Financial Information by Segment (Tables)

6 Months Ended

Mar. 31, 2020

The net sales from each of these businesses for the three and six months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31				Six Months Ended March 31
	2020		2019		2020		2019
	(In millions)
Performance Additives	$	168	$	179	$	338	$	346
Formulated Solutions		77		75		149		139
Total Performance Chemicals	$	245	$	254	$	487	$	485

Financial Information by Reportable Segment

Financial information by reportable segment is as follows:

	Reinforcement Materials		Performance Chemicals		Purification Solutions			Specialty Fluids⁽¹⁾		Segment Total		Unallocated and Other⁽²⁾			Consolidated Total
	(In millions)
Three Months Ended March 31, 2020
Revenues from external customers⁽³⁾	$	355	$	245	$	64		$	—	$	664	$	46		$	710
Income (loss) before income taxes⁽⁴⁾	$	61	$	31	$	3		$	—	$	95	$	(83	)	$	12

Three Months Ended March 31, 2019
Revenues from external customers⁽³⁾	$	445	$	254	$	72		$	24	$	795	$	49		$	844
Income (loss) before income taxes⁽⁴⁾	$	61	$	38	$	1		$	12	$	112	$	(63	)	$	49

Six Months Ended March 31, 2020
Revenues from external customers⁽²⁾	$	734	$	487	$	123		$	—	$	1,344	$	93		$	1,437
Income (loss) before income taxes⁽³⁾	$	108	$	72	$	1		$	—	$	181	$	(119	)	$	62

Six Months Ended March 31, 2019
Revenues from external customers⁽²⁾	$	902	$	485	$	137		$	43	$	1,567	$	98		$	1,665
Income (loss) before income taxes⁽³⁾	$	123	$	74	$	(2	)	$	22	$	217	$	(98	)	$	119

⁽¹⁾

^{Cabot divested its Specialty Fluids business during the third quarter of fiscal 2019. The agreement to divest this business did not meet the criteria for reporting this business as a discontinued operation, and therefore, the prior period’s financial statements and disclosures have not been recast. For more detail on the sale of the Specialty Fluids business, please refer to the 2019 10-K and Note C above.}

⁽²⁾	^{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 CODM.}

⁽³⁾

Consolidated Total Revenues from external customers reconciles to Net sales and other operating revenues on the Consolidated Statements of Operations. Revenues from external customers that are categorized as Unallocated and Other reflects royalties, external shipping and handling fees, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate, discounting charges for certain Notes receivable, and by-product revenue. Details are provided in the table below:

	Three Months Ended March 31						Six Months Ended March 31
	2020			2019			2020			2019
	(In millions)
Royalties, the impact of unearned revenue, the removal of 100% of the sales of an equity method affiliate and discounting charges for certain notes receivable	$	(1	)	$	(3	)	$	(2	)	$	(6)
Shipping and handling fees		30			32			61			64
By-product sales		17			20			34			40
Total	$	46		$	49		$	93		$	98

⁽⁴⁾	Consolidated Total Income (loss) before income taxes reconciles to Income (loss) before income taxes and equity in earnings of affiliated companies on the Consolidated Statements of Operations. Income (loss) before income taxes that are categorized as Unallocated and Other includes:

	Three Months Ended March 31						Six Months Ended March 31
	2020			2019			2020			2019
	(In millions)
Interest expense	$	(14	)	$	(14	)	$	(28	)	$	(29	)
Certain items^(a)
Legal and environmental matters and reserves		(51	)		(1	)		(50	)		(1	)
Global restructuring activities (Note K)		(5	)		(2	)		(13	)		(11	)
Employee benefit plan settlements		(1	)		—			(3	)		3
Acquisition and integration-related charges		(1	)		(1	)		(2	)		(4	)
Specialty Fluids loss on sale and asset impairment charges		(1	)		(20	)		(1	)		(20	)
Indirect tax settlement credits		3			—			3			—
Equity affiliate investment impairment charge		—			(11	)		—			(11	)
Other		—			(2	)		(1	)		(3	)
Total certain items, pre-tax		(56	)		(37	)		(67	)		(47	)
Unallocated corporate costs^(b)		(12	)		(13	)		(22	)		(25	)
General unallocated income (expense)^(c)		—			1			(1	)		3
Less: Equity in earnings of affiliated companies, net of tax^(d)		1			—			1			—
Total	$	(83	)	$	(63	)	$	(119	)	$	(98	)

^(a)

Certain items are items of expense and income that management does not consider representative of the Company’s fundamental on-going segment results and they are, therefore, excluded from Segment EBIT.

^(b)

Unallocated corporate costs are costs that are not controlled by the segments and primarily benefit corporate interests.

^(c)

General unallocated income (expense) consists of gains (losses) arising from foreign currency transactions, net of other foreign currency risk management activities, Interest and dividend income, the profit or loss related to the corporate adjustment for unearned revenue, the impact of including the full operating results of a contractual joint venture in Purification Solutions Segment EBIT and unrealized holding gains (losses) for equity securities.

^(d)

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

Revenues from External Customers by Geographic Region

The Company’s segments operate globally. In addition to presenting Revenue from external customers by reportable segment, the following tables further disaggregate Revenues from external customers by geographic region.

	Three Months Ended March 31, 2020
	Reinforcement Materials		Performance Chemicals		Purification Solutions		Consolidated Total
	(In millions)
Americas	$	154	$	76	$	29	$	259
Asia Pacific		122		79		9		210
Europe, Middle East and Africa		79		90		26		195
Segment revenues from external customers		355		245		64		664
Unallocated and other								46
Net sales and other operating revenues							$	710

	Three Months Ended March 31, 2019
	Reinforcement Materials		Performance Chemicals		Purification Solutions		Specialty Fluids		Consolidated Total
	(In millions)
Americas	$	169	$	81	$	31	$	2	$	283
Asia Pacific		180		75		7		—		262
Europe, Middle East and Africa		96		98		34		22		250
Segment revenues from external customers		445		254		72		24		795
Unallocated and other										49
Net sales and other operating revenues									$	844

	Six Months Ended March 31, 2020
	Reinforcement Materials		Performance Chemicals		Purification Solutions		Consolidated Total
	(In millions)
Americas	$	295	$	152	$	55	$	502
Asia Pacific		292		173		18		483
Europe, Middle East and Africa		147		162		50		359
Segment revenues from external customers		734		487		123		1,344
Unallocated and other								93
Net sales and other operating revenues							$	1,437

	Six Months Ended March 31, 2019
	Reinforcement Materials		Performance Chemicals		Purification Solutions		Specialty Fluids		Consolidated Total
	(In millions)
Americas	$	336	$	153	$	60	$	4	$	553
Asia Pacific		382		160		16		1		559
Europe, Middle East and Africa		184		172		61		38		455
Segment revenues from external customers		902		485		137		43		1,567
Unallocated and other										98
Net sales and other operating revenues									$	1,665