lives, which range from fourteen to twenty-five years, with a weighted average amortization period of approximately nineteen years. Amortization expense for the three months ended December 31, 2015 and 2014 was $2 million and $4 million, respectively, and is included in Cost of sales and Selling and

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administrative expenses in the Consolidated Statements of Operations. Total amortization expense is estimated to be approximately $9 million each year for the next five fiscal years.

E. Stockholders’ Equity

In fiscal 2007, the Board of Directors authorized Cabot to repurchase up to ten million shares of Cabot’s common stock in the open market or in privately negotiated transactions. This authorization did not have a set expiration date. During the first quarter of fiscal 2015, Cabot repurchased 925,700 shares of its common stock under this authorization.

In January 2015, the Board of Directors authorized Cabot to repurchase up to five million shares of its common stock in the open market or in privately negotiated transactions and cancelled the previous authorization. Cabot has repurchased 1,594,300 shares of its common stock under this authorization. As of December 31, 2015, 3,405,700 shares remain available for repurchase under the current authorization. The Company retired the repurchased shares and recorded the excess of the purchase price over par value to additional paid-in capital until such amount was reduced to zero and then charged the remainder against retained earnings.

During the first three months of both fiscal 2016 and 2015, Cabot paid cash dividends of $0.22 per share of common stock for a total of $14 million.

Noncontrolling interest

The following table illustrates the noncontrolling interest activity for the periods presented:

	2015			2014
	(Dollars in millions)
Balance at September 30	$	104		$	122
Net income attributable to noncontrolling interests		4			4
Noncontrolling interest foreign currency translation    adjustment		(3	)		(2	)
Noncontrolling interest dividends		(9	)		—
Balance at December 31	$	96		$	124

The dividends declared during the three months ended December 31, 2015 were not paid during the period.

F. Accumulated Other Comprehensive Loss

Comprehensive income combines net (loss) income and other comprehensive income items, which are reported as components of stockholders’ equity in the accompanying Consolidated Balance Sheets.

Changes in each component of AOCI, net of tax, are as follows:

	Currency Translation Adjustment			Unrealized Gains on Investments		Pension and Other Postretirement Benefit Liability Adjustments			Total
	(Dollars in millions)
Balance at September 30, 2015, attributable to Cabot    Corporation	$	(239	)	$	2	$	(62	)	$	(299	)
Other comprehensive loss before reclassifications		(47	)		—		—			(47	)
Amounts reclassified from accumulated other    comprehensive (loss) income		—			—		(1	)		(1	)
Net other comprehensive items		(286	)		2		(63	)		(347	)
Less: Noncontrolling interest		(3	)		—		—			(3	)
Balance at December 31, 2015, attributable to Cabot    Corporation	$	(283	)	$	2	$	(63	)	$	(344	)

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The amounts reclassified out of AOCI and into the Consolidated Statements of Operations in the three months ended December 31, 2015 and 2014 are as follows:

		Three Months Ended
	Affected Line Item in the Consolidated	December 31,
	Statements of Operations	2015			2014
		(Dollars in millions)
Pension and other postretirement    benefit liability adjustment
Amortization of actuarial losses	Net Periodic Benefit Cost - see    Note C for details	$	1		$	1
Amortization of prior service cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		(1	)
Settlement and curtailment (credit) cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		27
Total before tax			(1	)		27
Tax impact	Benefit for income taxes		—			(6	)
Total after tax		$	(1	)	$	21

G. Commitments and Contingencies

Purchase Commitments

Cabot has entered into long-term purchase agreements primarily for the purchase of raw materials. Under certain of these agreements the quantity of material being purchased is fixed, but the price paid changes as market prices change. For those commitments, the amounts included in the table below are based on market prices at December 31, 2015.

	Payments Due by Fiscal Year
	Remainder of Fiscal 2016		2017		2018		2019		2020		Thereafter		Total
	(Dollars in millions)
Reinforcement Materials	$	144	$	136	$	135	$	132	$	96	$	1,702	$	2,345
Performance Chemicals		44		50		37		32		29		155		347
Purification Solutions		10		7		1		—		—		—		18
Total	$	198	$	193	$	173	$	164	$	125	$	1,857	$	2,710

Guarantee Agreements

Cabot has provided certain indemnities pursuant to which it may be required to make payments to an indemnified party in connection with certain transactions and agreements. In connection with certain acquisitions and divestitures, Cabot has provided routine indemnities with respect to such matters as environmental, tax, insurance, product and employee liabilities. In connection with various other agreements, including service and supply agreements with customers, Cabot has provided indemnities for certain contingencies and routine warranties. Cabot is unable to estimate the maximum potential liability for these types of indemnities as a maximum obligation is not explicitly stated in most cases and the amounts, if any, are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be reasonably estimated. The duration of the indemnities vary, and in many cases are indefinite. Cabot has not recorded any liability for these indemnities in the consolidated financial statements, except as otherwise disclosed.

Contingencies

Cabot is a defendant, or potentially responsible party, in various lawsuits and environmental proceedings wherein substantial amounts are claimed or at issue.

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Environmental Matters

As of December 31, 2015 and September 30, 2015, Cabot had $15 million and $16 million, respectively, reserved for environmental matters. These environmental matters mainly relate to closed sites. These reserves represent Cabot’s best estimates of the probable costs to be incurred at those sites where costs are reasonably estimable based on the Company’s analysis of the extent of clean up required, alternative clean-up methods available, abilities of other responsible parties to contribute and its interpretation of laws and regulations applicable to each site. Cash payments related to these environmental matters were less than $1 million in the first three months of fiscal 2016 and 2015, respectively. Cabot reviews the adequacy of the reserves as circumstances change at individual sites and adjusts the reserves as appropriate. Almost all of Cabot’s environmental issues relate to sites that are mature and have been investigated and studied and, in many cases, are subject to agreed upon remediation plans. However, depending on the results of future testing, changes in risk assessment practices, remediation techniques and regulatory requirements, newly discovered conditions, and other factors, it is reasonably possible that the Company could incur additional costs in excess of environmental reserves currently recorded. Management estimates, based on the latest available information, that any such future environmental remediation costs that are reasonably possible to be in excess of amounts already recorded would be immaterial to the Company’s consolidated financial statements.

Other Matters

Respirator Liabilities

Cabot has exposure in connection with a safety respiratory products business that a subsidiary acquired from American Optical Corporation (“AO”) in an April 1990 asset purchase transaction. The subsidiary manufactured respirators under the AO brand and disposed of that business in July 1995. In connection with its acquisition of the business, the subsidiary agreed, in certain circumstances, to assume a portion of AO’s liabilities, including costs of legal fees together with amounts paid in settlements and judgments, allocable to AO respiratory products used prior to the 1990 purchase by the Cabot subsidiary. In exchange for the subsidiary’s assumption of certain of AO’s respirator liabilities, AO agreed to provide to the subsidiary the benefits of: (i) AO’s insurance coverage for the period prior to the 1990 acquisition and (ii) a former owner’s indemnity of AO holding it harmless from any liability allocable to AO respiratory products used prior to May 1982. As more fully described in the 2015 10-K, the respirator liabilities generally involve claims for personal injury, including asbestosis, silicosis and coal worker’s pneumoconiosis, allegedly resulting from the use of respirators that are alleged to have been negligently designed and/or labeled. Neither Cabot, nor its past or present subsidiaries, at any time manufactured asbestos or asbestos-containing products. At no time did this respiratory product line represent a significant portion of the respirator market.

As of December 31, 2015 and September 30, 2015, there were approximately 37,000 and 38,000 claimants, respectively, in pending cases asserting claims against AO in connection with respiratory products. Cabot has a reserve to cover its expected share of liability for existing and future respirator liability claims. At December 31, 2015 and September 30, 2015, the reserve was $10 million and $11 million, respectively. Cash payments related to this liability were $1 million in the first three months of both fiscal 2016 and 2015.

Other

The Company has various other lawsuits, claims and contingent liabilities arising in the ordinary course of its business and with respect to the Company’s divested businesses. In the opinion of the Company, although final disposition of some or all of these other suits and claims may impact the Company’s consolidated financial statements in a particular period, they are not expected, in the aggregate, to have a material adverse effect on the Company’s consolidated financial statements.

H. Income Tax

Effective Tax Rate

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
(Benefit) Provision for income taxes	$	(5	)	$	3
Effective tax rate		74	%		5	%

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During the first quarter of fiscal 2016, the Company recorded a tax benefit of $5 million, resulting in an effective tax rate of 74%. This amount included net discrete tax benefits of $6 million, primarily comprised of the net tax benefit from certain foreign exchange gains and losses, the renewal of the U.S. Research and Experimentation credit and releases of reserves for uncertain tax positions. During the first quarter of fiscal 2015, the Company recorded a tax provision of $3 million, resulting in an effective tax rate of 5%. This amount included net discrete tax benefits of $13 million, primarily comprised of the tax benefit from the change in accounting for uncertain tax positions, the renewal of the U.S. Research and Experimentation credit, and releases of reserves for uncertain tax positions.

Uncertainties

Cabot files U.S. federal and state and non-U.S. income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2015 tax years remain subject to examination by the United States Internal Revenue Service (“IRS”) and various tax years from 2005 through 2015 remain subject to examination by the respective state tax authorities. In significant non-U.S. jurisdictions, various tax years from 2004 through 2015 remain subject to examination by their respective tax authorities. Cabot’s significant non-U.S. jurisdictions include China, France, Germany, Italy, Japan, and the Netherlands.

Certain Cabot subsidiaries are under audit in jurisdictions outside of the U.S. In addition, certain statutes of limitations are scheduled to expire in the near future. It is reasonably possible that a change in the unrecognized tax benefits may also occur within the next twelve months related to the settlement of one or more of these audits, however, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.

During the three months ended December 31, 2015, Cabot released uncertain tax positions of $2 million due to the expirations of statutes of limitations in various jurisdictions.

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I. Earnings Per Share

The following tables summarize the components of the basic and diluted earnings per common share computations:

	Three Months Ended
	December 31,
	2015			2014
	(Dollars and shares in millions, except per share amounts)
Basic EPS:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends and dividend equivalents to    participating securities		—			—
Less: Undistributed earnings allocated to    participating securities(1)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Weighted average common shares and    participating securities outstanding		62.9			64.6
Less: Participating securities(1)		0.4			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.1
Amounts per share - basic:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.70
Diluted EPS(2) :
(Loss) earnings allocated to common shareholders	$	(7	)	$	45
Plus: (Loss) earnings allocated to participating securities		—			—
Less: Adjusted earnings allocated to participating    securities(3)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Adjusted weighted average common shares    outstanding		62.5			64.1
Effect of dilutive securities:
Common shares issuable(4)		—			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.6
Amounts per share - diluted:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.69

⁽¹⁾ Participating securities consist of shares of unvested time-based restricted stock units.

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Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common and participating shareholders. Undistributed earnings are allocated to common and participating shareholders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Calculation of undistributed earnings:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends declared on common stock		14			14
Less: Dividends declared on participating    securities		—			—
Undistributed (loss) earnings	$	(21	)	$	31
Allocation of undistributed (loss) earnings:
Undistributed (loss) earnings allocated to common    shareholders	$	(21	)	$	31
Undistributed (loss) earnings allocated to participating    shareholders		—			—
Undistributed (loss) earnings	$	(21	)	$	31

⁽²⁾ Due to the Company’s net loss position, dividends on participating securities were not added back to the loss available to common shares for the three months ended December 31, 2015 when calculating diluted EPS.  

⁽³⁾ Undistributed earnings are adjusted for the assumed distribution of dividends to the dilutive securities, which are described in (4) below, and then reallocated to participating securities.

⁽⁴⁾ Represents incremental shares of common stock from the (i) assumed exercise of stock options issued under Cabot’s equity incentive plans; (ii) assumed issuance of shares to employees pursuant to the Company’s Deferred Compensation and Supplemental Retirement Plan; and (iii) assumed issuance of shares under outstanding performance-based restricted stock unit awards issued under Cabot’s equity incentive plans.The weighted average common shares outstanding for the three months ending December 31, 2015 excludes 1,083,358 shares as those shares would be antidilutive due to the Company’s net loss position. For the three months ended December 31, 2014, 325,500 incremental shares of common stock were not included in the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.

J. Restructuring

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

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Cost of sales	$	37	$	2
Selling and administrative expenses		6		5
Research and technical expenses		5		—
Total	$	48	$	7

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Details of all restructuring activities and the related reserves during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Environmental Remediation		Asset Sales			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	5		$	2	$	—		$	—		$	2		$	9
Charges (credit)		25			—		(2	)		23			2			48
Costs charged against assets / liabilities		—			—		(5	)		(23	)		—			(28	)
Cash (paid) received		(11	)		—		7			—			(3	)		(7	)
Reserve at December 31, 2015	$	19		$	2	$	—		$	—		$	1		$	22

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. Cabot’s plan has resulted in a reduction of approximately 300 positions across the Company’s global locations. These actions are intended to result in a more competitive cost structure.

The Company has recorded pre-tax charges of approximately $24 million in the first three months of fiscal 2016, and expects to record an additional $4 million through the rest of fiscal 2016 related to these actions.   The charges recorded and anticipated are comprised of severance, employee benefits and other transition costs.

Cumulative net cash outlays related to these actions are expected to be approximately $28 million, comprised of severance, employee benefits and other transition costs.  Through December 31, 2015, the Company has made $11 million in cash payments related to this plan and expects to make $15 million in cash payments through the remainder of fiscal 2016 and $2 million thereafter.

As of December 31, 2015, Cabot has $14 million of accrued severance costs in the Consolidated Balance Sheet related to this plan.

Additionally, on November 11, 2015, Cabot announced that it had committed to closing its carbon black manufacturing facility in Merak, Indonesia. The decision to close this plant and to consolidate production in Asia using the Company’s Cilegon, Indonesia and other Asian and global carbon black production sites to meet regional demand was driven by the financial performance at the Merak facility in the past several years. Manufacturing operations ceased at the end of January 2016 and approximately 50 employees were affected.

The Company has recorded pre-tax charges of approximately $24 million in the first three months of fiscal 2016 related to this closure, comprised of $22 million of asset impairments and accelerated depreciation and $2 million of severance and employee benefits. The asset impairment charges reflect the write-down of the long-lived assets group that is no longer in use to its fair value.

Future anticipated site closure costs for the Merak facility, anticipated to be recorded through the remainder of fiscal 2016, are $6 million for site remediation and other miscellaneous costs.

Net cash outlays related to this closure are expected to be approximately $8 million, substantially all of which is expected to be paid through the remainder of fiscal 2016.

As of December 31, 2015, Cabot has $2 million of accrued severance costs in the Consolidated Balance Sheet related to the Merak facility closure.

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Details of the 2016 restructuring activities, including the Merak facility closure, during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	—		$	—		$	—		$	—
Charges		25			22			1			48
Costs charged against assets / liabilities		1			(22	)		—			(21	)
Cash paid		(10	)		—			(1	)		(11	)
Reserve at December 31, 2015	$	16		$	—		$	—		$	16

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.

The 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. There were no charges related to this plan recorded in the first fiscal quarter of 2016 and $4 million was recorded related to this plan in the first fiscal quarter of 2015.  

Through December 31, 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 $1 million, comprised mainly of severance, in the remainder of fiscal 2016.  The difference between the initial accrual and subsequent cash payments was due to changes in foreign exchange rates.

As of December 31, 2015, Cabot has $1 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.

Through December 31, 2015, the Company recorded cumulative net pre-tax restructuring charges related to this plan of $19 million, comprised mainly of accelerated depreciation and asset write-offs of $16 million, severance charges of $2 million, site demolition, clearing and environmental remediation charges of $2 million, and other closure related charges of $1 million, partially offset by the gain from the sale of land of $2 million in fiscal 2016. CMSB’s net income or loss is attributable to Cabot Corporation and to the noncontrolling interest in the joint venture.

The Company has recorded a net pre-tax gain of $1 million, and a net pre-tax charge of less than $1 million in the three  months ended December 31, 2015 and 2014, respectively. The portion of the charges that are allocable to the noncontrolling interest in CMSB (49.9%) are recorded within Net income 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.

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Cumulative net cash received related to this plan is $3 million, comprised of $7 million received from the sale of land, partially offset by approximately $2 million for severance, $1 million for site demolition, clearing and environmental remediation, and $1 million for other closure related charges.

CMSB expects to make cash payments of less than $1 million during the remainder of fiscal 2016 mainly for site demolition, clearing and environmental remediation costs.

As of December 31, 2015, Cabot has less than $1 million of accrued restructuring costs in the Consolidated Balance Sheets related to this closure, which is mainly for accrued environmental and other charges.

Other Activities

The Company has recorded other pre-tax restructuring charges of approximately $1 million during each of the first quarters of fiscal 2016 and 2015.  Fiscal 2016 charges are comprised mainly of accelerated depreciation and severance costs whereas fiscal 2015 charges are comprised of severance costs. Future charges related to these actions are anticipated to be less than $1 million in the remainder of fiscal 2016 and thereafter.

As of December 31, 2015, Cabot has $3 million of accrued severance and other closure related costs in the Consolidated Balance Sheets related to these activities which is expected to be paid through early fiscal 2017.

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 December 31, 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. The Company anticipates that it will record a gain on the sale of land rights in Hong Kong of $8 million during fiscal 2016.

Pre-tax restructuring expenses related to these plans were less than $1 million and $2 million during the first three months of fiscal 2016 and 2015, respectively.   Since fiscal 2009, Cabot has made net cash payments of $87 million related to these plans and expects to receive approximately $9 million from the sale of land rights in Hong Kong during fiscal 2016, partially offset by payments of approximately $2 million for environmental and other closure related costs.

As of December 31, 2015, Cabot has $2 million of accrued environmental  and other closure related costs in the Consolidated Balance Sheets related to these activities.

K. Financial Instruments and Fair Value Measurements

The FASB authoritative guidance on fair value measurements defines fair value, provides a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. The disclosures focus on the inputs used to measure fair value. The guidance establishes the following hierarchy for categorizing these inputs:

Level 1	—	Quoted market prices in active markets for identical assets or liabilities
Level 2	—	Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs)
Level 3	—	Significant unobservable inputs

There were no transfers of financial assets or liabilities measured at fair value between Level 1 and Level 2, or transfers into or out of Level 3, during the first three months of either fiscal 2016 or 2015.

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At December 31, 2015 and September 30, 2015, the fair value of Guaranteed investment contracts, included in Other assets on the Consolidated Balance Sheets, was $11 million and $12 million, respectively. Guaranteed investment contracts were classified as Level 2 instruments within the fair value hierarchy as the fair value determination was based on other observable inputs.

At December 31, 2015 and September 30, 2015, the fair values of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued liabilities, and notes payable and variable rate debt approximated their carrying values due to the short-term nature of these instruments. The carrying value and fair value of the long-term fixed rate debt were $0.96 billion and $1.01 billion, respectively, as of December 31, 2015 and $0.96 billion and $1.02 billion, respectively, as of September 30, 2015. The fair values of Cabot’s fixed rate long-term debt and capital lease obligations are estimated based on comparable quoted market prices at the respective period ends. The carrying amounts of Cabot’s floating rate long-term debt and capital lease obligations approximate their fair values. All such measurements are based on observable inputs and are classified as Level 2 within the fair value hierarchy. The valuation technique used is the discounted cash flow model.

L. Derivatives

Interest Rate Risk Management

Cabot’s objective is to maintain a certain fixed-to-variable interest rate mix on the Company’s debt obligations. Cabot may enter into interest rate swaps as a hedge of the underlying debt instruments to effectively change the characteristics of the interest rate without changing the debt instrument. As of both December 31, 2015 and September 30, 2015, there were no derivatives held to manage interest rate risk.

Foreign Currency Risk Management

Cabot’s international operations are subject to certain risks, including currency exchange rate fluctuations and government actions. Cabot endeavors to match the currency in which its debt is issued to the currency of the Company’s major, stable cash receipts. In some situations Cabot has issued debt denominated in U.S. dollars and then entered into cross currency swaps that exchange the dollar principal and interest payments into a currency where the Company expects long-term, stable cash receipts.

Additionally, the Company has foreign currency exposure arising from its net investments in foreign operations. Cabot, from time to time, enters into cross-currency swaps to mitigate the impact of currency rate changes on the Company’s net investments.

The Company also has foreign currency exposure arising from the denomination of monetary assets and liabilities in foreign currencies other than the functional currency of a given subsidiary as well as the risk that currency fluctuations could affect the dollar value of future cash flows generated in foreign currencies. Accordingly, Cabot uses short-term forward contracts to minimize the exposure to foreign currency risk. In certain situations where the Company has forecasted purchases under a long-term commitment or forecasted sales denominated in a foreign currency, Cabot may enter into appropriate financial instruments in accordance with the Company’s risk management policy to hedge future cash flow exposures.

The following table provides details of the derivatives held as of December 31, 2015 and September 30, 2015 to manage foreign currency risk.

		Notional Amount, net
Description	Borrowing	December 31, 2015	September 30, 2015	Hedge Designation
Forward Foreign Currency Contracts (1)	N/A	USD 7 million	USD 2 million	No designation

⁽¹⁾ Cabot’s forward foreign exchange contracts are denominated primarily in the British pound sterling, Czech koruna, and Indonesian rupiah.

Accounting for Derivative Instruments and Hedging Activities

The Company determines the fair value of financial instruments using quoted market prices whenever available. When quoted market prices are not available for various types of financial instruments (such as forwards, options and swaps), the Company uses standard models with market-based inputs, which take into account the present value of estimated future cash flows and the ability of the financial counterparty to perform. For interest rate and cross-currency swaps, the significant inputs to these models are

22

interest rate curves for discounting future cash flows. For forward foreign currency contracts, the significant inputs are interest rate curves for discounting future cash flows, and exchange rate curves of the foreign currency for translating future cash flows.

Fair Value Hedge

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current period earnings.

Cash Flow Hedge

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is recorded in Accumulated other comprehensive (loss) income and reclassified to earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current period earnings.

Other Derivative Instruments

From time to time, the Company may enter into certain derivative instruments that may not be designated as hedges for accounting purposes, which include cross currency swaps, foreign currency forward contracts and commodity derivatives. For cross currency swaps and foreign currency forward contracts not designated as hedges, the Company uses standard models with market-based inputs. The significant inputs to these models are interest rate curves for discounting future cash flows, and exchange rate curves of the foreign currency for translating future cash flows. In determining the fair value of the commodity derivatives, the significant inputs to valuation models are quoted market prices of similar instruments in active markets. Although these derivatives do not qualify for hedge accounting, Cabot believes that such instruments are closely correlated with the underlying exposure, thus managing the associated risk. The gains or losses from changes in the fair value of derivative instruments that are not accounted for as hedges are recognized in current period earnings.

As of both December 31, 2015 and September 30, 2015, the fair value of derivative instruments were immaterial and were presented in Prepaid expenses and other current assets and Accounts payable and accrued liabilities on the Consolidated Balance Sheets.

The net after-tax amounts to be reclassified from AOCI to earnings within the next 12 months are expected to be immaterial.

M. Venezuela

Cabot owns 49% of an operating carbon black affiliate in Venezuela, which is accounted for as an equity affiliate, through wholly-owned subsidiaries that carry the investment and receive its dividends. As of December 31, 2015, these subsidiaries carried the operating affiliate investment of $13 million and held 17 million bolivars (less than $1 million) in cash.

During each of the three month periods ended December 31, 2015 and 2014, the Company received dividends in the amounts of $2 million which were paid in U.S. dollars.

A significant portion of the Company’s operating affiliate’s sales are exports denominated in U.S. dollars. The Venezuelan government mandates that a certain percentage of the dollars collected from these sales be converted into bolivars. The operating affiliate and the Company’s wholly-owned subsidiaries used an exchange rate that was available to Cabot when converting these dollars into bolivars to remeasure their bolivar denominated monetary accounts. The exchange rate made available to us on December 31, 2015 was 52 bolivars to the U.S. dollar.

The operating entity has generally been profitable. The Company continues to closely monitor developments in Venezuela and their potential impact on the recoverability of its equity affiliate investment.

Any future change in the exchange rate made available to the Company or opening of additional parallel markets could cause the Company to change the exchange rate it uses and result in gains or losses on the bolivar denominated assets held by its operating affiliate and wholly-owned subsidiaries.

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N. Financial Information by Segment

The Company identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information. The Company has determined that all of its businesses are operating segments. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Operating segments are aggregated into a reportable segment if the operating segments are determined to have similar economic characteristics and if the operating segments are similar in the following areas: i) nature of products and services; ii) nature of production processes; iii) type or class of customer for their products and services; iv) methods used to distribute the products or provide services; and v) if applicable, the nature of the regulatory environment.

The Company has four reportable segments: Reinforcement Materials, Performance Chemicals, Purification Solutions and Specialty Fluids.

The Reinforcement Materials segment represents the rubber blacks and elastomer composites product lines.

Performance Chemicals is comprised of two businesses: (i) our Specialty Carbons and Formulations business, which manufactures and sells specialty grades of carbon black, specialty compounds and inkjet colorants, and (ii) our Metal Oxides business, which manufactures and sells fumed silica, fumed alumina and dispersions thereof and aerogel.The net sales from each of these businesses for the three months ended December 31, 2015 and 2014 are as follows:

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Specialty Carbons and Formulations	$	140	$	157
Metal Oxides		67		72
Total Performance Chemicals	$	207	$	229

The Purification Solutions segment represents the Company’s activated carbon business and the Specialty Fluids segment includes cesium formate oil and gas drilling fluids and high-purity fine cesium chemicals product lines.

Reportable segment operating profit (loss) before interest and taxes (“Segment EBIT”) is presented for each reportable segment in the financial information by reportable segment table below on the line entitled Income (loss) from continuing operations before taxes. Segment EBIT excludes certain items, meaning items management does not consider representative of segment results. In addition, Segment EBIT includes Equity in earnings (loss) of affiliated companies, net of tax, the full operating results of a contractual joint venture in Purification Solutions, royalties, Net income attributable to noncontrolling interests, net of tax, and discounting charges for certain Notes receivable, but excludes Interest expense, foreign currency transaction gains and losses, interest income, dividend income, unearned revenue, the effects of LIFO accounting for inventory, general unallocated expense and unallocated corporate costs.

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Financial information by reportable segment is as follows:

	Reinforcement Materials		Performance Chemicals		Purification Solutions			Specialty Fluids		Segment Total		Unallocated and Other(1)			Consolidated Total
	(Dollars in millions)
Three Months Ended December 31, 2015
Revenues from external customers(2)	$	288	$	207	$	66		$	7	$	568	$	35		$	603
Income (loss) from continuing operations    before taxes(3)	$	26	$	50	$	(5	)	$	—	$	71	$	(79	)	$	(8	)
Three Months Ended December 31, 2014
Revenues from external customers(2)	$	460	$	229	$	76		$	16	$	781	$	31		$	812
Income (loss) from continuing operations    before taxes(3)	$	53	$	39	$	(1	)	$	6	$	97	$	(46	)	$	51

⁽¹⁾ Unallocated and Other includes certain items and eliminations necessary to reflect management’s reporting of operating segment results. These items are reflective of the segment reporting presented to the Chief Operating Decision Maker.

⁽²⁾ “Unallocated and Other revenues from external customers” reflects royalties, other operating revenues, external shipping and handling costs, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain Notes receivable. Details are provided in the table below:

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Royalties, other operating revenues, the impact of unearned revenue, the    removal of 100% of the sales of an equity method affiliate and discounting    charges for certain Notes receivable.	$	9	$	4
Shipping and handling fees		26		27
Total	$	35	$	31

⁽³⁾ Income (loss) from continuing operations before taxes that are categorized as Unallocated and Other includes:

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Interest expense	$	(13	)	$	(13	)
Total certain items, pre-tax(a)		(58	)		(26	)
Equity in (earnings) loss of affiliated companies, net of tax(b)		—			(1	)
Unallocated corporate costs(c)		(13	)		(12	)
General unallocated income(d)		5			6
Total	$	(79	)	$	(46	)

^(a) Certain items are items that management does not consider to be representative of operating segment results and they are, therefore, excluded from Segment EBIT. Certain items, pre-tax, for the three months ended December 31, 2015 include $48 million related to global restructuring activities, $8 million related to foreign currency loss on the devaluation of the Argentine peso, and $2 million related to legal and environmental matters and reserves. Certain items, pre-tax, for the three months ended December 31, 2014 include $7 million related to global restructuring activities, $1 million for acquisition and integration-related charges and $18 million related to an employee benefit plan settlement charge.

^(b) Equity in (earnings) loss of affiliated companies, net of tax, is included in Segment EBIT and is removed from Unallocated and other to reconcile to income (loss) from operations before taxes.

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

^(d) General unallocated income consists of gains (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, the profit or loss related to the corporate adjustment for unearned revenue, and the impact of including the full operating results of an equity affiliate in Purification Solutions Segment EBIT.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical to the financial statements if (i) the estimate is complex in nature or requires a high degree of judgment and (ii) different estimates and assumptions were used, the results could have a material impact on the consolidated financial statements. On an ongoing basis, we evaluate our estimates and the application of our policies. We base our estimates on historical experience, current conditions and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The policies that we believe are critical to the preparation of the Consolidated Financial Statements are presented below.

Revenue Recognition and Accounts Receivable

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. We generally are able to ensure that products meet customer specifications prior to shipment. If we are unable to determine that the product has met the specified objective criteria prior to shipment or if title has not transferred because of sales terms, the revenue is considered “unearned” and is deferred until the revenue recognition criteria are met.

Shipping and handling charges related to sales transactions are recorded as sales revenue when billed to customers or included in the sales price. Taxes collected on sales to customers are excluded from revenues.

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segments.

	Three Months Ended
	December 31,
	2015			2014
Reinforcement Materials		51	%		59	%
Performance Chemicals		36	%		29	%
Purification Solutions		12	%		10	%
Specialty Fluids		1	%		2	%

We derive the substantial majority of revenues from the sale of products in Reinforcement Materials and Performance Chemicals. Revenue from these products is typically recognized when the product is shipped and title and risk of loss have passed to the customer. We offer certain customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized and are estimated based on historical experience and contractual obligations. We periodically review the assumptions underlying estimates of discounts and volume rebates and adjust revenues accordingly.

Revenue in Purification Solutions is typically recognized when the product is shipped and title and risk of loss have passed to the customer. For major activated carbon injection systems projects, revenue is recognized using the percentage-of-completion method.

A significant portion of the revenue in Specialty Fluids arises from the rental of cesium formate. This revenue is recognized throughout the rental period based on the contracted rental terms. Customers are also billed and revenue is recognized, typically at the end of the job, for cesium formate product that is not returned. We also generate revenues from cesium formate sold outside of a rental process and revenue is recognized upon delivery of the fluid.

We maintain allowances for doubtful accounts based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable and other economic information on both a historical and prospective basis. Customer account balances are charged against the allowance when it is probable the receivable will not be recovered. There is no material off-balance sheet credit exposure related to customer receivable balances.

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Intangible Assets and Goodwill Impairment

We record tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value assigned to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but is reviewed for impairment annually as of May 31, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value. A reporting unit, for the purpose of the impairment test, is at or below the operating segment level, and constitutes a business for which discrete financial information is available and regularly reviewed by segment management. The separate businesses included within Performance Chemicals are considered separate reporting units. The goodwill balance relative to this segment is recorded in the Metal Oxides reporting unit.

For the purpose of the goodwill impairment test, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, an additional quantitative evaluation is performed under the two-step impairment test. Alternatively, we may elect to proceed directly to the quantitative goodwill impairment test. If based on the quantitative evaluation the fair value of the reporting unit is less than its carrying amount, we perform an analysis of the fair value of all assets and liabilities of the reporting unit. If the implied fair value of the reporting unit’s goodwill is determined to be less than its carrying amount, an impairment is recognized for the difference. The fair value of a reporting unit is based on discounted estimated future cash flows. The fair value is also benchmarked against a market approach using the guideline public companies method. The assumptions used to estimate fair value include management’s best estimates of future growth rates, operating cash flows, capital expenditures and discount rates over an estimate of the remaining operating period at the reporting unit level. Should the fair value of any of our reporting units decline below its carrying amount because of reduced operating performance, market declines, changes in the discount rate, or other conditions, charges for impairment may be necessary. Based on our most recent annual goodwill impairment test performed as of May 31, 2015, the fair values of the Reinforcement Materials and Metal Oxides reporting units were substantially in excess of their carrying values. The fair value of the Purification Solutions reporting unit was less than its carrying amount and an impairment was recorded in the third fiscal quarter of 2015.  Due to the impairment recorded on June 30, 2015, the fair value of the Purification Solutions reporting unit was insignificantly higher than its carrying value as of the last impairment date. No events occurred subsequent to the last impairment evaluation that would suggest that it is more likely than not that the carrying values of any of our reporting units exceeded its fair value.

Nonetheless, the future growth in the Purification Solutions segment is highly dependent on achieving the expected volumes and margins in the activated carbon based mercury removal business. These volumes and margins are highly dependent on demand for mercury removal products and the Company’s successful realization of its anticipated share of volumes in this business. The expected demand for mercury removal products significantly depends on: (1) the implementation and enforcement of environmental laws and regulations, particularly those that would require U.S. based coal-fired electric utilities to reduce the quantity of air pollutants they release, including mercury, to comply with the Mercury and Air Toxics Standards (“MATS”) issued by the U.S. Environmental Protection Agency (“EPA”) and (2) other factors such as the anticipated usage of activated carbon in the coal-fired energy units. The MATS regulation has been subject to legal challenge and, in June 2015, the U.S. Supreme Court held that the EPA unreasonably failed to consider costs in determining whether it is necessary and appropriate to regulate hazardous air pollutants, including mercury, emitted by coal-fired utilities, and remanded the case back to the United States Court of Appeals for the District of Columbia Circuit Court for further proceedings. On December 15, 2015, the D.C. Circuit Court ruled to keep the MATS regulation in place while the EPA works to address the cost analysis required by the U.S. Supreme Court’s decision. EPA has indicated that it will complete this work by April 2016.

We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets requires the use of significant judgment with regard to assumptions used in the valuation model. We estimate the fair value of identifiable acquisition-related intangible assets principally based on projections of cash flows that will arise from these assets. The projected cash flows are discounted to determine the fair value of the assets at the dates of acquisition.

Definite-lived intangible assets, which are comprised of trademarks, customer relationships and developed technologies, are amortized over their estimated useful lives and are reviewed for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. We recognized an impairment on intangible assets associated with the Purification Solutions business in the third fiscal quarter of 2015 and no events have been subsequently identified that would require an additional impairment evaluation.

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Long-lived Assets Impairment

Our long-lived assets primarily include property, plant and equipment, intangible assets, long-term investments and assets held for rent. The carrying values of long-lived assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable.

To test for impairment of assets we generally use a probability-weighted estimate of the future undiscounted net cash flows of the assets over their remaining lives to determine if the value of the asset is recoverable. Long-lived assets are grouped with other assets and liabilities at the lowest level for which independent identifiable cash flows are determinable.

An asset impairment is recognized when the carrying value of the asset is not recoverable based on the analysis described above, in which case the asset is written down to its fair value.  If the asset does not have a readily determinable market value, a discounted cash flow model may be used to determine the fair value of the asset. In circumstances when an asset does not have separate identifiable cash flows, an impairment charge is recorded when we no longer intend to use the asset.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful lives. The depreciable lives for buildings, machinery and equipment, and other fixed assets are twenty to twenty-five years, ten to twenty-five years, and three to twenty-five years, respectively. The cost and accumulated depreciation for property, plant and equipment sold, retired, or otherwise disposed of are removed from the Consolidated Balance Sheets and resulting gains or losses are included in earnings in the Consolidated Statements of Operations. Expenditures for repairs and maintenance are charged to expenses as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated.

Litigation and Contingencies

We are involved in litigation in the ordinary course of business, including personal injury and environmental litigation. After consultation with counsel, as appropriate, we accrue a liability for litigation when it is probable that a liability has been incurred and the amount can be reasonably estimated. The estimated reserves are recorded based on our best estimate of the liability associated with such matters or the low end of the estimated range of liability if we are unable to identify a better estimate within that range. Our best estimate is determined through the evaluation of various information, including claims, settlement offers, demands by government agencies, estimates performed by independent third parties, identification of other responsible parties and an assessment of their ability to contribute, and our prior experience. Litigation is highly uncertain and there is always the possibility of an unusual result in any particular case that may reduce our earnings and cash flows.

The most significant reserves that we have established are for environmental remediation and respirator litigation claims. The amount accrued for environmental matters reflects our assumptions about remediation requirements at the contaminated sites, the nature of the remedies, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. These liabilities can be affected by the availability of new information, changes in the assumptions on which the accruals are based, unanticipated government enforcement action or changes in applicable government laws and regulations, which could result in higher or lower costs.

Our current estimate of the cost of our share of existing and future respirator liability claims is based on facts and circumstances existing at this time. Developments that could affect our estimate include, but are not limited to, (i) significant changes in the number of future claims, (ii) changes in the rate of dismissals without payment of pending silica and non-malignant asbestos claims, (iii) significant changes in the average cost of resolving claims, (iv) significant changes in the legal costs of defending these claims, (v) changes in the nature of claims received, (vi) changes in the law and procedure applicable to these claims, (vii) the financial viability of other parties which contribute to the settlement of respirator claims, (viii) a change in the availability of insurance coverage maintained by certain of the other parties which contribute to the settlement of respirator claims, or the indemnity provided by a former owner of the business, (ix) changes in the allocation of costs among the various parties paying legal and settlement costs and (x) a determination that the assumptions that were used to estimate our share of liability are no longer reasonable. We cannot determine the impact of these potential developments on our current estimate of our share of liability for these existing and future claims. Accordingly, the actual amount of these liabilities for existing and future claims could be different than the reserved amount.

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Income Taxes

Our business operations are global in nature, and we are subject to taxes in numerous jurisdictions. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change based on the political and economic climate in those countries. We file our tax returns in accordance with our interpretations of each jurisdiction’s tax laws.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related tax assets and liabilities. In the ordinary course of our business, there are operational decisions, transactions, facts and circumstances, and calculations which make the ultimate tax determination uncertain. Furthermore, our tax positions are periodically subject to challenge by taxing authorities throughout the world. We have recorded reserves for taxes and associated interest and penalties that may become payable in future years as a result of audits by tax authorities. Any significant impact as a result of changes in underlying facts, law, tax rates, tax audit, or review could lead to adjustments to our income tax expense, our effective tax rate, and/or our cash flow.

We record our tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and our projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

We record benefits for uncertain tax positions based on an assessment of whether the position is more likely than not to be sustained by the taxing authorities. If this threshold is not met, no tax benefit of the uncertain tax position is recognized. If the threshold is met, the tax benefit that is recognized is the largest amount that is greater than 50% likely of being realized upon ultimate settlement. This analysis presumes the taxing authorities’ full knowledge of the positions taken and all relevant facts, but does not consider the time value of money. We also accrue for interest and penalties on these uncertain tax positions and include such charges in the income tax provision in the Consolidated Statements of Operations.

Additionally, we have established valuation allowances against a variety of deferred tax assets, including net operating loss carry forwards, foreign tax credits, and other income tax credits. Valuation allowances take into consideration our ability to use these deferred tax assets and reduce the value of such items to the amount that is deemed more likely than not to be recoverable. Our ability to utilize these deferred tax assets is dependent on achieving our forecast of future taxable operating income over an extended period of time. We review our forecast in relation to actual results and expected trends on a quarterly basis. Failure to achieve our operating income targets may change our assessment regarding the recoverability of our net deferred tax assets and such change could result in a valuation allowance being recorded against some or all of our net deferred tax assets. An increase in a valuation allowance would result in additional income tax expense, while a release of valuation allowances in periods when these tax attributes become realizable would reduce our income tax expense.

Inventory Valuation

Inventories are stated at the lower of cost or market. The cost of all carbon black inventories in the U.S. is determined using the last-in, first-out (“LIFO”) method. Had we used the first-in, first-out (“FIFO”) method instead of the LIFO method for such inventories, the value of those inventories would have been $28 million and $30 million higher as of December 31, 2015 and September 30, 2015, respectively. The cost of Specialty Fluids inventories, which are classified as assets held for rent, is determined using the average cost method. The cost of other U.S. and non-U.S. inventories is determined using the FIFO method. In periods of rapidly rising or declining raw material costs, the inventory method we employ can have a significant impact on our profitability. Under our current LIFO method, when raw material costs are rising, our most recent higher priced purchases are the first to be charged to Cost of sales. If, however, we were using a FIFO method, our purchases from earlier periods, which were at lower prices, would instead be the first charged to Cost of sales. The opposite result could occur during a period of rapid decline in raw material costs.

We review inventory for both potential obsolescence and potential declines in anticipated selling prices periodically. In this review, we make assumptions about the future demand for and market value of our inventory and based on these assumptions estimate the amount of any obsolete, unmarketable, slow moving inventory or overvalued inventory. We write down the value of our inventories by an amount equal to the difference between the cost of the inventory and the estimated market value. Historically, such write-downs have not been material. If actual market conditions are less favorable than those projected by

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management at the time of the assessment, however, additional inventory write-downs may be required, which could reduce our gross profit and our earnings.

Results of Operations

Definition of Terms and Non-GAAP Financial Measures

When discussing our results of operations, we use several terms as described below.

The term “product mix” refers to the mix of types and grades of products sold or the mix of geographic regions where products are sold, and the positive or negative impact this has on the revenue or profitability of the business and/or segment.

The term “LIFO” includes two factors: (i) the impact of current inventory costs being recognized immediately in Cost of sales under a last-in first-out method, compared to the older costs that would have been included in Cost of sales under a first-in first-out method (“Cost of sales impact”); and (ii) the impact of reductions in inventory quantities, causing historical inventory costs to flow through Cost of sales (“liquidation impact”).

The discussion under the heading “Provision for Income Taxes and Reconciliation of Effective Tax Rate to Operating Tax Rate” includes a discussion of our “effective tax rate” and our “operating tax rate” and includes a reconciliation of the two rates. Our operating tax rate is a non-GAAP financial measure and should not be considered as an alternative to our effective tax rate, the most comparable GAAP financial measure. In calculating our operating tax rate, we exclude discrete tax items, which include: i) unusual or infrequent items such as a significant release of a valuation allowance, ii) items related to uncertain tax positions such as the tax impact of audit settlements, interest on tax reserves, and the release of tax reserves from the expiration of statutes of limitations, and iii) other discrete tax items, such as the tax impact of legislative changes and, on a quarterly basis, the timing of losses in certain jurisdictions and the cumulative rate adjustment, if applicable. We also exclude the tax impact of certain items, as defined below in the discussion of Total segment EBIT, on both operating income and the tax provision. Our definition of the operating tax rate may not be comparable to the definition used by other companies. Management believes that the non-GAAP financial measure is useful supplemental information because it helps our investors compare our tax rate year to year on a consistent basis and understand what our tax rate on current operations would be without the impact of these items which we do not believe are reflective of the underlying business results.

Total segment EBIT is a non-GAAP performance measure, and should not be considered an alternative for Income from continuing operations before taxes, the most directly comparable GAAP financial measure. In calculating Total segment EBIT, we make certain adjustments such as excluding certain items, meaning items that management does not consider representative of our fundamental segment results, as well as items that are not allocated to our business segments, such as interest expense and other corporate costs. Our Chief Operating Decision Maker uses segment EBIT to evaluate the operating results of each segment and to allocate resources to the segments. We believe Total segment EBIT provides useful supplemental information for our investors as it is an important indicator of the Company’s operational strength and performance. Investors should consider the limitations associated with this non-GAAP measure, including the potential lack of comparability of this measure from one company to another. A reconciliation of Total segment EBIT to Income from continuing operations before income taxes and equity in earnings (loss) of affiliated companies is provided in Note N of our consolidated financial statements.

Cabot is organized into four reportable business segments: Reinforcement Materials, Performance Chemicals, Purification Solutions and Specialty Fluids. Cabot is also organized for operational purposes into three geographic regions: the Americas; Europe, Middle East and Africa; and Asia Pacific. Discussions of all periods reflect these structures.

Our analysis of our financial condition and operating results should be read with our consolidated financial statements and accompanying notes. Certain reclassifications within the cost of sales presentation for business reporting for the Purification Solutions segment have occurred to be consistent with the presentation of financial information of the other segments, and thus prior period results have been recast to reflect this alignment.

Overview

During the first quarter of fiscal 2016, (Loss) income from continuing operations before income taxes and equity in earnings of affiliated companies decreased compared to the first quarter of fiscal 2015 primarily due to charges associated with restructuring plans, including the planned closure of our carbon black manufacturing plant in Merak, Indonesia.  The plans resulted in charges of

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$48 million during the first three months of fiscal 2016.  In addition, results declined due to margin pressure in Reinforcement Materials, lower project activity in Specialty Fluids, and lower volumes in Purification Solutions, partially offset by improved results in Performance Chemicals.

First Quarter of Fiscal 2016 versus First Quarter of Fiscal 2015—Consolidated

Net Sales and other operating revenues and Gross Profit

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Net sales and other operating revenues	$	603	$	812
Gross profit	$	99	$	157

The $209 million decrease in net sales in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 was due to a less favorable price and product mix (combined $151 million), an unfavorable impact from foreign currency translation ($39 million), and lower volumes ($20 million).  The less favorable price and product mix was primarily due to lower selling prices from price adjustments to customers for decreases in raw material costs.  The lower volumes were driven by lower demand in the Reinforcement Materials, Purification Solutions, and Specialty Fluids segments.

Gross profit decreased by $58 million in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 primarily due to charges associated with restructuring plans and lower unit margins in the Reinforcement Materials segment.

Selling and Administrative Expenses

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Selling and administrative expenses	$	71	$	78

Selling and administrative expenses decreased by $7 million in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 primarily from reduced spending across the Company as a result of cost savings initiatives.

Research and Technical Expenses

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Research and technical expenses	$	16	$	15

Research and technical expenses increased by $1 million in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 due to charges associated with the restructuring of research and technical activities.

Interest and Dividend Income, Interest Expense and Other Expense

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Interest and dividend income	$	1		$	1
Interest expense	$	(13	)	$	(13	)
Other expense	$	(8	)	$	(1	)

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Interest and dividend income and interest expense were consistent in the first quarter of fiscal 2016 as compared to the same period in fiscal 2015.

Other expense in the first quarter of fiscal 2016 increased by $7 million compared to the first quarter of fiscal 2015 due to an unfavorable comparison of foreign currency movements, most notably the devaluation of the Argentine peso by $8 million.

Provision for Income Taxes and Reconciliation of Effective Tax Rate to Operating Tax Rate

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
(Benefit) Provision for income taxes	$	(5	)	$	3
Effective tax rate		74	%		5	%
Impact of discrete tax items:
(1) Unusual or infrequent items		(14	)%		10	%
(2) Items related to uncertain tax positions		(20	)%		16	%
(3) Other discrete tax items		(5	)%		(1	)%
Impact of certain items		(9	)%		(2	)%
Operating tax rate		26	%		28	%

During the first quarter of fiscal 2016, we recorded a tax benefit of $5 million, resulting in an effective tax rate of 74%. This amount included net discrete tax benefits of $3 million, primarily comprised of the net tax benefit from certain foreign exchange gains and losses, the renewal of the U.S. Research and Experimentation credit and releases of reserves for uncertain tax positions. The operating tax rate for the first quarter of fiscal 2016 was 26%. During the first quarter of fiscal 2015, we recorded a tax provision of $3 million, resulting in an effective tax rate of 5%. This amount included net discrete tax benefits of $13 million, primarily comprised of the tax benefit from the change in accounting for uncertain tax positions, the renewal of the U.S. Research and Experimentation credit, and releases of reserves for uncertain tax positions. The operating tax rate for the first quarter of fiscal 2015 was 28%.

We are currently under audit in a number of jurisdictions outside of the U.S. It is possible that some of these audits will be resolved in fiscal 2016, which may impact our tax expense and effective tax rate going forward. We expect our operating tax rate for fiscal 2016 to be between 26% and 28%.

Equity in Earnings (Loss) of Affiliated Companies and Net Income Attributable to Noncontrolling Interests

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Equity in earnings (loss) of affiliated companies, net of tax	$	—	$	1
Net income attributable to noncontrolling interests, net of tax	$	4	$	4

Equity in earnings (loss) of affiliated companies, net of tax, decreased $1 million in the first quarter fiscal 2016 compared to the first quarter of fiscal 2015 due to lower earnings from our Venezuelan equity affiliate.

Net income attributable to noncontrolling interests, net of tax, was consistent in the first quarter of fiscal 2016 as compared to the same period in fiscal 2015.

Net Income Attributable to Cabot Corporation

In the first quarter of fiscal 2016, we reported net (loss) attributable to Cabot Corporation of ($7) million (($0.11) per diluted common share). This is compared to net income attributable to Cabot Corporation of $45 million ($0.69 per diluted common share) in the first quarter of fiscal 2015.

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First Quarter of Fiscal 2016 versus First Quarter of Fiscal 2015—By Business Segment

Total segment EBIT, certain items, other unallocated items and Income from continuing operations before income taxes and equity in earnings (loss) of affiliated companies for the three months ended December 31, 2015 and 2014 are set forth in the table below. The details of certain items and other unallocated items are shown below and in Note N of our consolidated financial statements.

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Total segment EBIT	$	71		$	97
Certain items		(58	)		(26	)
Other unallocated items		(21	)		(20	)
(Loss) income from continuing operations before income taxes    and equity in earnings (loss) of affiliated companies	$	(8	)	$	51

In the first quarter of fiscal 2016, total segment EBIT decreased by $26 million when compared to the same period of fiscal 2015. The decrease was driven by lower unit margins ($22 million) and lower volumes ($14 million) partially offset by lower fixed costs ($11 million).

Certain Items

Details of the certain items for the first quarter of fiscal 2016 and 2015 are as follows:

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Global restructuring activities	$	(48	)	$	(7	)
Acquisition and integration-related charges		—			(1	)
Employee benefit plan settlement		—			(18	)
Foreign currency loss on devaluation		(8	)		—
Legal and environmental matters and reserves		(2	)		—
Total certain items, pre-tax		(58	)		(26	)
Tax-related certain items
Tax impact of certain items		15			6
Discrete tax items		3			13
Total tax-related certain items		18			19
Total certain items after tax	$	(40	)	$	(7	)

Certain items for the first quarter of fiscal 2016 include charges primarily related to restructuring activities, a foreign currency loss from the devaluation of the Argentine peso, and tax-related certain items. Details of restructuring activities are included in Note J of the consolidated financial statements. Tax-related certain items include discrete tax items, which are unusual and infrequent, and the tax impact of certain foreign exchange losses.

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Other Unallocated Items

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Interest expense	$	(13	)	$	(13	)
Equity in earnings of affiliated companies		—			(1	)
Unallocated corporate costs		(13	)		(12	)
General unallocated income		5			6
Total other unallocated items	$	(21	)	$	(20	)

Costs from Total other unallocated items increased by $1 million in the first quarter of fiscal 2016 as compared to the same period in fiscal 2015. General unallocated income decreased $1 million primarily driven by a decrease in the benefit from the cost of sales impact of LIFO accounting ($3 million).

Reinforcement Materials

Sales and EBIT for Reinforcement Materials for the first quarter of fiscal 2016 and fiscal 2015 are as follows:

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Reinforcement Materials Sales	$	288	$	460
Reinforcement Materials EBIT	$	26	$	53

In the first quarter of fiscal 2016, sales in Reinforcement Materials decreased by $172 million when compared to the first quarter of fiscal 2015. The decrease was principally driven by a less favorable price and product mix (combined $138 million), unfavorable comparison from foreign currency translation ($23 million), and lower volumes ($9 million). The less favorable price and product mix impact was primarily due to lower selling prices in the quarter from price adjustments to customers for decreases in raw material costs and lower contract pricing.  Lower volumes were driven by a reduction in contractual volumes in North America and softer demand in China.

EBIT in Reinforcement Materials decreased by $27 million in the first quarter of fiscal 2016 when compared to the same period of fiscal 2015. The decrease was principally driven by lower unit margins ($30 million) and lower volumes ($3 million) partially offset by lower fixed costs ($6 million). Lower unit margins were driven by lower calendar year 2015 contract pricing and increased competition in Asia, unfavorable feedstock-related effects, and lower benefits generated from our energy efficiency investments as a result of lower energy prices. Lower fixed costs were driven primarily by reduced maintenance costs.

Performance Chemicals

Sales and EBIT for Performance Chemicals for the first quarter of fiscal 2016 and fiscal 2015 are as follows:

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Specialty Carbons and Formulations Sales	$	140	$	157
Metal Oxides Sales		67		72
Performance Chemicals Sales	$	207	$	229
Performance Chemicals EBIT	$	50	$	39

In the first quarter of fiscal 2016, sales in Performance Chemicals decreased by $22 million when compared to the first quarter of fiscal 2015. The decrease was due to a less favorable price and product mix (combined $15 million) and the unfavorable impact of foreign currency translation ($12 million), partially offset by a benefit from higher volumes ($4 million).  The change in price and

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product mix was mainly driven by price adjustments to customers for decreases in raw material costs.  Volumes increased 7% in Specialty Carbons and Formulations, particularly from stronger demand in Europe.

EBIT in Performance Chemicals increased by $11 million in the first quarter of fiscal 2016 when compared to the same quarter of fiscal 2015 principally due to favorable unit margins ($8 million), higher volumes ($1 million) and lower fixed costs ($6 million) partially offset by the unfavorable impact of foreign currency translation ($3 million). Unit margins improved primarily due to lower raw material costs.  Lower fixed costs were primarily due to reduced operating expenses.

Purification Solutions

Sales and EBIT for Purification Solutions for the first quarter of fiscal 2016 and fiscal 2015 are as follows:

	Three Months Ended
	December 31,
	2015			2014
	(Dollars in millions)
Purification Solutions Sales	$	66		$	76
Purification Solutions EBIT	$	(5	)	$	(1	)

Sales in Purification Solutions decreased by $10 million in the first quarter of fiscal 2016 when compared to the same period of fiscal 2015 due to lower volumes ($7 million) and the unfavorable impact of foreign currency translation ($4 million), partly offset by improved pricing ($2 million). Lower volumes were driven by lower demand for activated carbon used in air and gas and water applications.

EBIT in Purification Solutions decreased by $4 million in the first quarter of fiscal 2016 when compared to the same quarter of fiscal 2015 due to an unfavorable impact from reducing inventory levels ($7 million) and lower volumes ($4 million). These unfavorable impacts were partially offset by lower fixed costs ($6 million) and improved pricing ($2 million). 

Specialty Fluids

Sales and EBIT for Specialty Fluids for the first quarter of fiscal 2016 and 2015 are as follows:

	Three Months Ended
	December 31,
	2015		2014
	(Dollars in millions)
Specialty Fluids Sales	$	7	$	16
Specialty Fluid EBIT	$	—	$	6

Sales in Specialty Fluids decreased by $9 million in the first quarter of fiscal 2016 when compared to the same period of fiscal 2015, primarily due to lower volumes ($8 million).

EBIT in Specialty Fluids decreased by $6 million in the first quarter of fiscal 2016 when compared to the same period of fiscal 2015 due to lower volumes ($7 million). The decline in volumes was driven by a lower level of both sales and rental volumes as a result of a lower level of project activity, which was caused by the downturn in the oil and gas industry.

Outlook

We are focused on actions that will deliver improved financial performance and we expect our operating results will improve starting in the second quarter of fiscal 2016.   The improvement is expected to come from cost savings related to restructuring actions that have been implemented, improved product mix included in our calendar year 2016 contracts in the Reinforcement Materials segment, continued volume and margin strength in our Performance Chemicals segment, volume growth in the Purification Solutions segment related to the Mercury and Air Toxics Standards regulation, and an increase in project activity in the second half of the year in our Specialty Fluids segment.  The restructuring plans that have been implemented are expected to reduce costs by $55 million in fiscal 2016 as compared to fiscal 2015. 

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Cash Flows and Liquidity

Overview

Our liquidity position, as measured by cash and cash equivalents plus borrowing availability, increased by $269 million during the first three months of fiscal 2016. The increase was largely attributable to increasing the size of our credit facility. At December 31, 2015, we had cash and cash equivalents of $84 million, and current availability under our revolving credit agreement of $1 billion. We had no outstanding balance of commercial paper as of December 31, 2015.

Borrowings under the revolving credit agreement may be used for working capital, letters of credit and other general corporate purposes. The revolving credit agreement contains affirmative and negative covenants, a single financial covenant (debt-to-EBITDA) and events of default customary for financings of this type. At December 31, 2015, we were in compliance with this financial covenant.

We generally manage our cash and debt on a global basis to provide for working capital requirements as needed by region or site. Cash and debt are generally denominated in the local currency of the subsidiary holding the assets or liabilities, except where there are operational cash flow reasons to hold non-functional currency or debt. The vast majority of our cash and cash equivalent holdings tend to be held outside the U.S., as excess cash balances in the U.S. are generally used to repay commercial paper.

We anticipate sufficient liquidity from (i) cash on hand; (ii) cash flows from operating activities; and (iii) cash available from our revolving credit agreement and our commercial paper program to meet our operational and capital investment needs and financial obligations for the foreseeable future. Our liquidity derived from cash flows from operations is, to a large degree, predicated on our ability to collect our receivables in a timely manner, the cost of our raw materials, and our ability to manage inventory levels.

We issued $300 million of 5% fixed rate debt in fiscal 2009 that matures in early fiscal 2017 (October 1, 2016).  Our intention is to refinance these securities prior to maturity during fiscal 2016.

The following discussion of the changes in our cash balance refers to the various sections of our Consolidated Statements of Cash Flows.

Cash Flows from Operating Activities

Cash provided by operating activities, which consists of net income adjusted for the various non-cash items included in income, changes in working capital and changes in certain other balance sheet accounts, totaled $83 million in the first three months of fiscal 2016 compared to $56 million during the same period of fiscal 2015.

Cash provided by operating activities in the first three months of fiscal 2016 was driven primarily by net income excluding the non-cash impact of certain long-lived asset write-offs ($23 million) and depreciation and amortization ($41 million). In addition, there was a decrease in accounts receivable and inventories, largely driven by lower raw material costs and associated price reductions as well as overall lower volumes. Partially offsetting these cash inflows were lower accounts payable and accrued liabilities.

Cash provided from operating activities in the first three months of fiscal 2015 was driven primarily by net income of $49 million plus $45 million of depreciation and amortization. These sources of cash were partially offset by a net increase in working capital. Our working capital increase during the first three months of fiscal 2015 was driven primarily by lower accounts payable and accruals due to the timing and payout of certain corporate accruals.

Cash Flows from Investing Activities

In the three months ended December 31, 2015, investing activities consumed $18 million of cash which was primarily driven by capital expenditures of $24 million, offset by $7 million of proceeds from the sale of land in Port Dickson, Malaysia.  In the three months ended December 31, 2014, investing activities consumed $44 million of cash which was primarily driven by capital expenditures of $41 million.In the first three months of fiscal 2016, capital expenditures were primarily attributed to sustaining and compliance capital projects at our operating facilities.  

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Capital expenditures for fiscal 2016 are expected to be approximately $125 million. Our planned capital spending program for fiscal 2016 is primarily for sustaining and compliance capital projects at our operating facilities.

Cash Flows from Financing Activities

Financing activities consumed $41 million of cash in the first three months of fiscal 2016 compared to providing $24 million of cash in the first three months of fiscal 2015. In the first three months of fiscal 2016, we used our cash for share repurchases, dividend distributions and to repay debt.

In the first three months of fiscal 2015, our overall debt balance increased by $83 million primarily to fund capital expenditures and share repurchases.

Venezuela

We own 49% of an operating carbon black affiliate in Venezuela, which is accounted for as an equity affiliate, through wholly-owned subsidiaries that carry the investment and receive its dividends. As of December 31, 2015, these subsidiaries carried the operating affiliate investment of $13 million and held 17 million bolivars (less than $1 million) in cash.

During each of the periods ended December 31, 2015 and 2014, we received dividends in the amount of $2 million, which were paid in U.S. dollars.

A significant portion of our operating affiliate’s sales are exports denominated in U.S. dollars. The Venezuelan government mandates that a certain percentage of the dollars collected from these sales be converted into bolivars. The operating affiliate and our wholly-owned subsidiaries used an exchange rate that was available to us when converting these dollars into bolivars to remeasure their bolivar denominated monetary accounts. The exchange rate made available to us on December 31, 2015 was 52 bolivars to the U.S. dollar.

The operating entity has generally been profitable. We continue to closely monitor developments in Venezuela and their potential impact on the recoverability of our equity affiliate investment.

Any future change in the exchange rate made available to us or opening of additional parallel markets could cause us to change the exchange rate we use and result in gains or losses on the bolivar denominated assets held by our operating affiliate and wholly-owned subsidiaries.

Purchase Commitments

We have entered into long-term purchase agreements primarily for the purchase of raw materials. Under certain of these agreements the quantity of material being purchased is fixed, but the price paid changes as market prices change. For those commitments, the amounts included in the table below are based on market prices at December 31, 2015.

	Payments Due by Fiscal Year
	Remainder of
	Fiscal 2016		2017		2018		2019		2020		Thereafter		Total
	(Dollars in millions)
Reinforcement Materials	$	144	$	136	$	135	$	132	$	96	$	1,702	$	2,345
Performance Chemicals		44		50		37		32		29		155		347
Purification Solutions		10		7		1		—		—		—		18
Total	$	198	$	193	$	173	$	164	$	125	$	1,857	$	2,710

Off-balance sheet arrangements

We have no material transactions that meet the definition of an off-balance sheet arrangement.

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Forward-Looking Information

This report on Form 10-Q contains “forward-looking statements” under the Federal securities laws. These forward-looking statements address expectations or projections about the future, including our expectations for future financial performance; the benefits we expect to achieve from our restructuring plans; demand for our products; the amount and timing of the charge to earnings we will record and the cash outlays we will make in connection with the closing of certain manufacturing facilities and restructuring initiatives; our estimated future amortization expenses for our intangible assets; the sufficiency of our cash on hand, cash provided from operations and cash available under our credit facilities to fund our cash requirements; uses of available cash including anticipated capital spending and future cash outlays associated with long-term contractual obligations; our expected tax rate for fiscal 2016; and the possible outcome of legal and environmental proceedings. From time to time, we also provide forward-looking statements in other materials we release to the public and in oral statements made by authorized officers.

Forward-looking statements are based on our current expectations, assumptions, estimates and projections about Cabot’s businesses and strategies, market trends and conditions, economic conditions and other factors. These statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control or difficult to predict. If known or unknown risks materialize, or should underlying assumptions prove inaccurate, our actual results could differ materially from those expressed in the forward-looking statements.

In addition to factors described elsewhere in this report, the following are some of the factors that could cause our actual results to differ materially from those expressed in the forward-looking statements: changes in raw material costs; lower than expected demand for our products; the loss of one or more of our important customers; our inability to complete capacity expansions or other development projects, including at our cesium mine in Manitoba, as planned; the timing of implementation of environmental regulations; the availability of raw materials; our failure to develop new products or to keep pace with technological developments; fluctuations in currency exchange rates; patent rights of others; stock and credit market conditions; the timely commercialization of products under development (which may be disrupted or delayed by technical difficulties, market acceptance, competitors’ new products, as well as difficulties in moving from the experimental stage to the production stage); demand for our customers’ products; competitors’ reactions to market conditions; delays in the successful integration of structural changes, including acquisitions or joint ventures; severe weather events that cause business interruptions, including plant and power outages or disruptions in supplier or customer operations; the accuracy of the assumptions we used in establishing reserves for environmental matters and for our share of liability for respirator claims; and the outcome of pending litigation. Other factors and risks are discussed in our 2015 10-K.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued a new standard related to the “Revenue from Contracts with Customers” which amends the existing accounting standards for revenue recognition. The standard requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This standard is applicable for fiscal years beginning after December 15, 2017 and for interim periods within those years and early adoption is permitted for the fiscal years beginning after December 15, 2016. We expect to adopt this standard on October 1, 2018. We are currently evaluating the impact the adoption of this standard may have on our consolidated financial statements.

In April 2015, the FASB issued a new standard simplifying the presentation of debt issuance costs by requiring debt issuance costs to be presented as a reduction of the corresponding debt liability. This will make the presentation of debt issuance costs consistent with the presentation of debt discounts or premiums. This standard is applicable for fiscal years beginning after December 15, 2015 and for interim periods within those years and early adoption is permitted. We expect to adopt this standard on October 1, 2016. The adoption of this standard is not expected to materially impact our consolidated financial statements.

In November 2015, the FASB issued a new standard that amends the existing accounting standard for Income Taxes and simplifies the presentation of deferred income taxes.  This will require that deferred income tax assets and liabilities be classified as noncurrent on the balance sheet.  This standard is applicable for fiscal years beginning after December 15, 2016 and for interim periods within those years and early adoption is allowed.  We are evaluating this standard and the timing of its adoption. The adoption of this standard is not expected to materially impact our consolidated financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk 

Information about market risks for the period ended December 31, 2015 does not differ materially from that discussed under Item 7A of our 2015 10-K.

Item 4. Controls and Procedures

As of December 31, 2015, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Executive Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Principal Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date.

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item I. Legal Proceedings

Respirator Liabilities

We have exposure in connection with a safety respiratory products business that a subsidiary acquired from American Optical Corporation (“AO”) in an April 1990 asset purchase transaction. The subsidiary manufactured respirators under the AO brand and disposed of that business in July 1995. In connection with its acquisition of the business, the subsidiary agreed, in certain circumstances, to assume a portion of AO’s liabilities, including costs of legal fees together with amounts paid in settlements and judgments, allocable to AO respiratory products used prior to the 1990 purchase by the Cabot subsidiary. In exchange for the subsidiary’s assumption of certain of AO’s respirator liabilities, AO agreed to provide to the subsidiary the benefits of: (i) AO’s insurance coverage for the period prior to the 1990 acquisition and (ii) a former owner’s indemnity of AO holding it harmless from any liability allocable to AO respiratory products used prior to May 1982. As more fully described in our 2015 10-K, the respirator liabilities generally involve claims for personal injury, including asbestosis, silicosis and coal worker’s pneumoconiosis, allegedly resulting from the use of respirators that are alleged to have been negligently designed and/or labeled.

As of December 31, 2015 and September 30, 2015, there were approximately 37,000 and 38,000 claimants, respectively, in pending cases asserting claims against AO in connection with respiratory products. We have a reserve to cover our expected share of liability for existing and future respirator liability claims. At December 31, 2015 and September 30, 2015, the reserve was $10 million and $11 million, respectively. Cash payments related to this liability were $1 million in the first three months of both fiscal 2016 and 2015.

Other Matters

We are subject to various other lawsuits, claims and contingent liabilities arising in the ordinary course of our business and with respect to our divested businesses. In our opinion, although final disposition of some or all of these other suits and claims may impact our consolidated financial statements in a particular period, they are not expected, in the aggregate, to have a material adverse effect on our financial position.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

The table below sets forth information regarding Cabot’s purchases of its equity securities during the quarter ended December 31, 2015:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1)
October 1, 2015 – October 31, 2015		—	$	—		—		3,665,700
November 1, 2015 - November 30, 2015		160,000	$	41.40		160,000		3,505,700
December 1, 2015 - December 31, 2015		100,000	$	43.46		100,000		3,405,700
Total		260,000				260,000

⁽¹⁾ On January 13, 2015, Company announced that the Board of Directors authorized us to repurchase up to five million shares of our common stock on the open market or in privately negotiated transactions. This authorization does not have a set expiration date.

Item 6. Exhibits

The following Exhibits are filed herewith:

Exhibit No.	Description
Exhibit 3.1*	By-laws of Cabot Corporation as amended January 8, 2016
Exhibit 31.1*	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
Exhibit 31.2*	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
Exhibit 32**	Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 101.INS*	XBRL Instance Document.
Exhibit 101.SCH*	XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
Exhibit 101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

** Furnished herewith.

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the three months ended December 31, 2015 and 2014; (ii) the Consolidated Statements of Comprehensive (Loss) Income for the three months ended December 31, 2015 and 2014; (iii) the Consolidated Balance Sheets at December 31, 2015 and September 30, 2015; (iv) the Consolidated Statements of Cash Flows for the three months ended December 31, 2015 and 2014; and (v) Notes to Consolidated Financial Statements, December 31, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Cabot Corporation
Date: February 5, 2016	By:	/s/ Eduardo E. Cordeiro
		Eduardo E. Cordeiro
		Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer)
Date: February 5, 2016	By:	/s/ James P. Kelly
		James P. Kelly
		Vice President and Controller (Chief Accounting Officer)

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Exhibit Index

Exhibit No.	Description
Exhibit 3.1*	By-laws of Cabot Corporation as amended January 8, 2016
Exhibit 31.1*	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
Exhibit 31.2*	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
Exhibit 32**	Certifications of the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
Exhibit 101.INS*	XBRL Instance Document.
Exhibit 101.SCH*	XBRL Taxonomy Extension Schema Document.
Exhibit 101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
Exhibit 101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
Exhibit 101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
Exhibit 101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

** Furnished herewith.

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the three months ended December 31, 2015 and 2014; (ii) the Consolidated Statements of Comprehensive (Loss) Income for the three months ended December 31, 2015 and 2014; (iii) the Consolidated Balance Sheets at December 31, 2015 and September 30, 2015; (iv) the Consolidated Statements of Cash Flows for the three months ended December 31, 2015 and 2014; and (v) Notes to Consolidated Financial Statements, December 31, 2015.

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EX-3

Exhibit 3.1

BY-LAWS

OF

CABOT CORPORATION

(As Amended through January 8, 2016)

Section 1.  LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS

1.1These by-laws are subject to the certificate of incorporation of the corporation.  In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation of the corporation and these by-laws as from time to time in effect.

Section 2.STOCKHOLDERS

2.1Annual Meeting.  The annual meeting of stockholders shall be held on such date and at such time as shall be designated by the board of directors each year (which date and time may subsequently be changed at any time, including the year any such designation occurs).

2.2Special Meetings.  A special meeting of the stockholders may be called at any time by the board of directors.  Any such call shall state the place, time, and purposes of the meeting.

2.3Place of Meeting; Adjournment.  Meetings of the stockholders may be held at such place within or without the State of Delaware as may be designated by the board of directors in the call thereof.  When any meeting is convened, the officer presiding at such meeting, if directed by the board of directors, may adjourn the meeting for a period of time not to exceed 30 days if (a) no quorum is present for the transaction of business or (b) the board of directors determines that adjournment is necessary or appropriate to enable the stockholders (i) to consider fully information which the board of directors determines has not been made sufficiently or timely available to stockholders or (ii) otherwise to exercise effectively their voting rights.  The officer presiding at the meeting in such event shall announce the adjournment and date, time and place of reconvening and shall cause notice thereof to be posted at the place of meeting designated in the notice which was sent to the stockholders, and if such date is more than 10 days after the original date of the meeting the secretary or an assistant secretary shall give notice thereof in the manner provided in Section 2.4 of these by-laws.

2.4Notice of Meetings.  Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be

given not less than ten nor more than 60 days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice at the stockholder’s residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at the stockholder’s address as it appears in the records of the corporation.  Such notice shall be given by the secretary or an assistant secretary, or in the case of their death, incapacity or refusal, by another officer or person designated by the board of directors.  As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than 30 days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described.  No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice. 

2.5Quorum of Stockholders.  At any meeting of the stockholders, a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws.  If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting.  Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

2.6Required Vote for Election of Directors.  When a quorum is present at any meeting, a nominee for director shall be elected if the votes properly cast for such nominee’s election exceed the votes properly cast against such nominee’s election (abstentions shall not be considered to be votes cast); provided, however, that the directors shall be elected by a plurality of the votes properly cast at any meeting of stockholders for which (i) the corporation receives a notice that a stockholder has nominated a person for election as a director in compliance with the provisions for advance notice of nominations in Section 2.12 of these by-laws and (ii) such nomination has not been withdrawn on or prior to the tenth day preceding the date on which the corporation mails notice of the meeting to the stockholders. If nominees for director are to be elected by a plurality of the votes properly cast, stockholders shall not be permitted to vote against a nominee.

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2.7Required Vote for Other Matters.  When a quorum is present at any meeting, a majority of the votes properly cast shall decide the question, except as otherwise required by law, by the certificate of incorporation or by these by-laws.  If the corporation issues fractional shares of stock entitled to vote, holders of such fractional shares shall be entitled to exercise voting rights.  

2.8No Action Without Meetings.  Any action required or permitted to be taken by stockholders of the corporation must be taken at a duly called annual or special meeting of the corporation and may not be taken by any consent in writing by such stockholders.

2.9Proxy Representation.  Every stockholder may authorize another person or persons to act for him or her by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting.  Every proxy must be signed by the stockholder or by his or her attorney-in-fact.  No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period.  A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.  A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally.  The authorization of a proxy may but need not be limited to specified action; provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof.

2.10Inspectors.  The directors or the person presiding at the meeting may, but need not, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof.  Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability.  The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes or ballots, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders.  On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them.

2.11List of Stockholders.  The secretary shall prepare and make, or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in

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alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  The original or duplicate stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. 

2.12Advance Notice of Stockholder Proposals and Nominations.  Unless otherwise determined by the board of directors prior to a meeting of the stockholders, the officer presiding at such meeting, determined in accordance with these by-laws, shall determine the order of business and shall have the authority in his or her discretion to regulate the conduct of such meeting, including, without limitation, to impose restrictions on the persons (other than stockholders of the corporation or their duly appointed proxies) who may attend such meeting, to regulate and restrict the making of statements or asking of questions at such meeting and to cause the removal from such meeting of any person who has disrupted or appears likely to disrupt the proceedings at such meeting.  

At a meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting.  To be properly brought before any meeting of the stockholders, nominations of directors and the proposals of other business to be conducted must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) properly brought before the meeting by a stockholder who is a stockholder of record at the time of the giving by such stockholder of the notice provided for in this Section 2.12 below, who shall be entitled to vote for such matters at the meeting and who complies with the requirements of this Section 2.12 with respect to any business sought to be brought before the meeting or the nomination of directors.  Clause (c) of this paragraph shall be the exclusive means for a stockholder to make nominations or propose other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before a meeting of the stockholders.  In addition, unless the board of directors has determined that directors will be elected at a special meeting of the stockholders, no stockholder may nominate directors for election at any special meeting of the stockholders.

In addition to any other applicable requirements, in order for any proposal or nomination to be properly brought before the meeting by a stockholder (other than a stockholder proposal included in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act) the stockholder must have given timely notice thereof in writing to the secretary of the corporation.  To be timely, (a) with respect to an annual meeting of the stockholders held pursuant to Section 2.1 of these by-laws, a stockholder’s notice must be received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders ; provided, however, in the event that the annual meeting of stockholders is called for a date (including any change

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in a date designated by the board of directors pursuant to Section 2.1) more than 60 days prior to such anniversary date, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which public disclosure of the date of such meeting was made, and (b) with respect to a special meeting of the stockholders held pursuant to Section 2.2 of these by-laws, a stockholder’s notice must be received at the principal executive offices of the corporation by the close of business on the 10th day following the day on which public disclosure of the date of such meeting was made.  In no event shall any adjournment or postponement of an annual or special meeting of the stockholders or the announcement thereof commence a new time period for the delivery of such notice by a stockholder.

A stockholder’s notice to the secretary shall set forth as to each proposal or nomination the stockholder proposes to bring before the meeting (a) the name and address of the stockholder making such proposal, (b) the class and number of shares of capital stock of the corporation directly or indirectly held of record, owned beneficially and represented by proxy by such stockholder as of the date of such notice by the stockholder, (c) any “derivative security” (as that term is defined in Rule 16a-1(c) under the Exchange Act) directly or indirectly owned beneficially by the stockholder and any other “pecuniary interest” or “indirect pecuniary interest” (as those terms are defined in Rule 16a-1(a)(2) under the Exchange Act) in the shares of capital stock of the corporation, and (d) all other information that would be required to be included in a proxy statement required to be filed with the Securities and Exchange Commission if, with respect to any such proposal or nomination, such stockholder were a participant in a solicitation subject to Regulation 14A under the Exchange Act (the “Proxy Rules”).  

In addition, if the notice involves a proposal for business, a stockholder’s notice to the secretary shall set forth as to each proposal a brief description of the proposal desired to be brought before the meeting, the reasons for making such proposal at the meeting and any material interest that the stockholder has in the proposal.  If the notice involves the nomination of a director, a stockholder’s notice to the secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address or residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation, if any, which are beneficially owned by the person, (iv) any other information relating to the nominee as would be required to be included in a proxy statement or other filings required to be filed pursuant to the Proxy Rules (including without limitation the written consent of the nominee to being named in the proxy statement as a nominee and to serve as a director if elected) and (v) a statement signed by the person confirming that, if elected, he or she will comply with the corporation’s Global Ethics and Compliance Standards, Policy on Transactions in Securities, Corporate Governance Guidelines and any other applicable rule, regulation, policy or standard of conduct applicable to the directors; and (b) as to the stockholder giving the notice, (i) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons

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specified in the notice and (ii) a description of all direct and indirect compensation and other material monetary arrangements, agreements or understandings during the past three years, and any other material relationship, if any, between or concerning the stockholder and its respective affiliates or associates, or others with whom they are acting in concert, on the one hand, and each person nominated by the stockholder, and his or her respective affiliates, associates and others with whom any of them are acting in concert on the other hand.  In addition, any person nominated by the stockholder shall complete a questionnaire, in a form available from the corporation upon the request of the stockholder, and such completed questionnaire shall be submitted with the stockholder notice contemplated by this Section 2.12.

If the stockholder holds its shares by or through a nominee, the information required to be provided in a notice of the stockholder contemplated by this Section 2.12 shall be provided about the person who has the power to direct the voting and disposition of the shares of capital stock of the corporation and who has a pecuniary interest in such shares in lieu of the stockholder.

Notwithstanding anything in the by-laws to the contrary, no business pertaining to this Section 2.12 shall be conducted at any meeting except in accordance with the procedures set forth in this Section 2.12.   The officer presiding at the meeting shall, if the facts warrant, determine and declare to the meeting that any proposal or nomination, as the case may be, was not properly brought before the meeting in accordance with the provisions of this Section 2.12 and, if the presiding officer should so determine, any proposal not properly brought before the meeting shall not be discussed or voted on and any defective nomination shall be disregarded.

Section 3.BOARD OF DIRECTORS

3.1Number.  The number of directors which shall constitute the whole board shall be not less than three nor more than 17 in number.  Within the foregoing limits, the board of directors shall determine the number of directors, and the number of directors may be increased at any time or from time to time by the directors by vote of a majority of the directors then in office.  The number of directors may be decreased to any number permitted by the foregoing at any time by the directors by vote of a majority of the directors then in office.  The directors shall be classified, with respect to the time for which they severally hold office, into three classes as nearly equal in number as possible: one class whose term expires at the first annual meeting of stockholders after January 21, 1969 (the “Adoption Date”); one class whose term expires at the second annual meeting of stockholders after the Adoption Date; and another class whose term expires at the third annual meeting of stockholders after the Adoption Date, with each such class to hold office until its successors are elected and qualified.  At each annual meeting of stockholders after the Adoption Date, the successors of the class of directors whose term expires at that meeting shall be elected

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to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election.  Directors need not be stockholders. 

3.2Tenure.  Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until a successor is elected and qualified, or until such director sooner dies, resigns, is removed or replaced.

3.3Powers.  The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders.

3.4Vacancies of Directors.  Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.  Any director or directors so chosen shall hold office until the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until their successors are duly elected and shall qualify, unless they sooner die, resign, or are removed or replaced.  The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions.

3.5Committees.  Subject to Section 3.6 of these by-laws, the board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating.  In the absence or disqualification of any member of such committee and his or her alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member.  Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the

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board of directors.  Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 

3.6Executive Committee.  The board of directors shall, by vote of a majority of the whole board, elect from its own number an executive committee, to consist of not less than two members in addition to the chief executive officer, and may from time to time designate or alter, within the limits permitted by this Section 3.6, the duties and powers of such committee, or change its membership.

The executive committee shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation to the extent permitted by Section 141 of the Delaware General Corporation Law, and may authorize the seal of the corporation to be affixed to all papers which may require it, including the power and authority to declare a dividend, to authorize the issuance of stock and to adopt a certificate of ownership and merger; provided that the executive committee shall not have the power or authority in reference to amending the certificate of incorporation of this corporation (except that the executive committee may, to the extent authorized in the vote or votes providing for the issuance of shares of stock adopted by the board of directors, fix the designations and any of the preferences or rights of such shares or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, amending these by-laws, electing or appointing the chief executive officer, treasurer or secretary or filling vacancies in the board of directors or the executive committee.  Each member of the executive committee shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his or her successor is elected and qualified, or until he or she sooner dies, resigns, is removed, is replaced by change of membership, or becomes disqualified by ceasing to be a director.  One-third of the members of the executive committee then in office, but in no case less than two members, shall constitute a quorum for the transaction of business, but any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.

3.7Regular Meetings.  Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine; notice of the first regular meeting following any such determination shall be given to absent directors.  A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders.

3.8Special Meetings.  Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the

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notice of the meeting, when called by the chairman of the board, the vice chairman of the board, the president, or by two or more directors, reasonable notice thereof being given to each director by the secretary or an assistant secretary or by the chairman of the board, the vice chairman of the board, the president or by any one of the directors calling the meeting. 

3.9Notice.  It shall be reasonable and sufficient notice to a director to send notice by mail at least 48 hours or by telegram or telecopy at least 24 hours before the meeting addressed to such director at his or her usual or last known business or residence address or to give notice to a director in person or by telephone at least 24 hours before the meeting.  Notice of a meeting need not be given to any director if a written waiver of notice, executed by a director before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to such director.  Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting.

3.10Quorum.  Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum, but in no case less than two directors.  Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.

3.11Action by Vote.  Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors.

3.12Action Without a Meeting.  Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee.  Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be.

3.13Participation in Meetings by Conference Telephone.  Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law.  Such participation shall constitute presence in person at such meeting.

3.14Compensation.  In the discretion of the board of directors, the directors may be paid their expenses, if any, of attendance at each meeting of the board of

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directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director.  Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings. 

3.15 Interested Directors and Officers.

(a)No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation’s directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because the vote or votes of such director or officer are counted for such purpose, if:

(1)The material facts as to the relationship or interest of such director or officer and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

(2)The material facts as to the relationship or interest of such director or officer and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

(3)The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders.

(b)Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.

Section 4.OFFICERS AND AGENTS

4.1Enumeration; Qualification.  The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, a vice chairman of the board, a chief financial officer, one or more other vice presidents, a general counsel and a controller.  The corporation may also have such agents, if any, as the board of directors from time to time may in its

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discretion choose.  Any two or more offices may be held by the same person.  Officers may be required by the board of directors to secure the faithful performance of their duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine.   

4.2Powers.  Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his or her office and such additional duties and powers as the board of directors may from time to time designate.

4.3Election.  The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time.  At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents.

4.4Tenure.  Officers shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until their respective successors are chosen and qualified unless a shorter period shall have been specified by the terms of their election or appointment, or in each case until they sooner die, resign, are removed or become disqualified.  Agents shall retain their authority at the pleasure of the directors, or the officer by whom they were appointed or by the officer who then holds agent appointive power.

4.5Chairman of the Board of Directors, Vice Chairman of the Board of Directors, President and Vice President.  Unless the board of directors otherwise specifies, the chairman of the board, or if there is none or in the absence or disability of the chairman of the board, the vice chairman of the board, or if there is none or in the absence or disability of the vice chairman of the board, the president shall preside, or designate the person who shall preside, at all meetings of the stockholders, of the board of directors and of the executive committee.

If there is a chairman of the board, unless the board of directors otherwise specifies, the chairman of the board shall be the chief executive officer of the corporation and as such shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation.  

If there is a vice chairman of the board, the vice chairman of the board shall have such duties and powers as shall be designated from time to time by the board of directors or by the chief executive officer.

The president shall have such duties and powers as shall be designated from time to time by the board of directors or by the chief executive officer.

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Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the chief executive officer, except that no vice president who is not a citizen of the United States shall be authorized to act as the chairman of the board, president or other chief executive officer of the corporation in the absence or disability of the person designated chairman of the board, president or other chief executive officer of the corporation in accordance with this Section 4.5 for so long as the corporation is required by the U.S. maritime laws to be a U.S. citizen by reason of its interest, direct or indirect, in any vessel documented under the laws of the United States of America.  

4.6Chief Financial Officer.  The chief financial officer of the corporation shall be responsible for developing, recommending and implementing financial policies of the corporation and have general responsibility for protecting its financial position.  The chief financial officer shall represent the corporation with banks and other financial institutions.

4.7General Counsel and Assistant General Counsels.  The general counsel shall be the chief counseling officer of the corporation in all legal matters and, subject to the control by the board of directors, the general counsel shall have charge of all matters of legal import to the corporation.  The general counsel’s relationship to the corporation shall in all respects be that of an attorney to a client.  The general counsel shall have charge of all litigation of the corporation and keep advised of the progress of all legal proceedings and claims by and against the corporation, or in which it is interested by reason of its ownership and control of other corporations.  The general counsel shall maintain records of all suits and actions of every nature in which the corporation may be a party, or in which it is interested, with sufficient data to show the nature of the case and the proceedings therein, and such records and the papers relating thereto shall be open at all times to the inspection of the directors and the executive officers of the corporation.

The general counsel shall give to the board of directors and to any officer of the corporation, whenever requested to do so, an opinion upon any question affecting the interests of the corporation and when requested by the chairman of the board, the vice chairman of the board, the president, a vice president, or by the board of directors or the executive committee, shall give an opinion upon any subject that may be referred to the general counsel.

The general counsel may, in his or her discretion, retain such independent attorneys, or law firms, in any and all parts of the world, as the general counsel may deem necessary to assist him or her in the performance of his or her duties and to protect and further the interests of the corporation.

The general counsel shall have power and authority to execute in the name of the corporation any and all bonds or stipulations for costs or other purposes connected with legal proceedings in any of the courts of justice, for the protection or enforcement

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of the rights and interest of this corporation; and, by instrument in writing, the general counsel may delegate to any such authority like power and authority to execute such bonds or stipulations.

The assistant general counsel, or, if there are more than one, the assistant general counsels, shall, in the order determined by the general counsel, in the absence or disability of the general counsel perform the duties and exercise the powers of the general counsel and shall perform such other duties and have such other powers as the board of directors and the general counsel may from time to time prescribe.

4.8Treasurer and Assistant Treasurers.  The treasurer shall be in charge of the corporate funds and securities and shall keep, or cause to be kept, full and accurate account of receipts and disbursements in books belonging to the corporation and shall deposit or cause to be deposited all monies and other valuable effects in the name and to the credit of the corporation in such depositaries as may be designated by the board of directors.  The treasurer shall invest surplus funds in such investments as the treasurer shall deem appropriate and pursuant to this authority may buy and sell securities on behalf of the corporation from time to time.  The treasurer shall disburse or cause to be disbursed the funds of the corporation as may be ordered by the board of directors, the chief executive officer, the chief financial officer or such other officer as the chief financial officer may from time to time designate, taking proper vouchers for such disbursements.  The treasurer shall be subject to the direction of the chief financial officer.

The assistant treasurer, if any, shall in the absence or disability of the treasurer perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors and the treasurer may from time to time prescribe and shall be subject to the direction of the treasurer.

4.9Controller and Assistant Controllers.  The controller shall be the chief accounting officer of the corporation, shall be in charge of its books of account and accounting records, and shall be in charge of the corporation’s accounting policies and procedures.  The controller shall be subject to the direction of the chief financial officer.  The controller shall, with the approval of the board of directors, arrange for annual audits by independent public accounts.

The assistant controller, if any, shall in the absence or disability of the controller perform the duties and exercise the powers of the controller and shall perform such other duties and have such other powers as the board of directors and the controller may from time to time prescribe and shall be subject to the direction of the controller.

4.10Secretary and Assistant Secretaries.  The secretary shall record all proceedings of the meetings of the stockholders and of the board of directors and its committees in a book or books to be kept for that purpose and shall file therein all actions by written consent of directors. The secretary shall give or cause to be given

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notice of all meetings of the stockholders and meetings of the board of directors and shall perform such other duties as may be prescribed by the board of directors or by the chief executive officer.  The secretary shall keep in safe custody the seal of the corporation and, when authorized by the board of directors, the chief executive officer, or these by-laws, affix the same to any instrument requiring it and, when so affixed, it shall be attested by the secretary’s signature or by the signature of an assistant secretary. 

The secretary shall have charge of the stock ledger (which may, however, be kept by any transfer agent or agents of the corporation under the direction of the secretary).

The assistant secretary, or if there are more than one, the assistant secretaries, in the order determined by the secretary, shall in the absence or disability of the secretary perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors and the secretary may from time to time prescribe.

Section 5.RESIGNATIONS AND REMOVALS

5.1Any director or officer may resign at any time by delivering his or her resignation in writing to the chairman of the board, any vice chairman of the board, the president, or the secretary or to a meeting of the board of directors.  Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state.  A director (including persons elected by directors to fill vacancies in the board) may be removed from office with cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in the election of directors.  The board of directors may at any time remove any officer either with or without cause.  The board of directors may at any time terminate or modify the authority of any agent.  Except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation or severance or other benefit plan or arrangement approved by the board of directors, no director or officer resigning and no director or officer removed shall have any right to any compensation as such director or officer for any period following such director’s or officer’s resignation or removal, or any right to damages on account of such removal, whether such compensation be by the month or by the year or otherwise; unless, in the case of a resignation, the directors, or, in the case of removal, the body acting on the removal, shall in their or its discretion provide for compensation.

Section 6.VACANCIES OF OFFICERS

6.1If the office of any officer becomes vacant, the directors may elect a successor by vote of a majority of the directors present and voting at a meeting.  Such successors shall hold office for the unexpired term, and until their respective successors

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are chosen and qualified or in each case until they sooner die, resign, are removed or become disqualified.  Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. 

Section 7.CAPITAL STOCK

7.1Stock Certificates.  The shares of capital stock of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation.  Every holder of stock represented by certificates shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him or her, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors.  Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary.  Any of or all the signatures on the certificate may be a facsimile.  In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent, or registrar at the time of its issue.

7.2Loss of Certificates.  In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe.

Section 8.TRANSFER OF SHARES OF STOCK

8.1Transfer on Books.  Subject to the restrictions, if any, stated or noted on the stock certificate, or otherwise in force, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require.  Uncertificated shares of stock may be transferred on the books of the corporation upon receipt of proper transfer instructions from the registered owner of the uncertificated shares, an instruction from an approved source duly authorized by such owner or from an attorney lawfully constituted.  Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends

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and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. 

8.2Record Date and Closing Transfer Books.  In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the vote fixing the record date is adopted by the board of directors, and which record date shall not be more than 60 days nor less than ten days before the date of such meeting.  If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

In order that the corporation may determine the stockholders entitled to receive payment of any dividend declared pursuant to Section 9 of these by-laws or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the vote fixing the record date is adopted, and which record date shall be not more than 60 days prior to such payment, exercise or other action.  If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the vote relating thereto.

Section 9.DIVIDENDS

9.1Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law.  Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation.

Section 10.CONTRIBUTIONS

10.1The directors of this corporation are authorized to make charitable contributions as defined in the United States Internal Revenue Code, as from time to time amended, in such amounts as the directors may determine to be reasonable.

16

Section 11.CORPORATE SEAL 

11.1Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word “Delaware” and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors.  The corporate seal of the corporation may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 12.EXECUTION OF PAPERS

12.1Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, sales of securities, contracts, proxies, bonds, notes, checks, drafts and other obligations, agreements and undertakings made, accepted or endorsed by the corporation shall be signed by the chairman of the board, the vice chairman of the board, the president, any vice president or the treasurer, and, if such papers require a seal, the seal of the corporation shall be affixed thereto and attested by the secretary or an assistant secretary.

Section 13.FISCAL YEAR

13.1Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall commence on the first day of October of each year.

Section 14.INDEMNIFICATION

14.1The corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding, claim or counterclaim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director, officer, employee or agent of this corporation or while a director, officer, employee or agent is or was serving at the request of this corporation as a director, officer, partner, trustee, fiduciary, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney’s fees and expenses), judgments, fines, penalties and amounts paid in settlement or incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding, claim or counterclaim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person, other than an action to enforce indemnification rights.  Such indemnification shall not be exclusive of other indemnification rights arising under any

17

agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person.  Any such person seeking indemnification under this Section 14.1 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established.  The corporation shall have the power to provide indemnification and advance expenses to any other person, including stockholders purporting to act on behalf of the corporation, to the extent permitted by the law of the State of Delaware. 

Section 15.AMENDMENTS

15.1These by-laws may be altered, amended or repealed by (i) the affirmative vote of the holders of at least 75 percent of the voting power of the then outstanding shares of stock of all classes and series of this corporation entitled to vote generally in the election of directors, voting together as a single class or (ii) a vote of the majority of the directors then in office at any annual, regular or special stockholders or directors meeting, called for that purpose, the notice of which shall specify the subject matter of the proposed new by-law or the alteration, amendment or repeal of an existing by-law or the articles to be affected thereby.  Any by-law, whether made, altered, amended or repealed by the stockholders or directors, may be repealed, amended, further amended or reinstated, as the case may be, by either the stockholders or the directors as aforesaid.

Section 16.EXCLUSIVE FORUM

16.1  Exclusive Forum.  Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws (as either may be amended from time to time), or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.  Any person or entity purchasing or otherwise acquiring any interest in the shares of capital stock of the Corporation will be deemed to have notice of and consented to the provisions of this Section 16.

16.2       Foreign Actions.  If any Foreign Action (as defined below) is filed in the name of any stockholder, such stockholder will be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware  in connection with any action brought in any such court to enforce Section 16.1 above

18

(an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. A “Foreign Action” means any action the subject matter of which is within the scope of Section 16.1 that is filed in a court other than a court located within the State of Delaware.  

19

EX-31.1

Exhibit 31.1

Principal Executive Officer Certification

I, Brian A. Berube, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cabot Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2016	/s/ BRIAN A. BERUBE
	Brian A. Berube
	Interim Office of the Chief Executive Officer, Principal Executive Officer

EX-31.2

Exhibit 31.2

Principal Financial Officer Certification

I, Eduardo E. Cordeiro, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cabot Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2016	/s/ EDUARDO E. CORDEIRO
	Eduardo E. Cordeiro
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certifications Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 (the “Report”) by Cabot Corporation (the “Company”), each of the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1. The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRIAN A. BERUBE

Brian A. Berube

Interim Office of the Chief Executive Officer, Principal Executive Officer

February 5, 2016

/s/ Eduardo E. Cordeiro

Eduardo E. Cordeiro

Executive Vice President and

Chief Financial Officer

February 5, 2016

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Feb. 03, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	CBT
Entity Registrant Name	CABOT CORP
Entity Central Index Key	0000016040
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		62,358,741

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Net sales and other operating revenues	$ 603	$ 812
Cost of sales	504	655
Gross profit	99	157
Selling and administrative expenses	71	78
Research and technical expenses	16	15
Income from operations	12	64
Interest and dividend income	1	1
Interest expense	(13)	(13)
Other expense	(8)	(1)
(Loss) income from continuing operations	(8)	51
Benefit (provision) for income taxes	5	(3)
Equity in earnings of affiliated companies, net of tax		1
Net (loss) income	(3)	49
Net income attributable to noncontrolling interests, net of tax	4	4
Net (loss) income attributable to Cabot Corporation	$ (7)	$ 45
Weighted-average common shares outstanding, in millions:
Basic	62.5	64.1
Diluted	62.5	64.6
Basic:
Net (loss) income attributable to Cabot Corporation	$ (0.11)	$ 0.70
Diluted:
Net (loss) income attributable to Cabot Corporation	(0.11)	0.69
Dividends per common share	$ 0.22	$ 0.22

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ (3)	$ 49
Other comprehensive loss, net of tax
Foreign currency translation adjustment (net of tax benefit of $- and $1)	(47)	(103)
Pension and other postretirement benefit liability adjustments
Pension and other postretirement benefit liability adjustments arising during the period (net of tax provision of $- and $6)	(1)	21
Other comprehensive loss	(48)	(82)
Comprehensive loss	(51)	(33)
Net income attributable to noncontrolling interests	4	4
Noncontrolling interests foreign currency translation adjustment, net of tax	(3)	(2)
Comprehensive income attributable to noncontrolling interests, net of tax	1	2
Comprehensive loss attributable to Cabot Corporation	$ (52)	$ (35)

XML

Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) (Unaudited) $ in Millions	3 Months Ended
	Dec. 31, 2014 USD ($)
Statement Of Income And Comprehensive Income [Abstract]
Foreign currency translation adjustment, tax benefit	$ 1
Pension and other postretirement benefit liability adjustments arising during the period, tax provision	$ 6

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 84	$ 77
Accounts and notes receivable, net of reserve for doubtful accounts of $8 and $7	437	477
Inventories:
Raw materials	65	69
Work in process	4	1
Finished goods	261	287
Other	39	40
Total inventories	369	397
Prepaid expenses and other current assets	66	54
Deferred income taxes	43	43
Total current assets	999	1,048
Property, plant and equipment, net	1,315	1,383
Goodwill	153	154
Equity affiliates	54	57
Intangible assets, net	149	153
Assets held for rent	90	86
Deferred income taxes	153	152
Other assets	42	42
Total assets	2,955	3,075
Current liabilities:
Notes payable	7	22
Accounts payable and accrued liabilities	376	389
Income taxes payable	24	28
Deferred income taxes	1	1
Current portion of long-term debt	301	1
Total current liabilities	709	441
Long-term debt	670	970
Deferred income taxes	59	59
Other liabilities	235	240
Redeemable preferred stock	$ 27	$ 27
Commitments and contingencies (Note G)
Preferred stock:
Authorized: 2,000,000 shares of $1 par value Issued and Outstanding: None and none
Common stock:
Authorized: 200,000,000 shares of $1 par value Issued: 0 and 64,634,731 shares Outstanding: 0 and 64,382,366 shares	$ 63	$ 63
Less cost of 246,293 and 246,570 shares of common treasury stock	(8)	(8)
Retained earnings	1,448	1,478
Accumulated other comprehensive loss	(344)	(299)
Total Cabot Corporation stockholders' equity	1,159	1,234
Noncontrolling interests	96	104
Total stockholders' equity	1,255	1,338
Total liabilities and stockholders’ equity	$ 2,955	$ 3,075

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015
Statement Of Financial Position [Abstract]
Accounts and notes receivable, reserve for doubtful accounts	$ 8	$ 7
Preferred stock, authorized shares	2,000,000	2,000,000
Preferred stock, par value	$ 1	$ 1
Preferred stock, Issued shares	0	0
Preferred stock, Outstanding shares	0	0
Common stock, authorized shares	200,000,000	200,000,000
Common stock, par value	$ 1	$ 1
Common stock, issued shares	62,596,786	62,704,966
Common stock, outstanding shares	62,350,493	62,458,396
Common treasury stock, shares	246,293	246,570

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash Flows from Operating Activities:
Net (loss) income	$ (3)	$ 49
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization	41	45
Long-lived asset impairment charge (Note J)	23
Deferred tax benefit		(7)
Employee benefit plan settlement		18
Equity in net income of affiliated companies		(1)
Non-cash compensation	3	4
Other non-cash (income) expense	8
Changes in assets and liabilities:
Accounts and notes receivable	30	23
Inventories	16	7
Prepaid expenses and other current assets	(13)	(2)
Accounts payable and accrued liabilities	(6)	(73)
Income taxes payable	(6)	(2)
Other liabilities	(13)	(14)
Cash dividends received from equity affiliates	3	3
Other		6
Cash provided by operating activities	83	56
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(24)	(41)
Proceeds from the sale of land	7
Change in assets held for rent	(1)	(3)
Cash used in investing activities	(18)	(44)
Cash Flows from Financing Activities:
Repayments under financing arrangements	(3)	(3)
Increase (decrease) in notes payable, net		1
(Repayments of) proceeds from issuance of commercial paper, net	(11)	117
Repayments of long-term debt		(32)
Purchases of common stock	(14)	(47)
Proceeds from sales of common stock	1	2
Cash dividends paid to common stockholders	(14)	(14)
Cash (used in) provided by financing activities	(41)	24
Effects of exchange rate changes on cash	(17)	(15)
Increase in cash and cash equivalents	7	21
Cash and cash equivalents at beginning of period	77	67
Cash and cash equivalents at end of period	$ 84	$ 88

XML

Basis of Presentation

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

A. Basis of Presentation

The consolidated financial statements include the accounts of Cabot Corporation (“Cabot” or the “Company”) and its wholly owned subsidiaries and majority-owned and controlled U.S. and non-U.S. subsidiaries. Additionally, Cabot considers consolidation of entities over which control is achieved through means other than voting rights. Intercompany transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with the requirements of Form10-Q and consequently do not include all disclosures required by Form 10-K. Additional information may be obtained by referring to Cabot’s Annual Report on Form 10-K for the fiscal year ended September30, 2015 (“201510-K”).

The financial information submitted herewith is unaudited and reflects all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods ended December 31, 2015 and 2014. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of the results to be expected for the fiscal year.

XML

Significant Accounting Policies

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies

B.Significant Accounting Policies

Revenue Recognition and Accounts Receivable

Cabot recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Cabot generally is able to ensure that products meet customer specifications prior to shipment. If the Company is unable to determine that the product has met the specified objective criteria prior to shipment or if title has not transferred because of sales terms, the revenue is considered “unearned” and is deferred until the revenue recognition criteria are met.

Shipping and handling charges related to sales transactions are recorded as sales revenue when billed to customers or included in the sales price. Taxes collected on sales to customers are excluded from revenues.

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segments.

	Three Months Ended
	December31,
	2015			2014
Reinforcement Materials		51	%		59	%
Performance Chemicals		36	%		29	%
Purification Solutions		12	%		10	%
Specialty Fluids		1	%		2	%

Cabot derives the substantial majority of its revenues from the sale of products in Reinforcement Materials and Performance Chemicals. Revenue from these products is typically recognized when the product is shipped and title and risk of loss have passed to the customer. The Company offers certain of its customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized and are estimated based on historical experience and contractual obligations. Cabot periodically reviews the assumptions underlying its estimates of discounts and volume rebates and adjusts its revenues accordingly.

Revenue in Purification Solutions is typically recognized when the product is shipped and title and risk of loss have passed to the customer. For major activated carbon injection systems projects, revenue is recognized using the percentage-of-completion method.

Revenue in Specialty Fluids arises primarily from the rental of cesium formate. This revenue is recognized throughout the rental period based on the contracted rental terms. Customers are also billed and revenue is recognized, typically at the end of the job, for cesium formate product that is not returned. The Company also generates revenues from cesium formate sold outside of a rental process and revenue is recognized upon delivery of the fluid.

Cabot maintains allowances for doubtful accounts based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable and other economic information on both a historical and prospective basis. Customer account balances are charged against the allowance when it is probable the receivable will not be recovered. There were no material changes in the allowance for any of the years presented. There is no material off-balance sheet credit exposure related to customer receivable balances.

Intangible Assets and Goodwill Impairment

The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value assigned to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but is reviewed for impairment annually as of May 31, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value. A reporting unit, for the purpose of the impairment test, is at or below the operating segment level, and constitutes a business for which discrete financial information is available and regularly reviewed by segment management. The reporting units with goodwill balances are Reinforcement Materials, Purification Solutions, and Fumed Metal Oxides. The separate businesses included within Performance Chemicals are considered separate reporting units. As such, the goodwill balance relative to Performance Chemicals is recorded in the Fumed Metal Oxides reporting unit.

For the purpose of the goodwill impairment test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, an additional quantitative evaluation is performed under the two-step impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. If based on the quantitative evaluation the fair value of the reporting unit is less than its carrying amount, the Company performs an analysis of the fair value of all assets and liabilities of the reporting unit. If the implied fair value of the reporting unit’s goodwill is determined to be less than its carrying amount, an impairment is recognized for the difference. The fair value of a reporting unit is based on discounted estimated future cash flows. The fair value is also benchmarked against a market approach using the guideline public companies method. The assumptions used to estimate fair value include management’s best estimates of future growth rates, operating cash flows, capital expenditures and discount rates over an estimate of the remaining operating period at the reporting unit level. Should the fair value of any of the Company’s reporting units decline below its carrying amount because of reduced operating performance, market declines, changes in the discount rate, or other conditions, charges for impairment may be necessary. Based on the Company’s most recent annual goodwill impairment test performed as of May 31, 2015, the fair values of the Reinforcement Materials and Fumed Metal Oxides reporting units were substantially in excess of their carrying values.  The fair value of the Purification Solutions reporting unit was less than its carrying amount and an impairment was recorded in the third fiscal quarter of 2015. Due to the impairment recorded as of June 30, 2015, the fair value of the Purification Solutions reporting unit was insignificantly higher than its carrying value as of the last impairment date. No events occurred subsequent to the last impairment evaluation that would suggest that it is more likely than not that the carrying values of any of our reporting units exceeded their fair value.

Nonetheless, the future growth in the Purification Solutions segment is highly dependent on achieving the expected volumes and margins in the activated carbon based mercury removal business. These volumes and margins are highly dependent on demand for mercury removal products and the Company’s successful realization of its anticipated share of volumes in this business. The expected demand for mercury removal products significantly depends on: (1)the implementation and enforcement of environmental laws and regulations, particularly those that would require U.S. based coal-fired electric utilities to reduce the quantity of air pollutants they release, including mercury, to comply with the Mercury and Air Toxics Standards (“MATS”) issued by the U.S. Environmental Protection Agency (“EPA”) and (2)other factors such as the anticipated usage of activated carbon in the coal-fired energy units. The MATS regulation has been subject to legal challenge and, in June 2015, the U.S. Supreme Court held that the EPA unreasonably failed to consider costs in determining whether it is necessary and appropriate to regulate hazardous air pollutants, including mercury, emitted by coal-fired utilities, and remanded the case back to the United States Court of Appeals for the District of Columbia Circuit Court for further proceedings. On December 15, 2015, the D.C. Circuit Court ruled to keep the MATS regulation in place while the EPA works to address the cost analysis required by the U.S. Supreme Court’s decision. EPA has indicated that it will complete this work by April 2016.

The Company uses assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets requires the use of significant judgment with regard to assumptions used in the valuation model. The Company estimates the fair value of identifiable acquisition-related intangible assets principally based on projections of cash flows that will arise from these assets. The projected cash flows are discounted to determine the fair value of the assets at the dates of acquisition.

Definite-lived intangible assets, which are comprised of trademarks, customer relationships and developed technologies, are amortized over their estimated useful lives and are reviewed for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. The Company recognized an impairment on intangible assets associated with the Purification Solutions business in the third fiscal quarter of 2015 and no events have been subsequently identified that would require an additional impairment evaluation.

Long-lived Assets Impairment

The Company’s long-lived assets primarily include property, plant and equipment, intangible assets, long-term investments and assets held for rent. The carrying values of long-lived assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable.

To test for impairment of assets, the Company generally uses a probability-weighted estimate of the future undiscounted net cash flows of the assets over their remaining lives to determine if the value of the asset is recoverable. Long-lived assets are grouped with other assets and liabilities at the lowest level for which independent identifiable cash flows are determinable.

An asset impairment is recognized when the carrying value of the asset is not recoverable based on the analysis described above, in which case the asset is written down to its fair value. If the asset does not have a readily determinable market value, a discounted cash flow model may be used to determine the fair value of the asset. In circumstances when an asset does not have separate identifiable cash flows, an impairment charge is recorded when the Company no longer intends to use the asset.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful lives. The depreciable lives for buildings, machinery and equipment, and other fixed assets are twenty to twenty-five years, ten to twenty-five years, and three to twenty-five years, respectively. The cost and accumulated depreciation for property, plant and equipment sold, retired, or otherwise disposed of are removed from the Consolidated Balance Sheets and resulting gains or losses are included in earnings in the Consolidated Statements of Operations. Expenditures for repairs and maintenance are charged to expenses as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated.

Income Tax in Interim Periods

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period.

Valuation allowances are provided against the future tax benefits that arise from the deferred tax assets in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Inventory Valuation

Inventories are stated at the lower of cost or market. The cost of all carbon black inventories in the U.S. is determined using the last-in, first-out (“LIFO”) method. Had the Company used the first-in, first-out (“FIFO”) method instead of the LIFO method for such inventories, the value of those inventories would have been $28 million and $30 million higher as of December 31, 2015 and September30, 2015, respectively. The cost of Specialty Fluids inventories, which are classified as assets held for rent, is determined using the average cost method. The cost of other U.S. and non-U.S. inventories is determined using the first-in, first-out (“FIFO”) method.

Cabot reviews inventory for both potential obsolescence and potential declines in anticipated selling prices. In this review, the Company makes assumptions about the future demand for and market value of the inventory, and based on these assumptions estimates the amount of any obsolete, unmarketable, slow moving, or overvalued inventory. Cabot writes down the value of these inventories by an amount equal to the difference between the cost of the inventory and its estimated net realizable value.

Pensions and Other Postretirement Benefits

The Company recognizes the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The Company is required to recognize as a component of other comprehensive income, net of tax, the actuarial gains/losses and prior service costs/credits that arise but were not previously required to be recognized as components of net periodic benefit cost. Other comprehensive income is adjusted as these amounts are later recognized in income as components of net periodic benefit cost.

Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income, which is included as a component of stockholders’ equity, includes unrealized gains or losses on available-for-sale marketable securitiesand derivative instruments, currency translation adjustments in foreign subsidiaries, translation adjustments on foreign equity securities and minimumpension liability adjustments.

Recent Accounting Pronouncements

In May 2014, the FASB issued a new standard related to the “Revenue from Contracts with Customers” which amends the existing accounting standards for revenue recognition. The standard requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This standard is applicable for fiscal years beginning after December15, 2017 and for interim periods within those years and early adoption is permitted for the fiscal years beginning after December 15, 2016. The Company expects to adopt this standard on October1, 2018.The Company is currently evaluating the impact the adoption of this standard may have on its consolidated financial statements.

In April 2015, the FASB issued a new standard simplifying the presentation of debt issuance costs by requiring debt issuance costs to be presented as a reduction of the corresponding debt liability. This will make the presentation of debt issuance costs consistent with the presentation of debt discounts or premiums. This standard is applicable for fiscal years beginning after December15, 2015 and for interim periods within those years and early adoption is permitted. The Company expects to adopt this standard on October1, 2016. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

In November 2015, the FASB issued a new standard that amends the existing accounting standard for Income Taxes and simplifies the presentation of deferred income taxes. This will require that deferred income tax assets and liabilities be classified as noncurrent on the balance sheet. This standard is applicable for fiscal years beginning after December 15, 2016 and for interim periods within those years and early adoption is permitted. The Company is evaluating this standard and the timing of its adoption. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

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Employee Benefit Plans

3 Months Ended

Dec. 31, 2015

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

C.Employee Benefit Plans

Net periodic defined benefit pension and other postretirement benefit costs include the following:

	Three Months Ended December31,
	2015						2014						2015					2014
	Pension Benefits												Postretirement Benefits
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign		U.S.			Foreign
	(Dollars in millions)
Service cost	$	—		$	2		$	—		$	2		$	—		$	—	$	—		$	—
Interest cost		1			2			2			3			—			—		—			—
Expected return on plan assets		(3	)		(3	)		(3	)		(4	)		—			—		—			—
Amortization of prior service credit		—			—			—			—			(1)			—		(1	)		—
Amortization of actuarial loss		—			1			—			1			—			—		—			—
Settlement and curtailment cost (credit)		—			—			—			18			(1	)		—		—			—
Net periodic (credit) benefit cost	$	(2	)	$	2		$	(1	)	$	20		$	(2	)	$	—	$	(1	)	$	—

Settlement of employee benefit plan

Effective October1, 2014, the Company transferred the defined benefit obligations and pension plan assets in one of its foreign defined benefit plans to a multi-employer plan. As a result of the transfer, a pre-tax charge of $18 million was recorded in the three months ended December 31, 2014 as reflected in Settlement costs in the table above. The pre-tax charge consists of $27 million released from Accumulated other comprehensive (loss) income (“AOCI”) and $2 million of employer contributions at the time of the settlement, partially offset by an $11 million release of the pension liability. The settlement charge has been recorded primarily in Cost of sales in the Consolidated Statements of Operations.

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Goodwill and Intangible Assets

3 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

D. Goodwill and Intangible Assets

Cabot had goodwill balances of $153 million and $154 million at December 31, 2015 and September30, 2015, respectively. The carrying amount of goodwill attributable to each reportable segment with goodwill balances and the changes in those balances during the three month period ended December 31, 2015 are as follows:

	Reinforcement Materials			Performance Chemicals		Purification Solutions		Total
	(Dollars in millions)
Balance at September 30, 2015	$	55		$	9	$	90	$	154
Foreign currency impact		(1	)		—		—		(1	)
Balance at December 31, 2015	$	54		$	9	$	90	$	153

The following table provides information regarding the Company’s intangible assets:

	December31, 2015							September 30, 2015
	Gross Carrying Value		Accumulated Amortization			Net Intangible Assets		Gross Carrying Value		Accumulated Amortization			Net Intangible Assets
	(Dollars in millions)
Intangible assets with finite lives
Developed technologies	$	48	$	(2	)	$	46	$	48	$	(1	)	$	47
Trademarks		15		—			15		16		—			16
Customer relationships		95		(7	)		88		96		(6	)		90
Total intangible assets	$	158	$	(9	)	$	149	$	160	$	(7	)	$	153

Intangible assets are amortized over their estimated useful lives, which range from fourteen to twenty-five years, with a weighted average amortization period of approximately nineteen years. Amortization expense for the three months ended December 31, 2015 and 2014 was $2 million and $4 million, respectively, and is included in Cost of sales and Selling and administrative expenses in the Consolidated Statements of Operations. Total amortization expense is estimated to be approximately $9 million each year for the next five fiscal years.

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Stockholders' Equity

3 Months Ended

Dec. 31, 2015

Equity [Abstract]

Stockholders' Equity

E. Stockholders’ Equity

In fiscal 2007, the Board of Directors authorized Cabot to repurchase up to ten million shares of Cabot’s common stock in the open market or in privately negotiated transactions. This authorization did not have a set expiration date. During the first quarter of fiscal 2015, Cabot repurchased 925,700shares of its common stock under this authorization.

In January 2015, the Board of Directors authorized Cabot to repurchase up to five million shares of its common stock in the open market or in privately negotiated transactions and cancelled the previous authorization. Cabot has repurchased 1,594,300 shares of its common stock under this authorization. As of December 31, 2015,3,405,700shares remain available for repurchase under the current authorization. The Company retired the repurchased shares and recorded the excess of the purchase price over par value to additional paid-in capital until such amount was reduced to zero and then charged the remainder against retained earnings.

During the first three months of both fiscal 2016 and 2015, Cabot paid cash dividends of $0.22 per share of common stock for a total of $14 million.

Noncontrolling interest

The following table illustrates the noncontrolling interest activity for the periods presented:

	2015			2014
	(Dollars in millions)
Balance at September 30	$	104		$	122
Net income attributable to noncontrolling interests		4			4
Noncontrolling interest foreign currency translation    adjustment		(3	)		(2	)
Noncontrolling interest dividends		(9	)		—
Balance at December 31	$	96		$	124

The dividends declared during the three months ended December 31, 2015 were not paid during the period.

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Accumulated Other Comprehensive Loss

3 Months Ended

Dec. 31, 2015

Stockholders Equity Note [Abstract]

Accumulated Other Comprehensive Loss

F. Accumulated Other Comprehensive Loss

Comprehensive income combines net (loss) income and other comprehensive income items, which are reported as components of stockholders’ equity in the accompanying Consolidated Balance Sheets.

Changes in each component of AOCI, net of tax, are as follows:

	Currency Translation Adjustment			Unrealized Gains on Investments		PensionandOther Postretirement Benefit Liability Adjustments			Total
	(Dollars in millions)
Balance at September 30, 2015, attributable to Cabot    Corporation	$	(239	)	$	2	$	(62	)	$	(299	)
Other comprehensive loss before reclassifications		(47	)		—		—			(47	)
Amounts reclassified from accumulated other    comprehensive (loss) income		—			—		(1	)		(1	)
Net other comprehensive items		(286	)		2		(63	)		(347	)
Less: Noncontrolling interest		(3	)		—		—			(3	)
Balance at December 31, 2015, attributable to Cabot    Corporation	$	(283	)	$	2	$	(63	)	$	(344	)

The amounts reclassified out of AOCI and into the Consolidated Statements of Operations in the three months ended December 31, 2015 and 2014 are as follows:

		Three Months Ended
	Affected Line Item in the Consolidated	December31,
	Statements of Operations	2015			2014
		(Dollars in millions)
Pension and other postretirement    benefit liability adjustment
Amortization of actuarial losses	Net Periodic Benefit Cost - see    Note C for details	$	1		$	1
Amortization of prior service cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		(1	)
Settlement and curtailment (credit) cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		27
Total before tax			(1	)		27
Tax impact	Benefit for income taxes		—			(6	)
Total after tax		$	(1	)	$	21

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Commitments and Contingencies

3 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

G. Commitments and Contingencies

Purchase Commitments

Cabot has entered into long-term purchase agreements primarily for the purchase of raw materials. Under certain of these agreements the quantity of material being purchased is fixed, but the price paid changes as market prices change. For those commitments, the amounts included in the table below are based on market prices at December 31, 2015.

	Payments Due by Fiscal Year
	Remainderof Fiscal2016		2017		2018		2019		2020		Thereafter		Total
	(Dollars in millions)
Reinforcement Materials	$	144	$	136	$	135	$	132	$	96	$	1,702	$	2,345
Performance Chemicals		44		50		37		32		29		155		347
Purification Solutions		10		7		1		—		—		—		18
Total	$	198	$	193	$	173	$	164	$	125	$	1,857	$	2,710

Guarantee Agreements

Cabot has provided certain indemnities pursuant to which it may be required to make payments to an indemnified party in connection with certain transactions and agreements. In connection with certain acquisitions and divestitures, Cabot has provided routine indemnities with respect to such matters as environmental, tax, insurance, product and employee liabilities. In connection with various other agreements, including service and supply agreements with customers, Cabot has provided indemnities for certain contingencies and routine warranties. Cabot is unable to estimate the maximum potential liability for these types of indemnities as a maximum obligation is not explicitly stated in most cases and the amounts, if any, are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be reasonably estimated. The duration of the indemnities vary, and in many cases are indefinite. Cabot has not recorded any liability for these indemnities in the consolidated financial statements, except as otherwise disclosed.

Contingencies

Cabot is a defendant, or potentially responsible party, in various lawsuits and environmental proceedings wherein substantial amounts are claimed or at issue.

Environmental Matters

As of December 31, 2015 and September30, 2015, Cabot had $15 million and $16 million, respectively, reserved for environmental matters. These environmental matters mainly relate to closed sites. These reserves represent Cabot’s best estimates of the probable costs to be incurred at those sites where costs are reasonably estimable based on the Company’s analysis of the extent of clean up required, alternative clean-up methods available, abilities of other responsible parties to contribute and its interpretation of laws and regulations applicable to each site. Cash payments related to these environmental matters were less than $1 million in the first three months of fiscal 2016 and 2015, respectively. Cabot reviews the adequacy of the reserves as circumstances change at individual sites and adjusts the reserves as appropriate. Almost all of Cabot’s environmental issues relate to sites that are mature and have been investigated and studied and, in many cases, are subject to agreed upon remediation plans. However, depending on the results of future testing, changes in risk assessment practices, remediation techniques and regulatory requirements, newly discovered conditions, and other factors, it is reasonably possible that the Company could incur additional costs in excess of environmental reserves currently recorded. Management estimates, based on the latest available information, that any such future environmental remediation costs that are reasonably possible to be in excess of amounts already recorded would be immaterial to the Company’s consolidated financial statements.

Other Matters

Respirator Liabilities

Cabot has exposure in connection with a safety respiratory products business that a subsidiary acquired from American Optical Corporation (“AO”) in an April1990 asset purchase transaction. The subsidiary manufactured respirators under the AO brand and disposed of that business in July1995. In connection with its acquisition of the business, the subsidiary agreed, in certain circumstances, to assume a portion of AO’s liabilities, including costs of legal fees together with amounts paid in settlements and judgments, allocable to AO respiratory products used prior to the 1990 purchase by the Cabot subsidiary. In exchange for the subsidiary’s assumption of certain of AO’s respirator liabilities, AO agreed to provide to the subsidiary the benefits of: (i)AO’s insurance coverage for the period prior to the 1990 acquisition and (ii)a former owner’s indemnity of AO holding it harmless from any liability allocable to AO respiratory products used prior to May1982. As more fully described in the 2015 10-K, the respirator liabilities generally involve claims for personal injury, including asbestosis, silicosis and coal worker’s pneumoconiosis, allegedly resulting from the use of respirators that are alleged to have been negligently designed and/or labeled.Neither Cabot, nor its past or present subsidiaries, at any time manufactured asbestos or asbestos-containing products. At no time did this respiratory product line represent a significant portion of the respirator market.

As of December 31, 2015 and September30, 2015, there were approximately 37,000 and 38,000 claimants, respectively, in pending cases asserting claims against AO in connection with respiratory products. Cabot has a reserve to cover its expected share of liability for existing and future respirator liability claims. At December 31, 2015 and September30, 2015, the reserve was $10 million and $11 million, respectively. Cash payments related to this liability were $1 million in the first three months of both fiscal 2016 and 2015.

Other

The Company has various other lawsuits, claims and contingent liabilities arising in the ordinary course of its business and with respect to the Company’s divested businesses. In the opinion of the Company, although final disposition of some or all of these other suits and claims may impact the Company’s consolidated financial statements in a particular period, they are not expected, in the aggregate, to have a material adverse effect on the Company’s consolidated financial statements.

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Income Tax

3 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax

H. Income Tax

Effective Tax Rate

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
(Benefit) Provision for income taxes	$	(5	)	$	3
Effective tax rate		74	%		5	%

During the first quarter of fiscal 2016, the Company recorded a tax benefit of $5 million, resulting in an effective tax rate of 74%. This amount included net discrete tax benefits of $6 million, primarily comprised of the net tax benefit from certain foreign exchange gains and losses, the renewal of the U.S. Research and Experimentation credit and releases of reserves for uncertain tax positions. During the first quarter of fiscal 2015, the Company recorded a tax provision of $3 million, resulting in an effective tax rate of 5%. This amount included net discrete tax benefits of $13 million, primarily comprised of the tax benefit from the change in accounting for uncertain tax positions, the renewal of the U.S. Research and Experimentation credit, and releases of reserves for uncertain tax positions.

Uncertainties

Cabot files U.S. federal and state and non-U.S. income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2015 tax years remain subject to examination by the United States Internal Revenue Service (“IRS”) and various tax years from 2005 through 2015 remain subject to examination by the respective state tax authorities. In significant non-U.S. jurisdictions, various tax years from 2004 through 2015 remain subject to examination by their respective tax authorities. Cabot’s significant non-U.S. jurisdictions include China, France, Germany, Italy, Japan, and the Netherlands.

Certain Cabot subsidiaries are under audit in jurisdictions outside of the U.S. In addition, certain statutes of limitations are scheduled to expire in the near future. It is reasonably possible that a change in the unrecognized tax benefits may also occur within the next twelve months related to the settlement of one or more of these audits, however, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.

During the three months ended December31, 2015, Cabot released uncertain tax positions of $2 million due to the expirations of statutes of limitations in various jurisdictions.

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Earnings Per Share

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

I.Earnings Per Share

The following tables summarize the components of the basic and diluted earnings per common share computations:

	Three Months Ended
	December31,
	2015			2014
	(Dollars and shares in millions, except per share amounts)
Basic EPS:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends and dividend equivalents to    participating securities		—			—
Less: Undistributed earnings allocated to    participating securities(1)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Weighted average common shares and    participating securities outstanding		62.9			64.6
Less: Participating securities(1)		0.4			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.1
Amounts per share - basic:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.70
Diluted EPS(2) :
(Loss) earnings allocated to common shareholders	$	(7	)	$	45
Plus: (Loss) earnings allocated to participating securities		—			—
Less: Adjusted earnings allocated to participating    securities(3)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Adjusted weighted average common shares    outstanding		62.5			64.1
Effect of dilutive securities:
Common shares issuable(4)		—			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.6
Amounts per share - diluted:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.69

(1)Participating securities consist of shares of unvested time-based restricted stock units.

Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common and participating shareholders. Undistributed earnings are allocated to common and participating shareholders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
Calculation of undistributed earnings:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends declared on common stock		14			14
Less: Dividends declared on participating    securities		—			—
Undistributed (loss) earnings	$	(21	)	$	31
Allocation of undistributed (loss) earnings:
Undistributed (loss) earnings allocated to common    shareholders	$	(21	)	$	31
Undistributed (loss) earnings allocated to participating    shareholders		—			—
Undistributed (loss) earnings	$	(21	)	$	31

(2)Due to the Company’s net loss position, dividends on participating securities were not added back to the loss available to common shares for the three months ended December 31, 2015 when calculating diluted EPS.

(3)Undistributed earnings are adjusted for the assumed distribution of dividends to the dilutive securities, which are described in (4)below, and then reallocated to participating securities.

(4)Represents incremental shares of common stock from the (i)assumed exercise of stock options issued under Cabot’s equity incentive plans; (ii)assumed issuance of shares to employees pursuant to the Company’s Deferred Compensation and Supplemental Retirement Plan; and (iii)assumed issuance of shares under outstanding performance-based restricted stock unit awards issued under Cabot’s equity incentive plans.The weighted average common shares outstanding for the three months ending December 31, 2015 excludes 1,083,358 shares as those shares would be antidilutive due to the Company’s net loss position. For the three months ended December 31, 2014, 325,500incremental shares of common stock were not included in the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.

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Restructuring

3 Months Ended

Dec. 31, 2015

Restructuring And Related Activities [Abstract]

Restructuring

J. Restructuring

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

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Cost of sales	$	37	$	2
Selling and administrative expenses		6		5
Research and technical expenses		5		—
Total	$	48	$	7

Details of all restructuring activities and the related reserves during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Environmental Remediation		Asset Sales			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	5		$	2	$	—		$	—		$	2		$	9
Charges (credit)		25			—		(2	)		23			2			48
Costs charged against assets / liabilities		—			—		(5	)		(23	)		—			(28	)
Cash (paid) received		(11	)		—		7			—			(3	)		(7	)
Reserve at December 31, 2015	$	19		$	2	$	—		$	—		$	1		$	22

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. Cabot’s plan has resulted in a reduction of approximately 300 positions across the Company’s global locations. These actions are intended to result in a more competitive cost structure.

The Company has recorded pre-tax charges of approximately $24 million in the first three months of fiscal 2016, and expects to record an additional $4 million through the rest of fiscal 2016 related to these actions.   The charges recorded and anticipated are comprised of severance, employee benefits and other transition costs.

Cumulative net cash outlays related to these actions are expected to be approximately $28 million, comprised of severance, employee benefits and other transition costs.  Through December 31, 2015, the Company has made $11 million in cash payments related to this plan and expects to make $15 million in cash payments through the remainder of fiscal 2016 and $2 million thereafter.

As of December 31, 2015, Cabot has $14 million of accrued severance costs in the Consolidated Balance Sheet related to this plan.

Additionally, on November 11, 2015, Cabot announced that it had committed to closing its carbon black manufacturing facility in Merak, Indonesia. The decision to close this plant and to consolidate production in Asia using the Company’s Cilegon, Indonesia and other Asian and global carbon black production sites to meet regional demand was driven by the financial performance at the Merak facility in the past several years. Manufacturing operations ceased at the end of January 2016 and approximately 50 employees were affected.

The Company has recorded pre-tax charges of approximately $24 million in the first three months of fiscal 2016 related to this closure, comprised of $22 million of asset impairments and accelerated depreciation and $2 million of severance and employee benefits. The asset impairment charges reflect the write-down of the long-lived assets group that is no longer in use to its fair value.

Future anticipated site closure costs for the Merak facility, anticipated to be recorded through the remainder of fiscal 2016, are $6 million for site remediation and other miscellaneous costs.

Net cash outlays related to this closure are expected to be approximately $8 million, substantially all of which is expected to be paid through the remainder of fiscal 2016.

As of December 31, 2015, Cabot has $2 million of accrued severance costs in the Consolidated Balance Sheet related to the Merak facilityclosure.

Details of the 2016 restructuring activities, including the Merak facility closure, during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	—		$	—		$	—		$	—
Charges		25			22			1			48
Costs charged against assets / liabilities		1			(22	)		—			(21	)
Cash paid		(10	)		—			(1	)		(11	)
Reserve at December 31, 2015	$	16		$	—		$	—		$	16

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.

The 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. There were no charges related to this plan recorded in the first fiscal quarter of 2016 and $4 million was recorded related to this plan in the first fiscal quarter of 2015.  

Through December 31, 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 $1 million, comprised mainly of severance, in the remainder of fiscal 2016.The difference between the initial accrual and subsequent cash payments was due to changes in foreign exchange rates.

As of December 31, 2015, Cabot has $1 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 April26, 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.

Through December 31, 2015, the Company recorded cumulative net pre-tax restructuring charges related to this plan of $19 million, comprised mainly of accelerated depreciation and asset write-offs of $16 million, severance charges of $2 million, site demolition, clearing and environmental remediation charges of $2 million, and other closure related charges of $1 million, partially offset by the gain from the sale of land of $2 million in fiscal 2016. CMSB’s net income or loss is attributable to Cabot Corporation and to the noncontrolling interest in the joint venture.

The Company has recorded a net pre-tax gain of $1 million, and a net pre-tax charge of less than $1 million in the three  months ended December 31, 2015 and 2014, respectively. The portion of the charges that are allocable to the noncontrolling interest in CMSB (49.9%)are recorded within Net income 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 received related to this plan is $3 million, comprised of $7 million received from the sale of land, partially offset by approximately $2 million for severance, $1 million for site demolition, clearing and environmental remediation, and $1 million for other closure related charges.

CMSB expects to make cash payments of less than $1 million during the remainder of fiscal 2016 mainly for site demolition, clearing and environmental remediation costs.

As of December 31, 2015, Cabot has less than $1 million of accrued restructuring costs in the Consolidated Balance Sheets related to this closure, which is mainly for accrued environmental and other charges.

Other Activities

The Company has recorded other pre-tax restructuring charges of approximately $1 million during each of the first quarters of fiscal 2016 and 2015.  Fiscal 2016 charges are comprised mainly of accelerated depreciation and severance costs whereas fiscal 2015 charges are comprised of severance costs. Future charges related to these actions are anticipated to be less than $1 million in the remainder of fiscal 2016 and thereafter.

As of December 31, 2015, Cabot has $3 million of accrued severance and other closure related costs in the Consolidated Balance Sheets related to these activities which is expected to be paid through early fiscal 2017.

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 December 31, 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. The Company anticipates that it will record a gain on the sale of land rights in Hong Kong of $8 million during fiscal 2016.

Pre-tax restructuring expenses related to these plans were less than $1 million and $2 million during the first three months of fiscal 2016 and 2015, respectively.  Since fiscal 2009, Cabot has made net cash payments of $87 million related to these plans and expects to receive approximately $9 million from the sale of land rights in Hong Kong during fiscal 2016, partially offset by payments of approximately $2 million for environmental and other closure related costs.

As of December 31, 2015, Cabot has $2 million of accrued environmental  and other closure related costs in the Consolidated Balance Sheets related to these activities.

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Financial Instruments and Fair Value Measurements

3 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurements

K. Financial Instruments and Fair Value Measurements

The FASB authoritative guidance on fair value measurements defines fair value, provides a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. The disclosures focus on the inputs used to measure fair value. The guidance establishes the following hierarchy for categorizing these inputs:

Level1	—	Quoted market prices in active markets for identical assets or liabilities
Level2	—	Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs)
Level3	—	Significant unobservable inputs

There were no transfers of financial assets or liabilities measured at fair value between Level 1 and Level 2, or transfers into or out of Level 3, during the first three months of either fiscal 2016or 2015.

At December 31, 2015 and September30, 2015, the fair value of Guaranteed investment contracts, included in Other assets on the Consolidated Balance Sheets, was $11 million and $12 million, respectively. Guaranteed investment contracts were classified as Level 2 instruments within the fair value hierarchy as the fair value determination was based on other observable inputs.

At December 31, 2015 and September30, 2015, the fair values of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued liabilities, and notes payable and variable rate debt approximated their carrying values due to the short-term nature of these instruments. The carrying value and fair value of the long-term fixed rate debt were $0.96 billion and $1.01 billion, respectively, as of December 31, 2015 and $0.96 billion and $1.02 billion, respectively, as of September30, 2015. The fair values of Cabot’s fixed rate long-term debt and capital lease obligations are estimated based on comparable quoted market prices at the respective period ends. The carrying amounts of Cabot’s floating rate long-term debt and capital lease obligations approximate their fair values. All such measurements are based on observable inputs and are classified as Level 2 within the fair value hierarchy. The valuation technique used is the discounted cash flow model.

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Derivatives

3 Months Ended

Dec. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives

L. Derivatives

Interest Rate Risk Management

Cabot’s objective is to maintain a certain fixed-to-variable interest rate mix on the Company’s debt obligations. Cabot may enter into interest rate swaps as a hedge of the underlying debt instruments to effectively change the characteristics of the interest rate without changing the debt instrument. As of both December 31, 2015 and September30, 2015, there were no derivatives held to manage interest rate risk.

Foreign Currency Risk Management

Cabot’s international operations are subject to certain risks, including currency exchange rate fluctuations and government actions. Cabot endeavors to match the currency in which its debt is issued to the currency of the Company’s major, stable cash receipts. In some situations Cabot has issued debt denominated in U.S. dollars and then entered into cross currency swaps that exchange the dollar principal and interest payments into a currency where the Company expects long-term, stable cash receipts.

Additionally, the Company has foreign currency exposure arising from its net investments in foreign operations. Cabot, from time to time, enters into cross-currency swaps to mitigate the impact of currency rate changes on the Company’s net investments.

The Company also has foreign currency exposure arising from the denomination of monetary assets and liabilities in foreign currencies other than the functional currency of a given subsidiary as well as the risk that currency fluctuations could affect the dollar value of future cash flows generated in foreign currencies. Accordingly, Cabot uses short-term forward contracts to minimize the exposure to foreign currency risk. In certain situations where the Company has forecasted purchases under a long-term commitment or forecasted sales denominated in a foreign currency, Cabot may enter into appropriate financial instruments in accordance with the Company’s risk management policy to hedge future cash flow exposures.

The following table provides details of the derivatives held as of December 31, 2015 and September30, 2015 to manage foreign currency risk.

		NotionalAmount, net
Description	Borrowing	December31,2015	September30,2015	HedgeDesignation
Forward Foreign Currency Contracts (1)	N/A	USD7million	USD2million	Nodesignation

(1)Cabot’s forward foreign exchange contracts are denominated primarily in the British pound sterling, Czech koruna, and Indonesian rupiah.

Accounting for Derivative Instruments and Hedging Activities

The Company determines the fair value of financial instruments using quoted market prices whenever available. When quoted market prices are not available for various types of financial instruments (such as forwards, options and swaps), the Company uses standard models with market-based inputs, which take into account the present value of estimated future cash flows and the ability of the financial counterparty to perform. For interest rate and cross-currency swaps, the significant inputs to these models are interest rate curves for discounting future cash flows. For forward foreign currency contracts, the significant inputs are interest rate curves for discounting future cash flows, and exchange rate curves of the foreign currency for translating future cash flows.

Fair Value Hedge

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current period earnings.

Cash Flow Hedge

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is recorded in Accumulated other comprehensive (loss) income and reclassified to earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current period earnings.

Other Derivative Instruments

From time to time, the Company may enter into certain derivative instruments that may not be designated as hedges for accounting purposes, which include cross currency swaps, foreign currency forward contracts and commodity derivatives. For cross currency swaps and foreign currency forward contracts not designated as hedges, the Company uses standard models with market-based inputs. The significant inputs to these models are interest rate curves for discounting future cash flows, and exchange rate curves of the foreign currency for translating future cash flows. In determining the fair value of the commodity derivatives, the significant inputs to valuation models are quoted market prices of similar instruments in active markets. Although these derivatives do not qualify for hedge accounting, Cabot believes that such instruments are closely correlated with the underlying exposure, thus managing the associated risk. The gains or losses from changes in the fair value of derivative instruments that are not accounted for as hedges are recognized in current period earnings.

As of both December 31, 2015 and September30, 2015, the fair value of derivative instruments were immaterial and were presented in Prepaid expenses and other current assets and Accounts payable and accrued liabilities on the Consolidated Balance Sheets.

The net after-tax amounts to be reclassified from AOCI to earnings within the next 12 months are expected to be immaterial.

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Venezuela

3 Months Ended

Dec. 31, 2015

Equity Method Investments And Joint Ventures [Abstract]

Venezuela

M. Venezuela

Cabot owns 49% of an operating carbon black affiliate in Venezuela, which is accounted for as an equity affiliate, through wholly-owned subsidiaries that carry the investment and receive its dividends. As of December 31, 2015, these subsidiaries carried the operating affiliate investment of $13 million and held 17million bolivars (less than $1million) in cash.

During each of the three month periods ended December 31, 2015 and 2014, the Company received dividends in the amounts of $2million which were paid in U.S. dollars.

A significant portion of the Company’s operating affiliate’s sales are exports denominated in U.S. dollars. The Venezuelan government mandates that a certain percentage of the dollars collected from these sales be converted into bolivars. The operating affiliate and the Company’s wholly-owned subsidiaries used an exchange rate that was available to Cabot when converting these dollars into bolivars to remeasure their bolivar denominated monetary accounts. The exchange rate made available to us on December 31, 2015 was 52bolivars to the U.S. dollar.

The operating entity has generally been profitable. The Company continues to closely monitor developments in Venezuela and their potential impact on the recoverability of its equity affiliate investment.

Any future change in the exchange rate made available to the Company or opening of additional parallel markets could cause the Company to change the exchange rate it uses and result in gains or losses on the bolivar denominated assets held by its operating affiliate and wholly-owned subsidiaries.

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Financial Information by Segment

3 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Financial Information by Segment

N. Financial Information by Segment

The Company identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incur expenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and iii) it has available discrete financial information. The Company has determined that all of its businesses are operating segments. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Operating segments are aggregated into a reportable segment if the operating segments are determined to have similar economic characteristics and if the operating segments are similar in the following areas: i) nature of products and services; ii) nature of production processes; iii) type or class of customer for their products and services; iv) methods used to distribute the products or provide services; and v) if applicable, the nature of the regulatory environment.

The Company has fourreportable segments: Reinforcement Materials, Performance Chemicals, Purification Solutions and Specialty Fluids.

The Reinforcement Materials segment represents the rubber blacks and elastomer composites product lines.

Performance Chemicals is comprised of twobusinesses: (i) our Specialty Carbons and Formulations business, which manufactures and sells specialty grades of carbon black, specialty compounds and inkjet colorants, and (ii) our Metal Oxides business, which manufactures and sells fumed silica, fumed alumina and dispersions thereof and aerogel.The net sales from each of these businesses for the three months ended December 31, 2015 and 2014 are as follows:

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Specialty Carbons and Formulations	$	140	$	157
Metal Oxides		67		72
Total Performance Chemicals	$	207	$	229

The Purification Solutions segment represents the Company’s activated carbon business and the Specialty Fluids segment includes cesium formate oil and gas drilling fluids and high-purity fine cesium chemicals product lines.

Reportable segment operating profit (loss) before interest and taxes (“Segment EBIT”) is presented for each reportable segment in the financial information by reportable segment table below on the line entitled Income (loss) from continuing operations before taxes. Segment EBIT excludes certain items, meaning items management does not consider representative of segment results. In addition, Segment EBIT includes Equity in earnings (loss) of affiliated companies, net of tax, the full operating results of a contractual joint venture in Purification Solutions, royalties, Net income attributable to noncontrolling interests, net of tax, and discounting charges for certain Notes receivable, but excludes Interest expense, foreign currency transaction gains and losses, interest income, dividend income, unearned revenue, the effects of LIFO accounting for inventory, general unallocated expense and unallocated corporate costs.

Financial information by reportable segment is as follows:

	Reinforcement Materials		Performance Chemicals		Purification Solutions			Specialty Fluids		Segment Total		Unallocated and Other(1)			Consolidated Total
	(Dollars in millions)
Three Months Ended December 31, 2015
Revenues from external customers(2)	$	288	$	207	$	66		$	7	$	568	$	35		$	603
Income (loss) from continuing operations    before taxes(3)	$	26	$	50	$	(5	)	$	—	$	71	$	(79	)	$	(8	)
Three Months Ended December 31, 2014
Revenues from external customers(2)	$	460	$	229	$	76		$	16	$	781	$	31		$	812
Income (loss) from continuing operations    before taxes(3)	$	53	$	39	$	(1	)	$	6	$	97	$	(46	)	$	51

(1)Unallocated and Other includes certain items and eliminations necessary to reflect management’s reporting of operating segment results. These items are reflective of the segment reporting presented to the Chief Operating Decision Maker.

(2)“Unallocated and Other revenues from external customers”reflects royalties, other operating revenues, external shipping and handling costs, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain Notes receivable. Details are provided in the table below:

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Royalties, other operating revenues, the impact of unearned revenue, the    removal of 100% of the sales of an equity method affiliate and discounting    charges for certain Notes receivable.	$	9	$	4
Shipping and handling fees		26		27
Total	$	35	$	31

(3)Income (loss) from continuing operations before taxes that are categorized as Unallocated and Other includes:

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
Interest expense	$	(13	)	$	(13	)
Total certain items, pre-tax(a)		(58	)		(26	)
Equity in (earnings) loss of affiliated companies, net of tax(b)		—			(1	)
Unallocated corporate costs(c)		(13	)		(12	)
General unallocated income(d)		5			6
Total	$	(79	)	$	(46	)

(a)Certain items are items that management does not consider to be representative of operating segment results and they are, therefore, excluded from Segment EBIT. Certain items, pre-tax, for the three months ended December 31, 2015 include$48 million related to global restructuring activities, $8 million related to foreign currency loss on the devaluation of the Argentine peso, and $2 million related to legal and environmental matters and reserves. Certain items, pre-tax, for the three months ended December 31, 2014include $7 million related to global restructuring activities, $1 million for acquisition and integration-related charges and $18 million related to an employee benefit plan settlement charge.

(b)Equity in (earnings) loss of affiliated companies, net of tax, is included in Segment EBIT and is removed from Unallocated and other to reconcile to income (loss) from operations before taxes.

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

(d)General unallocated income consists of gains (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, the profit or loss related to the corporate adjustment for unearned revenue, and the impact of including the full operating results of an equity affiliate in Purification Solutions Segment EBIT.

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Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Revenue Recognition and Accounts Receivable

Revenue Recognition and Accounts Receivable

Cabot recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Cabot generally is able to ensure that products meet customer specifications prior to shipment. If the Company is unable to determine that the product has met the specified objective criteria prior to shipment or if title has not transferred because of sales terms, the revenue is considered “unearned” and is deferred until the revenue recognition criteria are met.

Shipping and handling charges related to sales transactions are recorded as sales revenue when billed to customers or included in the sales price. Taxes collected on sales to customers are excluded from revenues.

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segments.

	Three Months Ended
	December31,
	2015			2014
Reinforcement Materials		51	%		59	%
Performance Chemicals		36	%		29	%
Purification Solutions		12	%		10	%
Specialty Fluids		1	%		2	%

Cabot derives the substantial majority of its revenues from the sale of products in Reinforcement Materials and Performance Chemicals. Revenue from these products is typically recognized when the product is shipped and title and risk of loss have passed to the customer. The Company offers certain of its customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction in sales at the time revenue is recognized and are estimated based on historical experience and contractual obligations. Cabot periodically reviews the assumptions underlying its estimates of discounts and volume rebates and adjusts its revenues accordingly.

Revenue in Purification Solutions is typically recognized when the product is shipped and title and risk of loss have passed to the customer. For major activated carbon injection systems projects, revenue is recognized using the percentage-of-completion method.

Revenue in Specialty Fluids arises primarily from the rental of cesium formate. This revenue is recognized throughout the rental period based on the contracted rental terms. Customers are also billed and revenue is recognized, typically at the end of the job, for cesium formate product that is not returned. The Company also generates revenues from cesium formate sold outside of a rental process and revenue is recognized upon delivery of the fluid.

Cabot maintains allowances for doubtful accounts based on an assessment of the collectability of specific customer accounts, the aging of accounts receivable and other economic information on both a historical and prospective basis. Customer account balances are charged against the allowance when it is probable the receivable will not be recovered. There were no material changes in the allowance for any of the years presented. There is no material off-balance sheet credit exposure related to customer receivable balances.

Intangible Assets and Goodwill Impairment

Intangible Assets and Goodwill Impairment

The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for an acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value assigned to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but is reviewed for impairment annually as of May 31, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value. A reporting unit, for the purpose of the impairment test, is at or below the operating segment level, and constitutes a business for which discrete financial information is available and regularly reviewed by segment management. The reporting units with goodwill balances are Reinforcement Materials, Purification Solutions, and Fumed Metal Oxides. The separate businesses included within Performance Chemicals are considered separate reporting units. As such, the goodwill balance relative to Performance Chemicals is recorded in the Fumed Metal Oxides reporting unit.

For the purpose of the goodwill impairment test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, an additional quantitative evaluation is performed under the two-step impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. If based on the quantitative evaluation the fair value of the reporting unit is less than its carrying amount, the Company performs an analysis of the fair value of all assets and liabilities of the reporting unit. If the implied fair value of the reporting unit’s goodwill is determined to be less than its carrying amount, an impairment is recognized for the difference. The fair value of a reporting unit is based on discounted estimated future cash flows. The fair value is also benchmarked against a market approach using the guideline public companies method. The assumptions used to estimate fair value include management’s best estimates of future growth rates, operating cash flows, capital expenditures and discount rates over an estimate of the remaining operating period at the reporting unit level. Should the fair value of any of the Company’s reporting units decline below its carrying amount because of reduced operating performance, market declines, changes in the discount rate, or other conditions, charges for impairment may be necessary. Based on the Company’s most recent annual goodwill impairment test performed as of May 31, 2015, the fair values of the Reinforcement Materials and Fumed Metal Oxides reporting units were substantially in excess of their carrying values.  The fair value of the Purification Solutions reporting unit was less than its carrying amount and an impairment was recorded in the third fiscal quarter of 2015. Due to the impairment recorded as of June 30, 2015, the fair value of the Purification Solutions reporting unit was insignificantly higher than its carrying value as of the last impairment date. No events occurred subsequent to the last impairment evaluation that would suggest that it is more likely than not that the carrying values of any of our reporting units exceeded their fair value.

Nonetheless, the future growth in the Purification Solutions segment is highly dependent on achieving the expected volumes and margins in the activated carbon based mercury removal business. These volumes and margins are highly dependent on demand for mercury removal products and the Company’s successful realization of its anticipated share of volumes in this business. The expected demand for mercury removal products significantly depends on: (1)the implementation and enforcement of environmental laws and regulations, particularly those that would require U.S. based coal-fired electric utilities to reduce the quantity of air pollutants they release, including mercury, to comply with the Mercury and Air Toxics Standards (“MATS”) issued by the U.S. Environmental Protection Agency (“EPA”) and (2)other factors such as the anticipated usage of activated carbon in the coal-fired energy units. The MATS regulation has been subject to legal challenge and, in June 2015, the U.S. Supreme Court held that the EPA unreasonably failed to consider costs in determining whether it is necessary and appropriate to regulate hazardous air pollutants, including mercury, emitted by coal-fired utilities, and remanded the case back to the United States Court of Appeals for the District of Columbia Circuit Court for further proceedings. On December 15, 2015, the D.C. Circuit Court ruled to keep the MATS regulation in place while the EPA works to address the cost analysis required by the U.S. Supreme Court’s decision. EPA has indicated that it will complete this work by April 2016.

The Company uses assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets requires the use of significant judgment with regard to assumptions used in the valuation model. The Company estimates the fair value of identifiable acquisition-related intangible assets principally based on projections of cash flows that will arise from these assets. The projected cash flows are discounted to determine the fair value of the assets at the dates of acquisition.

Definite-lived intangible assets, which are comprised of trademarks, customer relationships and developed technologies, are amortized over their estimated useful lives and are reviewed for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. The Company recognized an impairment on intangible assets associated with the Purification Solutions business in the third fiscal quarter of 2015 and no events have been subsequently identified that would require an additional impairment evaluation.

Long-Lived Assets Impairment

Long-lived Assets Impairment

The Company’s long-lived assets primarily include property, plant and equipment, intangible assets, long-term investments and assets held for rent. The carrying values of long-lived assets are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable.

To test for impairment of assets, the Company generally uses a probability-weighted estimate of the future undiscounted net cash flows of the assets over their remaining lives to determine if the value of the asset is recoverable. Long-lived assets are grouped with other assets and liabilities at the lowest level for which independent identifiable cash flows are determinable.

An asset impairment is recognized when the carrying value of the asset is not recoverable based on the analysis described above, in which case the asset is written down to its fair value. If the asset does not have a readily determinable market value, a discounted cash flow model may be used to determine the fair value of the asset. In circumstances when an asset does not have separate identifiable cash flows, an impairment charge is recorded when the Company no longer intends to use the asset.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful lives. The depreciable lives for buildings, machinery and equipment, and other fixed assets are twenty to twenty-five years, ten to twenty-five years, and three to twenty-five years, respectively. The cost and accumulated depreciation for property, plant and equipment sold, retired, or otherwise disposed of are removed from the Consolidated Balance Sheets and resulting gains or losses are included in earnings in the Consolidated Statements of Operations. Expenditures for repairs and maintenance are charged to expenses as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated.

Income Tax in Interim Periods

Income Tax in Interim Periods

The Company records its tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period.

Valuation allowances are provided against the future tax benefits that arise from the deferred tax assets in jurisdictions for which no benefit can be recognized. The estimated annual effective tax rate may be significantly impacted by nondeductible expenses and the Company’s projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.

Inventory Valuation

Inventory Valuation

Inventories are stated at the lower of cost or market. The cost of all carbon black inventories in the U.S. is determined using the last-in, first-out (“LIFO”) method. Had the Company used the first-in, first-out (“FIFO”) method instead of the LIFO method for such inventories, the value of those inventories would have been $28 million and $30 million higher as of December 31, 2015 and September30, 2015, respectively. The cost of Specialty Fluids inventories, which are classified as assets held for rent, is determined using the average cost method. The cost of other U.S. and non-U.S. inventories is determined using the first-in, first-out (“FIFO”) method.

Cabot reviews inventory for both potential obsolescence and potential declines in anticipated selling prices. In this review, the Company makes assumptions about the future demand for and market value of the inventory, and based on these assumptions estimates the amount of any obsolete, unmarketable, slow moving, or overvalued inventory. Cabot writes down the value of these inventories by an amount equal to the difference between the cost of the inventory and its estimated net realizable value.

Pensions and Other Postretirement Benefits

Pensions and Other Postretirement Benefits

The Company recognizes the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The Company is required to recognize as a component of other comprehensive income, net of tax, the actuarial gains/losses and prior service costs/credits that arise but were not previously required to be recognized as components of net periodic benefit cost. Other comprehensive income is adjusted as these amounts are later recognized in income as components of net periodic benefit cost.

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income, which is included as a component of stockholders’ equity, includes unrealized gains or losses on available-for-sale marketable securitiesand derivative instruments, currency translation adjustments in foreign subsidiaries, translation adjustments on foreign equity securities and minimumpension liability adjustments.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued a new standard related to the “Revenue from Contracts with Customers” which amends the existing accounting standards for revenue recognition. The standard requires entities to recognize revenue when they transfer promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This standard is applicable for fiscal years beginning after December15, 2017 and for interim periods within those years and early adoption is permitted for the fiscal years beginning after December 15, 2016. The Company expects to adopt this standard on October1, 2018.The Company is currently evaluating the impact the adoption of this standard may have on its consolidated financial statements.

In April 2015, the FASB issued a new standard simplifying the presentation of debt issuance costs by requiring debt issuance costs to be presented as a reduction of the corresponding debt liability. This will make the presentation of debt issuance costs consistent with the presentation of debt discounts or premiums. This standard is applicable for fiscal years beginning after December15, 2015 and for interim periods within those years and early adoption is permitted. The Company expects to adopt this standard on October1, 2016. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

In November 2015, the FASB issued a new standard that amends the existing accounting standard for Income Taxes and simplifies the presentation of deferred income taxes. This will require that deferred income tax assets and liabilities be classified as noncurrent on the balance sheet. This standard is applicable for fiscal years beginning after December 15, 2016 and for interim periods within those years and early adoption is permitted. The Company is evaluating this standard and the timing of its adoption. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements.

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Significant Accounting Policies (Tables)

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Segment Reporting Revenue Percentage

The following table shows the relative size of the revenue recognized in each of the Company’s reportable segments.

	Three Months Ended
	December31,
	2015			2014
Reinforcement Materials		51	%		59	%
Performance Chemicals		36	%		29	%
Purification Solutions		12	%		10	%
Specialty Fluids		1	%		2	%

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Employee Benefit Plans (Tables)

3 Months Ended

Dec. 31, 2015

Compensation And Retirement Disclosure [Abstract]

Net Periodic Defined Benefit Pension and Other Postretirement Benefit Costs

Net periodic defined benefit pension and other postretirement benefit costs include the following:

	Three Months Ended December31,
	2015						2014						2015					2014
	Pension Benefits												Postretirement Benefits
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign		U.S.			Foreign
	(Dollars in millions)
Service cost	$	—		$	2		$	—		$	2		$	—		$	—	$	—		$	—
Interest cost		1			2			2			3			—			—		—			—
Expected return on plan assets		(3	)		(3	)		(3	)		(4	)		—			—		—			—
Amortization of prior service credit		—			—			—			—			(1)			—		(1	)		—
Amortization of actuarial loss		—			1			—			1			—			—		—			—
Settlement and curtailment cost (credit)		—			—			—			18			(1	)		—		—			—
Net periodic (credit) benefit cost	$	(2	)	$	2		$	(1	)	$	20		$	(2	)	$	—	$	(1	)	$	—

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill Balances

The carrying amount of goodwill attributable to each reportable segment with goodwill balances and the changes in those balances during the three month period ended December 31, 2015 are as follows:

	Reinforcement Materials			Performance Chemicals		Purification Solutions		Total
	(Dollars in millions)
Balance at September 30, 2015	$	55		$	9	$	90	$	154
Foreign currency impact		(1	)		—		—		(1	)
Balance at December 31, 2015	$	54		$	9	$	90	$	153

Schedule of Intangible Assets

The following table provides information regarding the Company’s intangible assets:

	December31, 2015							September 30, 2015
	Gross Carrying Value		Accumulated Amortization			Net Intangible Assets		Gross Carrying Value		Accumulated Amortization			Net Intangible Assets
	(Dollars in millions)
Intangible assets with finite lives
Developed technologies	$	48	$	(2	)	$	46	$	48	$	(1	)	$	47
Trademarks		15		—			15		16		—			16
Customer relationships		95		(7	)		88		96		(6	)		90
Total intangible assets	$	158	$	(9	)	$	149	$	160	$	(7	)	$	153

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Stockholders' Equity (Tables)

3 Months Ended

Dec. 31, 2015

Equity [Abstract]

Schedule of Activity in Noncontrolling Interests

Noncontrolling interest

The following table illustrates the noncontrolling interest activity for the periods presented:

	2015			2014
	(Dollars in millions)
Balance at September 30	$	104		$	122
Net income attributable to noncontrolling interests		4			4
Noncontrolling interest foreign currency translation    adjustment		(3	)		(2	)
Noncontrolling interest dividends		(9	)		—
Balance at December 31	$	96		$	124

The dividends declared during the three months ended December 31, 2015 were not paid during the period.

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Dec. 31, 2015

Equity [Abstract]

Changes in Each Component of AOCI, Net of Tax

Changes in each component of AOCI, net of tax, are as follows:

	Currency Translation Adjustment			Unrealized Gains on Investments		PensionandOther Postretirement Benefit Liability Adjustments			Total
	(Dollars in millions)
Balance at September 30, 2015, attributable to Cabot    Corporation	$	(239	)	$	2	$	(62	)	$	(299	)
Other comprehensive loss before reclassifications		(47	)		—		—			(47	)
Amounts reclassified from accumulated other    comprehensive (loss) income		—			—		(1	)		(1	)
Net other comprehensive items		(286	)		2		(63	)		(347	)
Less: Noncontrolling interest		(3	)		—		—			(3	)
Balance at December 31, 2015, attributable to Cabot    Corporation	$	(283	)	$	2	$	(63	)	$	(344	)

Amounts Reclassified Out of AOCI

The amounts reclassified out of AOCI and into the Consolidated Statements of Operations in the three months ended December 31, 2015 and 2014 are as follows:

		Three Months Ended
	Affected Line Item in the Consolidated	December31,
	Statements of Operations	2015			2014
		(Dollars in millions)
Pension and other postretirement    benefit liability adjustment
Amortization of actuarial losses	Net Periodic Benefit Cost - see    Note C for details	$	1		$	1
Amortization of prior service cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		(1	)
Settlement and curtailment (credit) cost	Net Periodic Benefit Cost - see    Note C for details		(1	)		27
Total before tax			(1	)		27
Tax impact	Benefit for income taxes		—			(6	)
Total after tax		$	(1	)	$	21

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Commitments and Contingencies (Tables)

3 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Schedule of Components of Purchase Commitments

Cabot has entered into long-term purchase agreements primarily for the purchase of raw materials. Under certain of these agreements the quantity of material being purchased is fixed, but the price paid changes as market prices change. For those commitments, the amounts included in the table below are based on market prices at December 31, 2015.

	Payments Due by Fiscal Year
	Remainderof Fiscal2016		2017		2018		2019		2020		Thereafter		Total
	(Dollars in millions)
Reinforcement Materials	$	144	$	136	$	135	$	132	$	96	$	1,702	$	2,345
Performance Chemicals		44		50		37		32		29		155		347
Purification Solutions		10		7		1		—		—		—		18
Total	$	198	$	193	$	173	$	164	$	125	$	1,857	$	2,710

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Income Tax (Tables)

3 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Effective Tax Rate

Effective Tax Rate

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
(Benefit) Provision for income taxes	$	(5	)	$	3
Effective tax rate		74	%		5	%

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Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Components of Basic and Diluted Earnings Per Common Share

The following tables summarize the components of the basic and diluted earnings per common share computations:

	Three Months Ended
	December31,
	2015			2014
	(Dollars and shares in millions, except per share amounts)
Basic EPS:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends and dividend equivalents to    participating securities		—			—
Less: Undistributed earnings allocated to    participating securities(1)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Weighted average common shares and    participating securities outstanding		62.9			64.6
Less: Participating securities(1)		0.4			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.1
Amounts per share - basic:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.70
Diluted EPS(2) :
(Loss) earnings allocated to common shareholders	$	(7	)	$	45
Plus: (Loss) earnings allocated to participating securities		—			—
Less: Adjusted earnings allocated to participating    securities(3)		—			—
(Loss) earnings allocated to common    shareholders (numerator)	$	(7	)	$	45
Adjusted weighted average common shares    outstanding		62.5			64.1
Effect of dilutive securities:
Common shares issuable(4)		—			0.5
Adjusted weighted average common shares    (denominator)		62.5			64.6
Amounts per share - diluted:
Net (loss) income attributable to Cabot Corporation	$	(0.11	)	$	0.69

(1)Participating securities consist of shares of unvested time-based restricted stock units.

Calculation of Undistributed Earnings

Undistributed earnings are the earnings which remain after dividends declared during the period are assumed to be distributed to the common and participating shareholders. Undistributed earnings are allocated to common and participating shareholders on the same basis as dividend distributions. The calculation of undistributed earnings is as follows:

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
Calculation of undistributed earnings:
Net (loss) income attributable to Cabot Corporation	$	(7	)	$	45
Less: Dividends declared on common stock		14			14
Less: Dividends declared on participating    securities		—			—
Undistributed (loss) earnings	$	(21	)	$	31
Allocation of undistributed (loss) earnings:
Undistributed (loss) earnings allocated to common    shareholders	$	(21	)	$	31
Undistributed (loss) earnings allocated to participating    shareholders		—			—
Undistributed (loss) earnings	$	(21	)	$	31

(2)Due to the Company’s net loss position, dividends on participating securities were not added back to the loss available to common shares for the three months ended December 31, 2015 when calculating diluted EPS.

(3)Undistributed earnings are adjusted for the assumed distribution of dividends to the dilutive securities, which are described in (4)below, and then reallocated to participating securities.

(4)Represents incremental shares of common stock from the (i)assumed exercise of stock options issued under Cabot’s equity incentive plans; (ii)assumed issuance of shares to employees pursuant to the Company’s Deferred Compensation and Supplemental Retirement Plan; and (iii)assumed issuance of shares under outstanding performance-based restricted stock unit awards issued under Cabot’s equity incentive plans.The weighted average common shares outstanding for the three months ending December 31, 2015 excludes 1,083,358 shares as those shares would be antidilutive due to the Company’s net loss position. For the three months ended December 31, 2014, 325,500incremental shares of common stock were not included in the calculation of diluted earnings per share because the inclusion of these shares would have been antidilutive.

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Restructuring (Tables)

3 Months Ended

Dec. 31, 2015

Recorded Restructuring Activities

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

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Cost of sales	$	37	$	2
Selling and administrative expenses		6		5
Research and technical expenses		5		—
Total	$	48	$	7

Restructuring Activities and Related Reserves

Details of all restructuring activities and the related reserves during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Environmental Remediation		Asset Sales			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	5		$	2	$	—		$	—		$	2		$	9
Charges (credit)		25			—		(2	)		23			2			48
Costs charged against assets / liabilities		—			—		(5	)		(23	)		—			(28	)
Cash (paid) received		(11	)		—		7			—			(3	)		(7	)
Reserve at December 31, 2015	$	19		$	2	$	—		$	—		$	1		$	22

2016 Plan [Member]

Restructuring Activities and Related Reserves

Details of the 2016 restructuring activities, including the Merak facility closure, during the three months ended December 31, 2015 are as follows:

	Severance and Employee Benefits			Asset Impairment and Accelerated Depreciation			Other			Total
	(Dollars in millions)
Reserve at September 30, 2015	$	—		$	—		$	—		$	—
Charges		25			22			1			48
Costs charged against assets / liabilities		1			(22	)		—			(21	)
Cash paid		(10	)		—			(1	)		(11	)
Reserve at December 31, 2015	$	16		$	—		$	—		$	16

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Derivatives (Tables)

3 Months Ended

Dec. 31, 2015

Forward Foreign Currency Contracts [Member]

Details of Derivatives Held to Manage Foreign Currency Risk

The following table provides details of the derivatives held as of December 31, 2015 and September30, 2015 to manage foreign currency risk.

		NotionalAmount, net
Description	Borrowing	December31,2015	September30,2015	HedgeDesignation
Forward Foreign Currency Contracts (1)	N/A	USD7million	USD2million	Nodesignation

(1)Cabot’s forward foreign exchange contracts are denominated primarily in the British pound sterling, Czech koruna, and Indonesian rupiah.

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Financial Information by Segment (Tables)

3 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Schedule of Performance Segment

The net sales from each of these businesses for the three months ended December 31, 2015 and 2014 are as follows:

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Specialty Carbons and Formulations	$	140	$	157
Metal Oxides		67		72
Total Performance Chemicals	$	207	$	229

Financial Information by Reportable Segment

Financial information by reportable segment is as follows:

	Reinforcement Materials		Performance Chemicals		Purification Solutions			Specialty Fluids		Segment Total		Unallocated and Other(1)			Consolidated Total
	(Dollars in millions)
Three Months Ended December 31, 2015
Revenues from external customers(2)	$	288	$	207	$	66		$	7	$	568	$	35		$	603
Income (loss) from continuing operations    before taxes(3)	$	26	$	50	$	(5	)	$	—	$	71	$	(79	)	$	(8	)
Three Months Ended December 31, 2014
Revenues from external customers(2)	$	460	$	229	$	76		$	16	$	781	$	31		$	812
Income (loss) from continuing operations    before taxes(3)	$	53	$	39	$	(1	)	$	6	$	97	$	(46	)	$	51

(1)Unallocated and Other includes certain items and eliminations necessary to reflect management’s reporting of operating segment results. These items are reflective of the segment reporting presented to the Chief Operating Decision Maker.

(2)“Unallocated and Other revenues from external customers”reflects royalties, other operating revenues, external shipping and handling costs, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain Notes receivable. Details are provided in the table below:

	Three Months Ended
	December31,
	2015		2014
	(Dollars in millions)
Royalties, other operating revenues, the impact of unearned revenue, the    removal of 100% of the sales of an equity method affiliate and discounting    charges for certain Notes receivable.	$	9	$	4
Shipping and handling fees		26		27
Total	$	35	$	31

(3)Income (loss) from continuing operations before taxes that are categorized as Unallocated and Other includes:

	Three Months Ended
	December31,
	2015			2014
	(Dollars in millions)
Interest expense	$	(13	)	$	(13	)
Total certain items, pre-tax(a)		(58	)		(26	)
Equity in (earnings) loss of affiliated companies, net of tax(b)		—			(1	)
Unallocated corporate costs(c)		(13	)		(12	)
General unallocated income(d)		5			6
Total	$	(79	)	$	(46	)

(a)Certain items are items that management does not consider to be representative of operating segment results and they are, therefore, excluded from Segment EBIT. Certain items, pre-tax, for the three months ended December 31, 2015 include$48 million related to global restructuring activities, $8 million related to foreign currency loss on the devaluation of the Argentine peso, and $2 million related to legal and environmental matters and reserves. Certain items, pre-tax, for the three months ended December 31, 2014include $7 million related to global restructuring activities, $1 million for acquisition and integration-related charges and $18 million related to an employee benefit plan settlement charge.

(b)Equity in (earnings) loss of affiliated companies, net of tax, is included in Segment EBIT and is removed from Unallocated and other to reconcile to income (loss) from operations before taxes.

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

(d)General unallocated income consists of gains (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, the profit or loss related to the corporate adjustment for unearned revenue, and the impact of including the full operating results of an equity affiliate in Purification Solutions Segment EBIT.

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Significant Accounting Policies - Segment Reporting Revenue Percentage (Detail) - Sales Revenue, Segment [Member] - Revenue from Rights Concentration Risk [Member]	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Reinforcement Materials [Member]
Segment Reporting Information [Line Items]
Revenue, by segment	51.00%	59.00%
Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Revenue, by segment	36.00%	29.00%
Purification Solutions [Member]
Segment Reporting Information [Line Items]
Revenue, by segment	12.00%	10.00%
Specialty Fluids [Member]
Segment Reporting Information [Line Items]
Revenue, by segment	1.00%	2.00%

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Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Significant Accounting Policies [Line Items]
Value of inventories under FIFO method	$ 28	$ 30
Buildings [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	20 years
Buildings [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	25 years
Machinery and Equipment [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	10 years
Machinery and Equipment [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	25 years
Other Fixed Assets [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	3 years
Other Fixed Assets [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Useful life of property, plant and equipment	25 years

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Employee Benefit Plans - Net Periodic Defined Benefit Pension and Other Postretirement Benefit Costs (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
U.S. Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 1	$ 2
Expected return on plan assets	(3)	(3)
Net periodic (credit) benefit cost	(2)	(1)
Foreign Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	2	2
Interest cost	2	3
Expected return on plan assets	(3)	(4)
Amortization of actuarial loss	1	1
Settlement and curtailment cost (credit)		18
Net periodic (credit) benefit cost	2	20
U. S. Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Amortization of prior service credit	(1)	(1)
Settlement and curtailment cost (credit)	(1)
Net periodic (credit) benefit cost	$ (2)	$ (1)

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Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Compensation And Retirement Disclosure [Abstract]
Settlement costs		$ 18
Pre-tax charge from AOCI	$ 27
Settlement charges on pension liability	11
Settlement charges on employer contributions	$ 2

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Goodwill And Intangible Assets [Line Items]
Goodwill	$ 153		$ 154
Amortization expense estimated for year one	9
Amortization expense estimated for year two	9
Amortization expense estimated for year three	9
Amortization expense estimated for year four	9
Amortization expense estimated for year five	9
Cost of Sales and Selling and Administrative Expenses [Member]
Goodwill And Intangible Assets [Line Items]
Amortization of intangible assets	$ 2	$ 4
Minimum [Member]
Goodwill And Intangible Assets [Line Items]
Useful life of intangible assets	14 years
Maximum [Member]
Goodwill And Intangible Assets [Line Items]
Useful life of intangible assets	25 years
Weighted Average [Member]
Goodwill And Intangible Assets [Line Items]
Useful life of intangible assets	19 years

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Goodwill and Intangible Assets - Schedule of Goodwill Balances (Detail) $ in Millions	3 Months Ended
	Dec. 31, 2015 USD ($)
Goodwill And Intangible Assets [Line Items]
Beginning balance	$ 154
Foreign currency impact	(1)
Ending balance	153
Reinforcement Materials [Member]
Goodwill And Intangible Assets [Line Items]
Beginning balance	55
Foreign currency impact	(1)
Ending balance	54
Performance Chemicals [Member]
Goodwill And Intangible Assets [Line Items]
Beginning balance	9
Ending balance	9
Purification Solutions [Member]
Goodwill And Intangible Assets [Line Items]
Beginning balance	90
Ending balance	$ 90

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Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value, finite lives	$ 158	$ 160
Accumulated Amortization	(9)	(7)
Net Intangible Assets, finite lives	149	153
Developed Technologies [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value, finite lives	48	48
Accumulated Amortization	(2)	(1)
Net Intangible Assets, finite lives	46	47
Trademarks [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value, finite lives	15	16
Net Intangible Assets, finite lives	15	16
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value, finite lives	95	96
Accumulated Amortization	(7)	(6)
Net Intangible Assets, finite lives	$ 88	$ 90

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Stockholders' Equity - Additional Information (Detail) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Jan. 31, 2015	Sep. 30, 2007
Class Of Stock [Line Items]
Repurchase authorization, shares			5,000,000	10,000,000
Cash dividends paid to common stockholders	$ 14,000,000	$ 14,000,000
Cash dividend paid per share	$ 0.22	$ 0.22
Dividend declared but not paid	$ 0
2007 Share Repurchase Authorization [Member]
Class Of Stock [Line Items]
Common stock shares repurchased	925,700
January 2015 Share Repurchase Authorization [Member]
Class Of Stock [Line Items]
Common stock shares repurchased	1,594,300
Shares remaining available for repurchase under the current authorization	3,405,700

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Stockholders' Equity - Schedule of Activity in Noncontrolling Interests (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Equity [Abstract]
Balance at September 30	$ 104	$ 122
Net income attributable to noncontrolling interests	4	4
Noncontrolling interest foreign currency translation adjustment	(3)	(2)
Noncontrolling interest dividends	(9)
Balance at December 31	$ 96	$ 124

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Accumulated Other Comprehensive Loss - Changes in Each Component of AOCI, Net of Tax (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income Loss [Line Items]
Balance attributable to Cabot Corporation	$ (299)
Other comprehensive loss before reclassifications	(47)
Amounts reclassified from accumulated other comprehensive (loss) income	(1)	$ 21
Net other comprehensive items	(347)
Less: Noncontrolling interest	(3)
Balance attributable to Cabot Corporation	(344)
Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance attributable to Cabot Corporation	(239)
Other comprehensive loss before reclassifications	(47)
Net other comprehensive items	(286)
Less: Noncontrolling interest	(3)
Balance attributable to Cabot Corporation	(283)
Unrealized Gains on Investments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance attributable to Cabot Corporation	2
Net other comprehensive items	2
Balance attributable to Cabot Corporation	2
Pension and Other Postretirement Benefit Liability Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance attributable to Cabot Corporation	(62)
Amounts reclassified from accumulated other comprehensive (loss) income	(1)
Net other comprehensive items	(63)
Balance attributable to Cabot Corporation	$ (63)

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Accumulated Other Comprehensive Loss - Amounts Reclassified Out of AOCI (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total before tax	$ (1)	$ 27
Tax impact		(6)
Total after tax	(1)	21
Pension and Other Postretirement Benefit Liability Adjustments [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amortization of actuarial losses	1	1
Amortization of prior service cost	(1)	(1)
Settlement and curtailment (credit) cost	1	$ (27)
Total after tax	$ (1)

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Commitments and Contingencies - Schedule of Components of Purchase Commitments (Detail) $ in Millions	Dec. 31, 2015 USD ($)
Long-term Purchase Commitment [Line Items]
Payments Due by Remainder of Fiscal Year 2016	$ 198
Payments Due by Fiscal Year 2017	193
Payments Due by Fiscal Year 2018	173
Payments Due by Fiscal Year 2019	164
Payments Due by Fiscal Year 2020	125
Payments Due Thereafter	1,857
Payments Due, Total	2,710
Reinforcement Materials [Member]
Long-term Purchase Commitment [Line Items]
Payments Due by Remainder of Fiscal Year 2016	144
Payments Due by Fiscal Year 2017	136
Payments Due by Fiscal Year 2018	135
Payments Due by Fiscal Year 2019	132
Payments Due by Fiscal Year 2020	96
Payments Due Thereafter	1,702
Payments Due, Total	2,345
Performance Chemicals [Member]
Long-term Purchase Commitment [Line Items]
Payments Due by Remainder of Fiscal Year 2016	44
Payments Due by Fiscal Year 2017	50
Payments Due by Fiscal Year 2018	37
Payments Due by Fiscal Year 2019	32
Payments Due by Fiscal Year 2020	29
Payments Due Thereafter	155
Payments Due, Total	347
Purification Solutions [Member]
Long-term Purchase Commitment [Line Items]
Payments Due by Remainder of Fiscal Year 2016	10
Payments Due by Fiscal Year 2017	7
Payments Due by Fiscal Year 2018	1
Payments Due, Total	$ 18

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended
	Dec. 31, 2015 USD ($) claimants	Dec. 31, 2014 USD ($)	Sep. 30, 2015 USD ($) claimants
Respirator Liabilities [Member]
Loss Contingencies [Line Items]
Number of claimants | claimants	37,000		38,000
Respirator reserve	$ 10		$ 11
Cash payments for respirator reserves	1	$ 1
Environmental Matters [Member]
Loss Contingencies [Line Items]
Reserved for environmental matters	15		$ 16
Cash payments for environmental reserves	$ 1	$ 1

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Income Tax - Effective Tax Rate (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
(Benefit) Provision for income taxes	$ (5)	$ 3
Effective tax rate	74.00%	5.00%

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Income Tax - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Line Items]
(Benefit) Provision for income taxes	$ (5)	$ 3
Effective tax rate	74.00%	5.00%
Net discrete tax (benefits) charges related to tax settlements	$ (6)	$ (13)
Uncertain tax positions from expirations of statute of limitations	$ 2
Earliest Tax Year [Member] | Internal Revenue Service (IRS) [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2012
Earliest Tax Year [Member] | State Tax Authorities [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2005
Earliest Tax Year [Member] | Non-U.S. Jurisdictions [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2004
Latest Tax Year [Member] | Internal Revenue Service (IRS) [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2015
Latest Tax Year [Member] | State Tax Authorities [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2015
Latest Tax Year [Member] | Non-U.S. Jurisdictions [Member]
Income Taxes [Line Items]
Tax years remain subject to examination	2015

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Earnings Per Share - Components of Basic and Diluted Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Basic EPS:
Net (loss) income attributable to Cabot Corporation	$ (7)	$ 45
(Loss) earnings allocated to common shareholders (numerator)	$ (7)	$ 45
Weighted average common shares and participating securities outstanding	62.9	64.6
Less: Participating securities	0.4	0.5
Adjusted weighted average common shares (denominator)	62.5	64.1
Net (loss) income attributable to Cabot Corporation	$ (0.11)	$ 0.70
Diluted EPS:
(Loss) earnings allocated to common shareholders	$ (7)	$ 45
(Loss) earnings allocated to common shareholders (numerator)	$ (7)	$ 45
Adjusted weighted average common shares (denominator)	62.5	64.1
Common shares issuable		0.5
Adjusted weighted average common shares (denominator)	62.5	64.6
Net (loss) income attributable to Cabot Corporation	$ (0.11)	$ 0.69

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Earnings Per Share - Calculation of Undistributed Earnings (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Earnings Per Share [Abstract]
Net (loss) income attributable to Cabot Corporation	$ (7)	$ 45
Less: Dividends declared on common stock	14	14
Undistributed (loss) earnings	(21)	31
Undistributed (loss) earnings allocated to common shareholders	$ (21)	$ 31

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Earnings Per Share - Calculation of Undistributed Earnings (Parenthetical) (Detail) - shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share	1,083,358	325,500

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Restructuring - Recorded Restructuring Activities (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Restructuring Cost And Reserve [Line Items]
Restructuring reserve, period expense	$ 48	$ 7
Cost of Sales [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring reserve, period expense	37	2
Selling and Administrative Expenses [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring reserve, period expense	6	$ 5
Research and Technical Expenses [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring reserve, period expense	$ 5

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Restructuring - Restructuring Activities and Related Reserves (Detail) $ in Millions	3 Months Ended
	Dec. 31, 2015 USD ($)
Restructuring Cost And Reserve [Line Items]
Reserve balance	$ 9
Charges (credit)	48
Costs charged against assets / liabilities	(28)
Cash (paid) received	(7)
Reserve balance	22
Severance and Employee Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Reserve balance	5
Charges (credit)	25
Cash (paid) received	(11)
Reserve balance	19
Environmental Remediation [Member]
Restructuring Cost And Reserve [Line Items]
Reserve balance	2
Reserve balance	2
Asset Sales [Member]
Restructuring Cost And Reserve [Line Items]
Charges (credit)	(2)
Costs charged against assets / liabilities	(5)
Cash (paid) received	7
Asset Impairment and Accelerated Depreciation [Member]
Restructuring Cost And Reserve [Line Items]
Charges (credit)	23
Costs charged against assets / liabilities	(23)
Other [Member]
Restructuring Cost And Reserve [Line Items]
Reserve balance	2
Charges (credit)	2
Cash (paid) received	(3)
Reserve balance	$ 1

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Restructuring - Additional Information (Detail)				1 Months Ended		3 Months Ended		9 Months Ended	12 Months Ended	87 Months Ended
	Nov. 11, 2015 Employees	Oct. 20, 2015 Position	Apr. 26, 2013 Employees	Dec. 31, 2015 USD ($)	Jan. 31, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						$ 48,000,000	$ 7,000,000
Restructuring costs in accrued expenses				$ 22,000,000		22,000,000				$ 22,000,000	$ 9,000,000
Restructuring Activities Other [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						1,000,000	1,000,000
Severance Costs [Member] | Restructuring Activities Other [Member]
Restructuring Cost And Reserve [Line Items]
Accrued severance charges				3,000,000		3,000,000				3,000,000
Scenario Forecast [Member] | Maximum [Member] | Restructuring Activities Other [Member]
Restructuring Cost And Reserve [Line Items]
Additional restructuring charges after current fiscal								$ 1,000,000
Operational Restructuring [Member]
Restructuring Cost And Reserve [Line Items]
Number of positions eliminated | Position		300
Pre-tax charge to earnings						24,000,000
Expected cumulative net cash outlays related to plan				28,000,000		28,000,000				28,000,000
Cash payments						11,000,000
Restructuring cash payments through the reminder of fiscal 2016						15,000,000
Restructuring cash payments, thereafter						2,000,000
Operational Restructuring [Member] | Severance Costs [Member]
Restructuring Cost And Reserve [Line Items]
Accrued severance charges				14,000,000		14,000,000				14,000,000
Operational Restructuring [Member] | Scenario Forecast [Member]
Restructuring Cost And Reserve [Line Items]
Additional restructuring charges after current fiscal								4,000,000
Closure of Carbon Black Facility [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						24,000,000
Affected employees | Employees	50
Closure of Carbon Black Facility [Member] | Severance Costs [Member]
Restructuring Cost And Reserve [Line Items]
Accrued severance charges				2,000,000		2,000,000				2,000,000
Closure of Carbon Black Facility [Member] | Asset Impairment and Accelerated Depreciation [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						22,000,000
Closure of Carbon Black Facility [Member] | Severance and Employee Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						2,000,000
Closure of Carbon Black Facility [Member] | Scenario Forecast [Member]
Restructuring Cost And Reserve [Line Items]
Expected cumulative net cash outlays related to plan								8,000,000	$ 8,000,000
Site demolition and other miscellaneous costs									6,000,000
Shared Service Center Transition [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings					$ 24,000,000	0	4,000,000
Cash payments						20,000,000
Severance charges					16,000,000	13,000,000
Other charges					$ 8,000,000	7,000,000
Expected restructuring charges				1,000,000		1,000,000				1,000,000
Restructuring costs in accrued expenses				1,000,000		1,000,000				1,000,000
Closure of Port Dickson [Member]
Restructuring Cost And Reserve [Line Items]
Affected employees | Employees			90
Severance charges						2,000,000
Other charges						1,000,000
Expected restructuring charges				19,000,000		19,000,000				19,000,000
Net pre-tax gain						1,000,000
Accelerated depreciation and asset write-offs						16,000,000
Site demolition, clearing and environmental remediation costs						2,000,000
Expected cumulative net cash received to this plan				3,000,000		3,000,000				3,000,000
Closure of Port Dickson [Member] | Maximum [Member]
Restructuring Cost And Reserve [Line Items]
Expected restructuring charges							1,000,000
Restructuring costs in accrued expenses				$ 1,000,000		$ 1,000,000				$ 1,000,000
Closure of Port Dickson [Member] | Cabot [Member]
Restructuring Cost And Reserve [Line Items]
Equity share in CMSB			50.10%
Closure of Port Dickson [Member] | CMSB [Member]
Restructuring Cost And Reserve [Line Items]
Portion of the charges that are allocable to the noncontrolling interest				49.90%		49.90%				49.90%
Closure of Port Dickson [Member] | Severance and Employee Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Expected cumulative net cash received to this plan				$ 2,000,000		$ 2,000,000				$ 2,000,000
Closure of Port Dickson [Member] | Asset Sales [Member]
Restructuring Cost And Reserve [Line Items]
Expected cumulative net cash received to this plan				7,000,000		7,000,000				7,000,000
Closure of Port Dickson [Member] | Environmental Remediation [Member]
Restructuring Cost And Reserve [Line Items]
Expected cumulative net cash received to this plan				1,000,000		1,000,000				1,000,000
Closure of Port Dickson [Member] | Facility Closure Costs [Member]
Restructuring Cost And Reserve [Line Items]
Expected cumulative net cash received to this plan				1,000,000		1,000,000				1,000,000
Closure of Port Dickson [Member] | Scenario Forecast [Member] | Maximum [Member]
Restructuring Cost And Reserve [Line Items]
Cash payments								$ 1,000,000
Closure of Port Dickson [Member] | Scenario Forecast [Member] | Land [Member]
Restructuring Cost And Reserve [Line Items]
Gain on sale of asset									2,000,000
Previous Actions and Sites Pending Sale [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings							$ 2,000,000
Cash payments										87,000,000
Severance charges				67,000,000
Other charges				23,000,000
Expected restructuring charges				165,000,000		165,000,000				165,000,000
Gain on sale of asset				1,000,000
Site demolition, clearing and environmental remediation costs				10,000,000
Restructuring accelerated depreciation and asset impairments				66,000,000
Previous Actions and Sites Pending Sale [Member] | Maximum [Member]
Restructuring Cost And Reserve [Line Items]
Pre-tax charge to earnings						1,000,000
Previous Actions and Sites Pending Sale [Member] | Severance Costs [Member] | Restructuring Activities Other [Member]
Restructuring Cost And Reserve [Line Items]
Accrued severance charges				$ 2,000,000		$ 2,000,000				$ 2,000,000
Previous Actions and Sites Pending Sale [Member] | Scenario Forecast [Member] | Land Rights [Member]
Restructuring Cost And Reserve [Line Items]
Gain on sale of asset									8,000,000
Expected cash received from sale of land rights									9,000,000
Previous Actions and Sites Pending Sale [Member] | Scenario Forecast [Member] | Environmental and Other Closure Related Costs [Member]
Restructuring Cost And Reserve [Line Items]
Cash payments									$ 2,000,000

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Restructuring - Restructuring Activities Including Merak Facility Closure (Detail) $ in Millions	3 Months Ended
	Dec. 31, 2015 USD ($)
Restructuring Cost And Reserve [Line Items]
Reserve balance	$ 9
Charges	48
Cash paid	(7)
Reserve balance	22
Severance and Employee Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Reserve balance	5
Charges	25
Cash paid	(11)
Reserve balance	19
Asset Impairment and Accelerated Depreciation [Member]
Restructuring Cost And Reserve [Line Items]
Charges	23
Other [Member]
Restructuring Cost And Reserve [Line Items]
Reserve balance	2
Charges	2
Cash paid	(3)
Reserve balance	1
2016 Plan [Member]
Restructuring Cost And Reserve [Line Items]
Charges	48
Costs charged against assets / liabilities	(21)
Cash paid	(11)
Reserve balance	16
2016 Plan [Member] | Severance and Employee Benefits [Member]
Restructuring Cost And Reserve [Line Items]
Charges	25
Costs charged against assets / liabilities	1
Cash paid	(10)
Reserve balance	16
2016 Plan [Member] | Asset Impairment and Accelerated Depreciation [Member]
Restructuring Cost And Reserve [Line Items]
Charges	22
Costs charged against assets / liabilities	(22)
2016 Plan [Member] | Other [Member]
Restructuring Cost And Reserve [Line Items]
Charges	1
Cash paid	$ (1)

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Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, liabilities, Level 2 to Level 1 transfers, amount	$ 0	$ 0
Fair value, assets, Level 2 to Level 1 transfers, amount	0	0
Fair value, liabilities, Level 1 to Level 2 transfers, amount	0	0
Fair value, assets, Level 1 to Level 2 transfers, amount	0	0
Fair value, assets, transfers into Level 3, amount	0	0
Fair value, assets, transfers out of Level 3, amount	0	0
Fair value, liabilities, transfers into Level 3, amount	0	0
Fair value, liabilities, transfers out of Level 3, amount	0	$ 0
Fair value of long-term debt	1,010,000,000		$ 1,020,000,000
Fixed Rate Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying value of long-term debt	960,000,000		960,000,000
Significant Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets in the Consolidated Balance Sheets	$ 11,000,000		$ 12,000,000

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Derivative - Additional Information (Detail) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Fair Value Hedging [Member] | Interest Rate Swap-Fixed to Variable [Member]
Derivative [Line Items]
Derivatives held to manage interest rate risk	$ 0	$ 0

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Derivatives - Details of Derivatives Held to Manage Foreign Currency Risk (Detail) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
Not Designated as Hedging Instrument [Member] | Forward Foreign Currency Contracts [Member]
Derivative [Line Items]
Notional amount, net of forward foreign currency contract no designation hedge derivatives	[1]	$ 7,000,000	$ 2,000,000

[1] Cabot’s forward foreign exchange contracts are denominated primarily in the British pound sterling, Czech koruna, and Indonesian rupiah.

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Venezuela - Additional Information (Detail) VEF in Millions	3 Months Ended
	Dec. 31, 2015 USD ($) VEB / $	Dec. 31, 2014 USD ($)	Dec. 31, 2015 VEF VEB / $
Nature Of Operations [Line Items]
Operating affiliate investment	$ 13,000,000
Due from affiliates, dividends cash | VEF			VEF 17
Conversion of Bolivars to USD | VEB / $	52		52
Subsidiaries
Nature Of Operations [Line Items]
Cash dividends received from subsidiary	$ 2,000,000	$ 2,000,000
Maximum [Member]
Nature Of Operations [Line Items]
Due from affiliates, dividends cash	$ 1,000,000
Venezuela [Member] | Carbon Black Affiliate [Member]
Nature Of Operations [Line Items]
Equity method investment, ownership percentage	49.00%		49.00%

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Financial Information by Segment - Additional Information (Detail)	3 Months Ended
	Dec. 31, 2015 Segment Business_Unit
Segment Reporting Information [Line Items]
Number of business reportable segments | Segment	4
Performance Chemicals [Member]
Segment Reporting Information [Line Items]
Number of business activity | Business_Unit	2

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Financial Information by Segment - Schedule of Performance Segment (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Net sales	$ 603	$ 812
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	568	781
Performance Chemicals [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	207	229
Performance Chemicals [Member] | Specialty Carbons and Formulations [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	140	157
Performance Chemicals [Member] | Metal Oxides [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales	$ 67	$ 72

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Financial Information by Segment - Financial Information by Reportable Segment (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Revenues from external customers	$ 603	$ 812
Income (loss) from continuing operations before taxes	(8)	51
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	568	781
Income (loss) from continuing operations before taxes	71	97
Unallocated and Other [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	35	31
Income (loss) from continuing operations before taxes	(79)	(46)
Reinforcement Materials [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	288	460
Income (loss) from continuing operations before taxes	26	53
Performance Chemicals [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	207	229
Income (loss) from continuing operations before taxes	50	39
Purification Solutions [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	66	76
Income (loss) from continuing operations before taxes	(5)	(1)
Specialty Fluids [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues from external customers	$ 7	16
Income (loss) from continuing operations before taxes		$ 6

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Financial Information by Segment - Financial Information by Reportable Segment (Parenthetical) (Detail)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting [Abstract]
Percentage of sale of an equity method affiliate	100.00%	100.00%

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Financial Information by Segment - Sales of Equity Method Affiliate and Discounting Charges for Certain Notes Receivable (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Net sales	$ 603	$ 812
Unallocated and Other [Member]
Segment Reporting Information [Line Items]
Net sales	35	31
Unallocated and Other [Member] | Royalties, Other Operating Revenues, the Impact of Unearned Revenue, the Removal of 100% of the Sales of an Equity Method Affiliate and Discounting Charges for Certain Notes Receivable [Member]
Segment Reporting Information [Line Items]
Net sales	9	4
Unallocated and Other [Member] | Shipping and Handling Costs [Member]
Segment Reporting Information [Line Items]
Net sales	$ 26	$ 27

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Financial Information by Segment - Sales of Equity Method Affiliate and Discounting Charges for Certain Notes Receivable (Parenthetical) (Detail)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting [Abstract]
Percentage of sale of an equity method affiliate	100.00%	100.00%

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Financial Information by Segment - Schedule of Income (Loss) from Continuing Operations before Taxes for Unallocated and Other (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Interest expense	$ (13)	$ (13)
Unallocated and Other [Member]
Segment Reporting Information [Line Items]
Interest expense	(13)	(13)
Total certain items, pre-tax	(58)	(26)
Equity in (earnings) loss of affiliated companies, net of tax		(1)
Unallocated corporate costs	(13)	(12)
General unallocated income	5	6
Income from continuing operations before income taxes and equity in earnings of affiliated companies	$ (79)	$ (46)

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Financial Information by Segment - Schedule of Income (Loss) from Continuing Operations before Taxes for Unallocated and Other (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Restructuring reserve, period expense	$ 48	$ 7
Employee benefit plan settlement charge		18
Certain Item [Member]
Segment Reporting Information [Line Items]
Restructuring reserve, period expense	48	7
Charges for environmental expense	2
Acquisition and integration related charges		1
Employee benefit plan settlement charge		$ 18
Certain Item [Member] | Devaluation of Argentine Peso [Member]
Segment Reporting Information [Line Items]
Foreign currency exchange rate, re measurement loss	$ 8