Earnings Per Share (Tables)

12 Months Ended

Sep. 30, 2016

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:

	Years Ended September 30
	2016		2015			2014
	(In millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to Cabot Corporation	$	149	$	(334	)	$	199
Less: Dividends and dividend equivalents to participating securities		—		—			1
Less: Undistributed earnings allocated to participating securities⁽¹⁾		1		—			1
Earnings (loss) allocated to common shareholders (numerator)	$	148	$	(334	)	$	197
Weighted average common shares and participating securities outstanding		62.9		63.9			65.0
Less: Participating securities⁽¹⁾		0.5		0.5			0.6
Adjusted weighted average common shares (denominator)		62.4		63.4			64.4
Per share amounts—basic:
Income (loss) from continuing operations attributable to Cabot Corporation	$	2.36	$	(5.29	)	$	3.04
Income (loss) from discontinued operations		0.02		0.02			0.02
Net income (loss) attributable to Cabot Corporation	$	2.38	$	(5.27	)	$	3.06
Diluted EPS:
Earnings (loss) allocated to common shareholders	$	148	$	(334	)	$	197
Plus: Earnings (loss) allocated to participating securities		1		—			1
Less: Adjusted earnings allocated to participating securities⁽²⁾		1		—			1
Earnings (loss) available to common shares (numerator)	$	148	$	(334	)	$	197
Adjusted weighted average common shares outstanding		62.4		63.4			64.4
Effect of dilutive securities:
Common shares issuable⁽³⁾		0.5		—			0.7
Adjusted weighted average common shares (denominator)		62.9		63.4			65.1
Per share amounts—diluted:
Income (loss) from continuing operations attributable to Cabot Corporation	$	2.34	$	(5.29	)	$	3.01
Income (loss) from discontinued operations		0.02		0.02			0.02
Net income (loss) attributable to Cabot Corporation	$	2.36	$	(5.27	)	$	3.03

(1)

Participating securities consist of unvested time-based restricted stock units.

(2)

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

(3)

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 Supplemental 401(k) Plan; and (iii) assumed issuance of shares for outstanding and achieved performance-based stock unit awards issued under Cabot’s equity incentive plans using the treasury stock method. For fiscal 2016, 2015 and 2014, respectively, 634,168, 897,056 and 197,072 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.

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:

	Years Ended September 30
	2016		2015			2014
	(Dollars in millions)
Calculation of undistributed earnings:
Net income (loss) attributable to Cabot Corporation	$	149	$	(334	)	$	199
Less: Dividends declared on common stock		65		56			54
Less: Dividends and dividend equivalents to participating securities		—		—			1
Undistributed earnings (loss)	$	84	$	(390	)	$	144
Allocation of undistributed earnings:
Undistributed earnings (loss) allocated to common shareholders	$	83	$	(390	)	$	143
Undistributed earnings allocated to participating securities		1		—			1
Undistributed earnings (loss)	$	84	$	(390	)	$	144