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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMMISSION FILE NUMBER
1-5667
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO .
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CABOT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 04-2271897
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (IRS EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
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75 STATE STREET, BOSTON, MASSACHUSETTS 02109-1806
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(617) 345-0100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO
SECTION 12(B) OF THE ACT:
COMMON STOCK, $1 PAR VALUE PER SHARE: BOSTON STOCK EXCHANGE
38,005,607 SHARES OUTSTANDING NEW YORK STOCK EXCHANGE
AT NOVEMBER 22, 1994 PACIFIC STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS
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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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's common stock held beneficially or
of record by shareholders who are not directors or executive officers of the
registrant at November 22, 1994, was approximately $940,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the fiscal year
ended September 30, 1994 (the "Annual Report") are incorporated by reference in
Parts I, II and IV, and portions of the registrant's definitive Proxy Statement
for its 1995 Annual Meeting of Stockholders (the "Proxy Statement") are
incorporated by reference in Part III.
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PART I
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ITEM 1. BUSINESS
GENERAL
Cabot's business was founded in 1882 and incorporated in the State of
Delaware in 1960. The Company is a Fortune 300 Company with businesses in
specialty chemicals and materials and in energy. The Company and its affiliates
have manufacturing facilities in the United States and 22 other countries.
The term "Cabot" as used in this Report refers to Cabot Corporation. The
terms "Company" and "Registrant" mean Cabot and its consolidated subsidiaries.
The description of the Company's businesses is as of September 30, 1994,
unless otherwise noted. Information regarding the revenues and operating profits
of the Company's business segments and geographic areas appears in the Annual
Report at pages 19 and 38.
On August 17, 1994, Cabot effected a two-for-one stock split in the form of
a stock dividend of its common stock, $1.00 par value per share ("Common
Stock"). In addition, the cash dividend paid on shares of Common Stock on
September 9, 1994, was increased to $0.14 per share. In October 1994, Cabot's
Board of Directors authorized the purchase of up to 1,500,000 shares of Common
Stock, which superseded a previous authorization. Effective September 30, 1994,
the Company adopted Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", requiring it
to reflect investments in equity securities with readily determinable fair
values on the balance sheet at their market values as of September 30, 1994.
Additional information regarding significant events affecting the Company
in its fiscal year ended September 30, 1994, appears in the Annual Report at
pages 17 through 23.
SPECIALTY CHEMICALS AND MATERIALS
The businesses of the Specialty Chemicals and Materials Group manufacture
carbon black; fumed silica; thermoplastics concentrates and specialty compounds;
electronic materials and refractory metals; and safety, environmental
enhancement and energy absorbing products.
CARBON BLACK
Carbon black, a very fine black powder, is used as a reinforcing agent in
tires (tire blacks) and other rubber products such as hoses and gaskets
(industrial rubber blacks). Non-rubber grades of carbon black, known as special
blacks, are used to provide pigmentation, conductivity and ultraviolet
protection and for other purposes in many specialty applications such as inks,
plastics, cables and coatings. The Company believes that it is the leading
manufacturer of carbon black in the world. It estimates that it has about one
quarter of the worldwide production capacity and market share for carbon black.
The Company competes in the manufacture of carbon black with two companies
having an international presence and with at least 20 other companies in various
regional markets in which it operates (see "General" on pages 4 and 5).
The Company's carbon black business is operated through a matrix of four
regional divisions, European, North American, Pacific Asia and South American,
and three sectors, industrial rubber blacks, special blacks and tire blacks.
Tire blacks and various grades of industrial rubber blacks are produced in most
of the carbon black manufacturing plants owned by the Company and its
affiliates. Carbon black plants owned by Cabot or a subsidiary are located in
Argentina, Australia, Brazil, Canada, England, France (two plants), Indonesia,
Italy, Japan, The Netherlands, Spain and the United States (four plants).
Affiliates of the Company own carbon black plants in Colombia, the Czech
Republic, India, Japan (three plants), Malaysia, Mexico, The People's Republic
of China and Venezuela. During fiscal 1994, the Company consolidated the balance
sheet of its Indonesia subsidiary. The Company also completed the closing of its
carbon black manufacturing facility in
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Hanau, Germany and began operation of its affiliate-owned plant in the Czech
Republic. In addition, because of significant on-going losses expected to
continue into the future, the Company wrote off its equity investment in its
Japanese carbon black manufacturing affiliate. The write-off is not expected to
affect the Company's Japanese special blacks subsidiary.
The principal raw materials used in the manufacture of carbon black are
carbon black oils derived from petroleum refining operations and from the
distillation of coal tars and the production of ethylene throughout the world.
The availability of raw materials has not been and is not expected to be a
significant factor for the business. Raw material costs are influenced by the
cost and availability of oil worldwide and the availability of various types of
carbon black oils.
Sales are generally made by Company employees in the countries where carbon
black plants are located. Export sales are generally made through distributors
or sales representatives in conjunction with Company employees. Sales are made
under various trademarks owned by Cabot, of which Black Pearls(R), Cabot(R),
Elftex(R), Mogul(R), Monarch(R), Regal(R), Spheron(TM) and Sterling(R) are the
best known.
Carbon black research, development and technical service programs conducted
within the carbon black businesses are directed toward development of new and
improved processes and products, improvements in operating efficiencies and
conservation of energy at the Company's plants. The carbon black technology
efforts are concentrated in Billerica, Massachusetts with additional facilities
in Norcross, Georgia, Pampa, Texas and Leiden, The Netherlands (see also the
section headed "Research and Development of the Company" on page 6).
FUMED SILICA
The Company's Cab-O-Sil Division manufactures and sells fumed silica and
dispersions thereof under various trademarks including Cab-O-Sil(R). Fumed
silica is an ultra-fine, high-purity silica produced by a flame process for use
as a reinforcing, thickening, thixotropic, suspending or anti-caking agent in a
wide variety of products for the automotive and construction industries and for
consumers, including adhesives, cosmetics, inks, lubricants, paints and
pharmaceuticals. The headquarters of this business is located in Boston,
Massachusetts. Its North American manufacturing plant is located in Tuscola,
Illinois. A subsidiary of Cabot owns a manufacturing plant in Wales, and an
affiliate of Cabot owns a manufacturing plant in Germany. Raw materials for the
production of fumed silica are various chlorosilane feedstocks. The feedstocks
are either purchased or toll converted for owners of the materials. The Division
has long-term procurement contracts in place which it believes will enable it to
meet its raw material requirements. Sales of fumed silica products are made by
Company employees and through distributors and sales representatives. There are
five principal producers of fumed silica in the world (see "General" on pages 4
and 5). Cabot believes it is the leading producer and seller of this chemical in
the United States and second worldwide.
PLASTICS
The Company produces black and white thermoplastic concentrates and
specialty compounds for sale to plastic resin producers and the plastics
processing industry. Major applications for these materials include pipe and
tubing, packaging and agricultural film, automotive components, cable sheathing
and special packaging for use in the electronics industry. Sales are made by
Company employees and through sales representatives and distributors primarily
in Europe and the Far East. This business has manufacturing facilities in
Belgium (two plants), England, Hong Kong and Italy. In Europe, the Company is
one of the three leading producers of thermoplastic compounds. The main raw
materials used in this business are carbon black, titanium dioxide,
thermoplastic resins and mineral fillers. Raw materials are in general readily
available. The Company also operates a small plastics recycling facility in
Belgium.
PERFORMANCE MATERIALS
The Cabot Performance Materials Division serves the electronic materials
and refractory metals industries and produces tantalum, niobium (columbium),
niobium titanium, cesium, germanium, rubidium and tellurium. Tantalum is
produced in various forms including powder, wire, sheet and foil for
electrolytic
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capacitors. Tantalum and niobium and their alloys are also produced in wrought
form for non-electronic applications such as chemical process equipment and the
production of superalloys, and for various other industrial, aerospace and
medical applications. Tantalum is also used in ballistic munitions produced for
the defense industry. The headquarters and the principal manufacturing facility
of this business are in Boyertown, Pennsylvania. A wholly-owned subsidiary,
Tantalum Mining Corporation of Canada Limited ("Tanco"), holds a leasehold
interest in land and certain mineral rights with respect to such land in
Manitoba, Canada. Tanco mines and sells tantalite, spodumene, lepidolite and
pollucite. Showa Cabot Supermetals K.K., an affiliate of the Company, has a
manufacturing plant in Japan. Raw materials are in adequate supply. They are
obtained from ores mined principally in Africa, Australia, Brazil and Canada and
from by-product tin slags from tin smelting mainly in Malaysia and Thailand.
Sales in the United States are made by personnel of the Company with export
sales to Europe handled by Company employees and independent European sales
representatives. One of the companies which is a sales representative for the
Company in Europe is affiliated with Cabot. Sales to Japan and other parts of
Asia are handled primarily through employees of the Company's Japanese
affiliate. There are currently three principal groups producing tantalum and
niobium in the western world. The Company believes that it, together with its
Japanese affiliate, is the leading producer of electronic grade tantalum powder
and wire products with competitors having greater production in some other
product lines (see "General" below).
SAFETY, ENVIRONMENTAL ENHANCEMENT AND ENERGY ABSORBING PRODUCTS
Cabot Safety Corporation ("Cabot Safety"), a wholly-owned subsidiary of
Cabot, manufactures and sells personal safety products, as well as energy
absorbing, vibration damping and impact absorbing products for industrial noise
control and environmental enhancement. Included in personal safety equipment are
hearing protection, safety eyewear and respiratory equipment sold to industrial,
consumer and health care markets. The products are made from organic polymers,
inorganic chemicals and various plastic compounds such as propionates,
polyurethanes, polyvinyl chlorides and polycarbonates, supplies of which are
readily available. Cabot Safety is headquartered in Southbridge, Massachusetts.
Its principal manufacturing facilities are in Southbridge, Indianapolis, Indiana
and Newark, Delaware. Significant manufacturing facilities, located in Poynton,
England and Mississauga, Canada are leased by subsidiaries of Cabot. Sales are
made worldwide through sales representatives and distributors and by Company
employees. Cabot Safety competes with a number of companies in its various
product lines. The Company believes Cabot Safety is the world leader in
disposable hearing protection and is among the leading producers in its other
personal safety product lines (see "General" below).
GENERAL
The Company owns and is a licensee of various patents, which expire from
time to time, covering many products, processes and product uses of the
Specialty Chemicals and Materials Group. Although, taken as a whole, the rights
of the Company and the products made and sold under these patents and licenses
are important to the Company's businesses, the loss of any particular patent or
license would not materially affect the businesses of this Group. Products of
this Group are also sold by the Company under a variety of trademarks, the loss
of any one of which would similarly not materially affect the businesses of this
Group.
The Group's businesses are generally not seasonal in nature, although they
experience some decline in sales in the fourth fiscal quarter due to European
holiday plant shutdowns. Backlog orders for the Group believed to be firm as of
September 30, 1994 were approximately $119,000,000, compared to firm backlog
orders as of September 30, 1993, of approximately $95,000,000. All but
approximately $6,000,000 of the 1994 backlog orders are expected to be filled
during fiscal year 1995.
Six major tire and rubber companies operating worldwide, one special blacks
customer operating in Europe and the United States and one fumed silica customer
operating in Europe and the United States represent a material portion of the
Group's total net sales and operating revenues; the loss of one or more of these
customers might materially adversely affect the Group. The Company's specialty
chemicals and materials are used in many end uses associated with the automotive
industry such as tires, hoses, gaskets, capacitors and paints. The Company's
financial results are affected by the cyclical nature of the automotive
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industry although a large portion of the market is for replacement tires and
other parts which are less subject to automobile industry cycles.
Competition exists on the basis of price, service, quality, product
performance and technical innovation in the businesses of this Group.
Competitive conditions also result in the need to carry an inventory of raw
materials and finished goods in order to meet the customers' needs for prompt
delivery of products. Competition in quality, service, product performance and
technical innovation is particularly significant for the fumed silica,
industrial rubber blacks, special blacks, safety and tantalum businesses.
Competition affecting the businesses of the non-carbon black parts of the Group
comes from different firms for each product group.
ENERGY
The Company's energy businesses are conducted through two subsidiaries. The
businesses include transportation, terminalling and marketing of liquefied
natural gas (through Cabot LNG Corporation, a wholly-owned subsidiary) and coal
handling and distribution (by TUCO INC., a wholly-owned subsidiary). The
headquarters of these companies are located as follows: Cabot LNG Corporation,
Boston, Massachusetts, and TUCO INC., Amarillo, Texas. The Company also owns a
15% interest (17% assuming exercise of warrants) in K N Energy, Inc. ("KNE"), a
natural gas services and utility company.
LIQUEFIED NATURAL GAS
The Company, through a subsidiary, purchases liquefied natural gas ("LNG")
from Sonatrading, an affiliate of Sonatrach, the Algerian national oil and gas
company, under a long-term and a medium-term supply contract. Cabot and
Sonatrach have each agreed to assure performance of the obligations of their
respective affiliates under these agreements. The LNG is stored and resold in
the northeastern United States from a facility in Everett, Massachusetts. In
1992, a subsidiary of the Company entered into a long-term contract with Nigeria
LNG Limited for the supply of LNG. The contract provides for initial deliveries
of LNG commencing in the late 1990s. It is unclear when, if ever, Nigeria LNG
Limited will begin construction of an LNG plant. Cabot has entered into a
limited guaranty of the subsidiary's payment obligations under the contract with
Nigeria LNG Limited for an amount not to exceed $150,000,000 plus the amount of
any prior payments by Cabot under the guaranty in respect of which make-up LNG
has been delivered to the subsidiary.
The Company has received authorizations from the U.S. Department of Energy
to import LNG under the contracts with Sonatrading and Nigeria LNG Limited, as
well as blanket authorization to import LNG from other foreign suppliers on a
short-term basis. The Company has also received authorization from the Federal
Energy Regulatory Commission for sales services. The supply of LNG is currently
limited to volumes contracted for with Sonatrading/Sonatrach.
In 1993, the Company was notified by Sonatrach that the renovation of
Sonatrach's Algerian LNG production facilities would likely result in a
temporary reduction of LNG deliveries to its customers, including the Company.
The Company expects the curtailment of LNG from its Algerian supplier to
continue at least through fiscal year 1995. The Company has been able to
continue to meet its firm sales obligations to customers and is exploring
additional sources of supply. Political unrest in Algeria continues. The Company
is not able to predict, at this time, what, if any, impact the political
instability in Algeria may have on the future supply of LNG from its Algerian
supplier. The loss of supply from the Algerian supplier could have a material
adverse effect on the business of the Energy Group until additional sources of
supply could be obtained. The Company is working with Amoco, British Gas and The
National Gas Company of Trinidad and Tobago toward a proposal for the
construction of a liquefaction and export facility for LNG in Trinidad.
COAL HANDLING AND DISTRIBUTION
TUCO INC. ("TUCO") purchases coal mined in Wyoming pursuant to long-term
and short-term (spot) contracts and transports it by rail to Texas where it
processes and sells it to Southwestern Public Service Company ("SPS") pursuant
to long-term sales contracts for use in generating electricity. The loss of
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SPS as a customer of TUCO could have a material adverse effect on the Energy
Group. The supply of coal is regarded as adequate.
OTHER
The Company acquired its investment in KNE in connection with the merger of
American Oil and Gas Corporation with a subsidiary of KNE in July 1994. As a
result of the adoption by the Company of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", on September 30, 1994, the Company has reflected its investment in
the common stock of KNE at its fair market value as of that date.
GENERAL
The Energy Group is not materially dependent upon any patent, trademark or
license. Backlog orders are not significant to this Group. Sales by the coal
business are stronger in the summer months in the west Texas area because of
electrical demands for air conditioning and agricultural purposes, while sales
by the LNG business are stronger in the winter months because of heating
demands. No significant working capital is required by this Group other than for
coal inventories.
Price competition characterizes the markets served by the LNG business. The
Group has numerous competitors including natural gas suppliers and suppliers of
alternative fuels.
OTHER INFORMATION
EMPLOYEES
As of September 30, 1994, the Company had approximately 5,400 employees.
The Company believes that its relations with its employees are satisfactory.
Approximately 620 out of a total of approximately 3,100 employees in the United
States are covered by collective bargaining agreements.
RESEARCH AND DEVELOPMENT OF THE COMPANY
The Company develops new and improved products and processes through
Company-sponsored research and technical service activities including those
initiated in response to customer requests. Expenditures by the Company for such
activities are shown on page 24 of the Annual Report and are incorporated herein
by reference.
ENVIRONMENT, SAFETY AND HEALTH
The Company's operations are subject to several environmental laws and
regulations. Over the past five years, the Company has expended considerable
sums to add, improve, maintain and operate facilities for environmental
protection. A significant amount of the Company's normal capital projects to
improve or replace manufacturing facilities has provided positive environmental
benefits. Expenditures for equipment or facilities intended solely for
environmental protection are estimated to have been approximately $4,000,000 in
fiscal year 1994 and are expected not to exceed $10,000,000 in fiscal 1995. In
addition, expenditures of at least $30,000,000 in the aggregate for such
equipment and facilities are forecast to be spent in fiscal years 1995, 1996 and
1997 to enable Cabot's U.S. plants to comply with the Clean Air Act. During the
next several years, the Company expects to utilize a significant portion of its
environmental reserve, currently valued at approximately $44,000,000, to
implement remediation plans for various sites. Compliance with the laws and
regulations relating to the protection of the environment is not expected to
have a material adverse effect on the Company's earnings or competitive position
or the Company's ability to make capital expenditures, in the opinion of the
Company's management. The Company has been named as a potentially responsible
party under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (the "Superfund law") with respect to several sites. See
Item 3, "Legal Proceedings," on pages 7 through 9 of this Report for a
description of various environmental proceedings.
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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Industry segment financial data are set forth in tables included on pages
19 and 38 of the Annual Report and are incorporated herein by reference. A
significant portion of the Company's revenues and operating profits is derived
from overseas operations. Profitability of the Specialty Chemicals and Materials
businesses is affected by fluctuations in the value of the U.S. dollar relative
to foreign currencies. The Company's overseas operations do not include any
energy-related businesses. See Note N of the Notes to Consolidated Financial
Statements for further information relating to sales and profits by geographic
area and Management's Discussion and Analysis of Results of Operations and
Financial Condition, appearing on page 38 and pages 17 through 23, respectively,
in the Annual Report and incorporated herein by reference. Currency fluctuations
and nationalization and expropriation of assets are risks inherent in
international operations. The Company has taken steps it deems prudent in its
international operations to diversify and otherwise to protect against these
risks.
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ITEM 2. PROPERTIES
The Company owns, operates and leases office, manufacturing, production,
terminalling, storage, marketing and research and development facilities in the
United States and in foreign countries.
The principal facilities of the Company's business units are described
generally in Item 1 above.
The principal facilities owned by the Company in the United States are: (i)
its carbon black manufacturing plants in Louisiana, Texas and West Virginia
(comprising approximately 77,500 square yards); (ii) its research and
development facilities in Illinois, Massachusetts, Pennsylvania and Texas and
its applications development facility in Georgia (comprising approximately
29,790 square yards); (iii) administrative offices and manufacturing plants of
its Cab-O-Sil, Cabot Safety and Cabot Performance Materials business units in
Delaware, Illinois, Indiana and Pennsylvania (comprising approximately 92,650
square yards); and (iv) its LNG terminalling and storage facility in
Massachusetts (approximately 3,250 square yards). Portions of plants in
Louisiana referred to above are constructed on long-term ground leases.
The Company's principal foreign facilities are owned by subsidiaries and
together they comprise approximately 365,000 square yards of manufacturing
facilities, 3,900 square yards of research and development facilities, and
60,500 square yards of administrative facilities.
The principal facilities leased by the Company in the United States are:
(i) its corporate headquarters in Boston, Massachusetts and the administrative
offices of the LNG companies in Boston, the carbon black operations in Georgia
and the Cabot Performance Materials business in Pennsylvania (comprising
approximately 15,600 square yards); and (ii) the administrative offices and
manufacturing facilities of Cabot Safety in Delaware, Indiana and Massachusetts
(comprising approximately 53,100 square yards).
The principal facilities leased by subsidiaries in locations outside of the
United States are the administrative offices and manufacturing facilities of the
carbon black operations in France, Indonesia and Spain, the Plastics business in
Belgium and Cabot Safety in Canada and England as well as the Tanco leasehold
interest in Canada (comprising approximately 170,500 square yards).
The Company's offices and manufacturing facilities are generally suitable
and adequate for their intended purposes. Existing manufacturing facilities of
the Company are in general adequate for the Company's requirements.
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ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits and environmental
proceedings wherein substantial amounts are claimed. The following is a
description of the significant proceedings pending as of September 30, 1994:
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Environmental Proceedings
In 1994, Cabot and the State of Florida signed a settlement of a 1983 state
court lawsuit requiring Cabot to pay the State $650,000 in past costs associated
with a site in Gainesville, Florida. The site included a parcel of land on which
Cabot owned and operated a pine tar distillation plant. Cabot is scheduled to
install a groundwater extraction system and remove the contaminated soil found
during the design phase at an estimated design and implementation cost of
approximately $3,100,000 (including $1,400,000 in costs already spent).
In April 1985, Cabot and five other companies entered into a consent order
with the U.S. Environmental Protection Agency ("EPA") under the Superfund law to
perform a remedial investigation and feasibility study with respect to the King
of Prussia Technical Corp. site in Winslow Township, New Jersey. A Record of
Decision ("ROD") has been issued by the EPA specifying a combination of remedial
actions for the site at an estimated cost of almost $15,000,000. The EPA issued
an administrative order directing Cabot and four other companies to design and
complete the remedial measures; much of the work on site remediation has been
completed. Cabot and the other companies involved have not yet reached agreement
on the portions of the costs to be borne by each.
Beginning in May 1986, the Department of Environmental Protection of the
State of New Jersey ("NJDEP") issued directives under the New Jersey Spill
Compensation and Control Act to Cabot and other potentially responsible parties
("PRPs") to fund a remedial investigation for the cleanup of hazardous waste at
the Old Bridge Township landfill near Perth Amboy, New Jersey. Cabot and other
parties contributed funds for a remedial investigation and feasibility study
which was conducted by a consultant to the NJDEP. In September 1992, the EPA
issued a ROD specifying certain remedial actions and indicating that a second
ROD would be issued following further study. Preliminary action on the first ROD
has been taken by the NJDEP. The second ROD has not been issued. It is not
possible at this point to identify what the remediation costs for this site will
be or what Cabot's portion of such costs will be.
In 1989, the United States filed a claim in the United States District
Court for the Eastern District of Pennsylvania against 18 defendants under the
Superfund law for recovery of the EPA's cleanup costs at Moyer's Landfill in
Collegeville, Pennsylvania, estimated to be $48,000,000. For several years,
Moyer's Landfill was used for the disposal of municipal and industrial wastes by
numerous parties, including Cabot. More than 100 additional parties, including
Cabot, were brought into the litigation by means of a third-party complaint.
Recently, the EPA announced that it had reached settlements with certain de
minimis parties. Negotiations continue with the other parties including Cabot.
In 1989 and 1990, respectively, Cabot completed a remedial investigation
and feasibility study of its former beryllium processing plant in Hazleton,
Pennsylvania, and submitted the study to the Pennsylvania Department of
Environmental Resources ("DER"). An environmental consultant retained by Cabot
has designed and Cabot has implemented certain of the remedial measures
described in the study. In April 1991, the DER issued a wastewater discharge
permit to Cabot but included certain limitations to which Cabot objected by
filing an appeal with the Pennsylvania Environmental Hearing Board. In August
1993, the DER and Cabot resolved the issues on appeal in a manner satisfactory
to both parties and the appeal was withdrawn. Source control remediation efforts
by Cabot are continuing.
Cabot is one of approximately 25 parties identified by the EPA as PRPs
under the Superfund law with respect to the cleanup of Fields Brook (the
"Brook"), a tributary of the Ashtabula River in northeastern Ohio. From 1963 to
1972, Cabot owned two manufacturing facilities located beside the Brook. The EPA
has specified a remedy for the site but continues to assess the condition of the
Brook. Cleanup is expected to begin in 1996. In March 1989, the EPA issued an
administrative order under Section 106 of the Superfund law directing 19
companies, including Cabot, to perform design and other preliminary work
relating to the specified remedy for the proposed cleanup of portions of the
Brook. In September 1989, the United States filed suit in the United States
District Court for the Northern District of Ohio seeking to recover past
governmental investigatory costs. The cost recovery claims have been settled and
the action has been stayed pending the result of arbitration proceedings under a
Cooperation Agreement which provides for the sharing of past and future remedial
and investigatory costs incurred in implementing the EPA's 1989 order. The EPA
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has indicated that remediation may be required at the plant sites along the
Brook, including at least one of the facilities formerly operated by Cabot. The
State of Ohio has also notified Cabot and several other companies that it will
seek damages for injury to natural resources at the Brook. Cabot is also
participating in arbitration proceedings with succeeding plant owners regarding
costs associated with remediation of the Brook and the plant site. In 1994,
Detrex Chemical Industries, Inc. filed third-party complaints against eight
companies, including Cabot, in connection with material allegedly sent to the
Koski/RES landfill in Ashtabula, Ohio. At present there is no evidence that the
material allegedly sent by Cabot to that landfill will result in liability for
cleanup costs.
Cabot has received various requests for information and notifications that
it may be a PRP at several other Superfund sites.
As of September 30, 1994, approximately $44,000,000 was accrued for
environmental proceedings by the Company. The amount represents the Company's
current best estimate of costs likely to be incurred based on its analysis of
the extent of cleanup required, methods available, abilities of other
responsible parties to contribute and its interpretation of applicable laws and
regulations at each site.
Breast Implant Litigation
Fumed silica supplied by Cabot was used by others in the manufacture of
silicone breast implant envelopes. There are currently pending more than 10,000
lawsuits in state and federal courts alleging injuries against various parties
arising from the use of silicone breast implants. The federal cases have been
consolidated in the Multi-District Litigation pending in the United States
District Court for the Northern District of Alabama. Generally, the various
state cases have been similarly consolidated in each jurisdiction. In addition,
arrangements have been made for consolidated discovery in all actions. A
so-called "global settlement" between certain classes of plaintiffs who have not
"opted out" and certain defendants (not including Cabot) has been approved by
the United States District Court for the Northern District of Alabama.
Plaintiffs who have opted out of the settlement are now free to proceed with
their own claims.
Cabot has been named as a defendant in fewer than 100 breast implant
lawsuits. Cabot has been dismissed as a defendant from a number of those suits,
without any settlement payments, and has been granted summary judgment (subject
to appeal) in others. Cabot believes that it has adequate defenses in each of
the lawsuits in which it is a defendant. However, the scientific, legal and
societal issues raised by these cases are complex and the outcome is uncertain.
Cabot, therefore, cannot predict with any assurance the course this litigation
will take, the number of cases to which Cabot will be added as a defendant, the
amount of damages, if any, that may be assessed against Cabot or the defense
costs that will be incurred by Cabot.
Other Proceedings
Cabot has been named as one of many defendants in a lawsuit, now pending in
federal district court in Oklahoma, brought by a large group of plaintiffs
alleging personal injury due to exposure to and contact with certain chemicals
and materials allegedly manufactured by the defendants. Plaintiffs seek actual
and punitive damages against all defendants, jointly and severally, in the
aggregate amount of $1,250,000,000. Cabot is currently investigating this matter
to ascertain what products, if any, were manufactured by it that are of any
relevance to this litigation.
The Company has various other lawsuits, claims and contingent liabilities
arising in the ordinary course of its business. In the opinion of the Company,
although final disposition of all of its suits and claims may impact the
Company's financial statements in a particular period, it should not, in the
aggregate, have a material adverse effect on the Company's financial position.
See Note L of the Notes to the Company's Consolidated Financial Statements on
page 37 of the Annual Report.
- --------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
- --------------------------------------------------------------------------------
9
10
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below, as of November 22, 1994, for each executive officer of
Cabot is information regarding his age, position(s) with Cabot, the periods
during which he has served as an officer and his business experience during at
least the past five years:
OFFICES HELD/BUSINESS
NAME AGE EXPERIENCE DATES HELD
- -----------------------------------------------------------------------------------------------
Samuel W. Bodman............. 55 Cabot Corporation
Chairman of the Board October 1988 to present
President February 1991 to present,
January 1987 to October 1988
Chief Executive Officer February 1988 to present
FMR Corp. (investment
advisor and mutual
fund manager),
President and Chief
Operating Officer 1983 to December 1986
John G.L. Cabot.............. 60 Cabot Corporation
Vice Chairman of the Board October 1988 to present
Chief Financial Officer October 1992 to present
Executive Vice President January 1985 to October 1988
Kennett F. Burnes............ 51 Cabot Corporation
Executive Vice President October 1988 to present
Secretary February 1988 to October 1988
Vice President and
General Counsel November 1987 to October 1988
Choate, Hall & Stewart
(law firm), Partner 1976 to November 1987
John D. Curtin, Jr........... 61 Cabot Corporation
Executive Vice President July 1989 to present
Chief Financial Officer July 1989 to October 1992
Curtin & Co., Incorporated
(investment banking),
President, Chief Executive
Officer and Director 1974 to June 1989
Robert Rothberg.............. 45 Cabot Corporation
Vice President and
General Counsel October 1993 to present
Choate, Hall & Stewart
(law firm), Partner January 1982 to October 1993
William R. Thompson.......... 59 Cabot Corporation
Vice President and November 1989 to present
Controller
Kurzweil Music Systems, Inc.
(computerized musical
instruments),
President, Chief Operating
Officer and Director May 1985 to June 1989
10
11
- --------------------------------------------------------------------------------
PART II
- --------------------------------------------------------------------------------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Cabot's common stock is listed for trading (symbol CBT) on the New York,
Boston and Pacific Stock Exchanges. As of September 30, 1994, there were
approximately 2,100 holders of record of Cabot's common stock. The price range
in which the stock has traded, as reported on the composite tape, and the
quarterly and total cash dividends per share paid in the past two fiscal years
are shown below, restated to reflect the two-for-one stock split in August 1994.
- --------------------------------------------------------------------------------
STOCK PRICE AND DIVIDEND DATA
DEC. MARCH JUNE SEPT.
FISCAL 1994 QTR. QTR. QTR. QTR. YEAR
- -----------------------------------------------------------------------------------------------------
Cash dividends per share.......... $ 0.13 $ 0.13 $ 0.13 $ 0.14 $ 0.53
Price range of common stock:
High.............................. $29.19 $28.00 $26.63 $28.38 $29.19
Low............................... $26.13 $25.56 $24.44 $25.13 $24.44
Close............................. $26.94 $27.00 $25.56 $27.25 $27.25
- -----------------------------------------------------------------------------------------------------
DEC. MARCH JUNE SEPT.
FISCAL 1993 QTR. QTR. QTR. QTR. YEAR
- -----------------------------------------------------------------------------------------------------
Cash dividends per share.......... $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.52
Price range of common stock:
High.............................. $24.81 $21.94 $24.38 $28.13 $28.13
Low............................... $20.56 $18.63 $19.81 $23.31 $18.63
Close............................. $21.69 $21.25 $24.38 $27.75 $27.75
- -----------------------------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
Cabot Corporation Selected Financial Data:
(Dollars in Thousands, Except Per Share Amounts)
YEARS ENDED SEPTEMBER 30
---------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
Financial Highlights
Net sales and other operating
revenues from continuing
operations................ $1,679,819 $1,614,315 $1,556,986 $1,482,089 $ 1,547,910
- --------------------------------------------------------------------------------------------------
Income from continuing
operations................ $ 78,691 $ 37,410 $ 62,223 $ 39,825 $ 41,875
- --------------------------------------------------------------------------------------------------
Long-term debt............... $ 307,828 $ 459,275 $ 479,882 $ 369,609 $ 480,762
Minority interest............ $ -- $ -- $ 9,756 $ -- $ 18,642
Stockholders' equity......... $ 562,489 $ 442,273 $ 492,955 $ 426,863 $ 570,589
- --------------------------------------------------------------------------------------------------
Total capitalization...... $ 870,317 $ 901,548 $ 982,593 $ 796,472 $1,069,993
- --------------------------------------------------------------------------------------------------
Total assets................... $1,616,756 $1,489,473 $1,554,529 $1,462,396 $1,731,909
- --------------------------------------------------------------------------------------------------
Per Share:
Income from continuing
operations................ $ 1.96 $ 0.90(a) $ 1.59 $ 0.85 $ 0.77(c)
Net income................... $ 1.96 $ 0.20(b) $ 1.59 $ 2.90 $ 1.37
Cash dividends............... $ 0.53 $ 0.52 $ 0.52 $ 0.52 $ 0.52
- --------------------------------------------------------------------------------------------------
Average shares outstanding --
thousands.................... 38,249 37,438 36,802 42,556 49,162
- --------------------------------------------------------------------------------------------------
- ---------------
(a) Includes charges of $0.83 per share for the restructuring of the Company's
Specialty Chemicals and Materials businesses and favorable energy accrual
adjustment of $0.23 per share. (see Item 7)
(b) Includes a charge of $0.70 per share for the cumulative effect of required
accounting changes.
(c) Includes charges of $0.26 per share for take-or-pay provisions related to
the divestiture of selected energy businesses.
11
12
- --------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information required by this Item appears in the Annual Report on pages
17 through 23 and is incorporated herein by reference.
- --------------------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item appears in the Annual Report on pages
24 through 39 and is incorporated herein by reference.
- --------------------------------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
- --------------------------------------------------------------------------------
12
13
- --------------------------------------------------------------------------------
PART III
- --------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required regarding the executive officers of Cabot is
included in Part I in the unnumbered item captioned "Executive Officers of the
Registrant." Certain other information required regarding the directors of Cabot
is contained in the Proxy Statement on pages 2 through 6 under the heading
"Certain Information Regarding Directors." All of such information is
incorporated herein by reference.
The information required regarding the filing of reports by directors,
executive officers and 10% stockholders with the Securities and Exchange
Commission relating to transactions in Cabot stock is contained in the Proxy
Statement on page 15 under the heading "Certain Securities Filings" and is
incorporated herein by reference.
- --------------------------------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION
The information required is contained in the Proxy Statement on pages 9
through 12 under the heading "Executive Compensation." All of such information
is incorporated herein by reference.
- --------------------------------------------------------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required is contained in the Proxy Statement on pages 7
through 9 under the heading "Beneficial Stock Ownership of Directors, Executive
Officers and Persons Owning More than Five Percent of Common Stock." All of such
information is incorporated herein by reference.
- --------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
- --------------------------------------------------------------------------------
13
14
- --------------------------------------------------------------------------------
PART IV
- --------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements. The following are incorporated herein by
reference in this Report from the indicated pages of the Company's Annual
Report:
DESCRIPTION PAGE
-------------------------------------------------------------- ---------
(1) Consolidated Statements of Income for each of the three fiscal
years in the period ended September 30, 1994................ 24
(2) Consolidated Balance Sheets at September 30, 1994 and 1993.... 25 to 26
(3) Consolidated Statements of Cash Flows for each of the three
fiscal years in the period ended September 30, 1994......... 27
(4) Notes to Consolidated Financial Statements.................... 28 to 39
(5) Statement of Management Responsibility for Financial Reporting
and Report of Independent Accountants relating to the
Consolidated Financial Statements listed above.............. 40
(b) Reports on Form 8-K. None
(c) Exhibits. (not included in copies of the Form 10-K sent to
stockholders)
The exhibit numbers in the following list correspond to the numbers
assigned to such exhibits in the Exhibit Table of Item 601 of Regulation S-K.
The Company will furnish to any stockholder, upon written request, any exhibit
listed below upon payment by such stockholder to the Company of the Company's
reasonable expenses in furnishing such exhibit.
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------
3(a) --Certificate of Incorporation of Cabot Corporation restated
effective October 24, 1983, as amended February 14, 1985,
December 3, 1986, February 19, 1987, and November 18, 1988
(incorporated herein by reference to Exhibit 3(a) of Cabot's
Annual Report on Form 10-K for the year ended September 30,
1988, file reference 1-5667, filed with the Commission on
December 29, 1988).
3(b) --The By-laws of Cabot Corporation as of January 11, 1991
(incorporated herein by reference to Exhibit 3(b) of Cabot's
Annual Report on Form 10- K for the year ended September 30,
1991, file reference 1-5667, filed with the Commission on
December 27, 1991).
4(a)(i) --Rights Agreement, dated as of November 14, 1986, amended and
restated as of August 12, 1988, between Cabot Corporation and
The First National Bank of Boston as Rights Agent (incorporated
herein by reference to Exhibit 1 of Cabot's Current Report on
Form 8-K, dated August 12, 1988, file reference 1-5667, filed
with the Commission).
4(a)(ii) --Amendment to Rights Agreement dated as of November 15, 1990
(incorporated herein by reference to Exhibit 4(a)(ii) of Cabot's
Annual Report on Form 10-K for the year ended September 30,
1990, file reference 1-5667, filed with the Commission on
December 24, 1990).
4(b)(i) --Indenture, dated as of December 1, 1987, between Cabot
Corporation and The First National Bank of Boston, Trustee
(incorporated herein by reference to Exhibit 4 of Amendment No.
1 to Cabot's Registration Statement on Form S-3, Registration
No. 33-18883, filed with the Commission).
4(b)(ii) --First Supplemental Indenture dated as of June 17, 1992, to
Indenture, dated as of December 1, 1987, between Cabot
Corporation and The First National Bank of Boston, Trustee
(incorporated by reference to Exhibit 4.3 of Cabot's
Registration Statement on Form S-3, Registration Statement No.
33-48686, filed with the Commission).
4(c)(i)+ --Finance Agreement between P.T. Cabot Chemical and Overseas
Private Investment Corporation dated September 10, 1991.
14
15
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------
4(c)(ii)+ --Facility Agreement and Acknowledgement of Indebtedness (The
Hongkong and Shanghai Banking Corporation Limited) dated January
10, 1992.
4(c)(iii)+ --Project Completion Agreement between Cabot, P.T. Cabot Chemical
and The Hongkong and Shanghai Banking Corporation Limited dated
April 28, 1992.
10(a) --Form of Distribution Agreement between Cabot Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill
Lynch & Co., Goldman Sachs & Co., and J.P. Morgan Securities
Inc. for the issuance and sale of medium-term notes pursuant to
a prospectus supplement dated July 17, 1992 (incorporated herein
by reference to Exhibit 1 of Cabot's Current Report on Form 8-K,
dated July 17, 1992, file reference 1-5667, filed with the
Commission).
10(b) --Credit Agreement, dated as of January 13, 1994, among Cabot
Corporation and 11 banks and Morgan Guaranty Trust Company of
New York, as agent for the banks (incorporated by reference to
Exhibit 4 of Cabot's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993, file reference 1-5667, filed
with the Commission on February 16, 1993).
10(c)* --Equity Incentive Plan, as amended (incorporated herein by
reference to Exhibit 99 of Cabot's Registration Statement on
Form S-8, Registration No. 33-53659, filed with the Commission).
10(d) --Note Purchase Agreement between John Hancock Mutual Life
Insurance Company, State Street Bank and Trust Company, as
trustee for the Cabot Corporation Employee Stock Ownership Plan,
and Cabot Corporation, dated as of November 15, 1988
(incorporated herein by reference to Exhibit 10(c) of Cabot's
Annual Report on Form 10-K for the year ended September 30,
1988, file reference 1-5667, filed with the Commission on
December 29, 1988).
10(e)(i)* --Supplemental Cash Balance Plan, filed herewith.
10(e)(ii)* --Supplemental Employee Stock Ownership Plan, filed herewith.
10(e)(iii)* --Supplemental Retirement Incentive Savings Plan, filed herewith.
10(e)(iv)* --Supplemental Employee Benefit Agreement for John G.L. Cabot
(incorporated herein by reference to Exhibit 10(f) of Cabot's
Annual Report on Form 10-K for the year ended September 30,
1987, file reference 1-5667, filed with the Commission on
December 28, 1987).
10(f)* --Form of severance agreement entered into between Cabot and
various managers (incorporated by reference to Exhibit 10(g) of
Cabot's Annual Report on Form 10-K for the year ended September
30, 1991, file reference 1-5667, filed with the Commission on
December 27, 1991).
10(g) --Group Annuity Contract No. GA-6121 between The Prudential
Insurance Company of America and State Street Bank and Trust
Company, dated June 28, 1991 (incorporated herein by reference
to Exhibit 10(h) of Cabot's Annual Report on Form 10-K for the
year ended September 30, 1991, file reference 1-5667, filed with
the Commission on December 27, 1991).
10(h)* --Non-employee Directors' Stock Compensation Plan (incorporated
herein by reference to Exhibit A of Cabot's Proxy Statement for
its 1992 Annual Meeting of Stockholders, file reference 1-5667,
filed with the Commission on December 27, 1991).
10(i)(i) --Amended and Restated Omnibus Acquisition Agreement among
American Oil and Gas Corporation, Cabot Corporation and Cabot
Transmission Corporation, dated as of November 13, 1989
(incorporated herein by reference to Exhibit (2) of Cabot's
Current Report on Form 8-K, dated November 16, 1989, file
reference 1-5667, filed with the Commission).
10(i)(ii) --Amended and Restated Basket Agreement among American Oil and Gas
Corporation, American Pipeline Company, Cabot Corporation and
Cabot Transmission Corporation, dated as of June 30, 1990
(incorporated herein by reference to Exhibit 10(n) of Cabot's
Annual Report on Form 10-K for the year ended September 30,
1990, file reference 1-5667, filed with the Commission on
December 24, 1990).
15
16
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------
10(i)(iii) --First Amendment, dated March 31, 1992, to Amended and Restated
Omnibus Acquisition Agreement among American Oil and Gas
Corporation, Cabot Corporation and Cabot Transmission
Corporation, dated as of November 13, 1989, and to Amended and
Restated Basket Agreement among American Oil and Gas
Corporation, American Pipeline Company, Cabot Corporation and
Cabot Transmission Corporation, dated as of June 30, 1990
(incorporated herein by reference to Exhibit 10(i)(ii) of
Cabot's Annual Report on Form 10-K for the year ended September
30, 1992, file reference 1-5667, filed with the Commission on
December 24, 1992).
10(j) --Agreement for the Sale and Purchase of Liquefied Natural Gas and
Transportation Agreement, dated April 13, 1976, between
Sonatrach and Distrigas Corporation, and Amendment No. 3 to said
Agreement, dated February 21, 1988, filed herewith.
10(k) --Agreement for the Sale and Purchase of Liquefied Natural Gas and
Transportation Agreement, dated December 11, 1988, between
Sonatrading and Distrigas Corporation (incorporated herein by
reference to Exhibit 10(p) of Cabot's Annual Report on Form 10-K
for the year ended September 30, 1989, file reference 1-5667,
filed with the Commission on December 28, 1989).
10(l) --Contract for sale of vessel GAMMA between Cabot LNG Shipping
Corporation and the United States of America, dated September
18, 1990 (incorporated herein by reference to Exhibit 10(q) of
Cabot's Annual Report on Form 10-K for the year ended September
30, 1990, file reference 1-5667, filed with the Commission on
December 24, 1990).
10(m) --Mutual Assurances Agreements among Cabot Corporation,
L'Entreprise Nationale pour la Recherche, la Production, le
Transport, la Transformation et la Commercialisation des
Hydrocarbures ("Sonatrach"), Distrigas Corporation and
Sonatrading Amsterdam B.V. dated February 21, 1988 and December
11, 1988, respectively (incorporated herein by reference to
Exhibit 10.1 of Cabot's Current Report on Form 8-K, dated July
17, 1992, file reference 1-5667, filed with the Commission).
10(n) --LNG Sale and Purchase Agreement between Distrigas Corporation
and Nigeria LNG Limited, dated June 15, 1992 (incorporated
herein by reference to Exhibit 10.2 to Cabot's Current Report on
Form 8-K, dated July 17, 1992, file reference 1-5667, filed with
the Commission).
10(o)(i) --Agreement between K N Energy, Inc. ("KNE"), American Oil and Gas
Corporation ("AOG") and Cabot, dated June 27, 1994 (incorporated
herein by reference to Exhibit 1 of Cabot's Schedule 13D
relating to KNE, file reference 1-5667, filed with the
Commission on July 22, 1994 (the "KNE Schedule 13D").
10(o)(ii) --Registration Rights Agreement between KNE and Cabot, dated July
13, 1994 (incorporated herein by reference to Exhibit 2 of the
KNE Schedule 13D).
10(o)(iii) --Share Transfer and Registration Agreement between KNE and Cabot,
dated July 13, 1994 (incorporated herein by reference to Exhibit
3 of the KNE Schedule 13D).
10(o)(iv) --KNE By-law provision, filed herewith.
10(o)(v) --Request of Cabot for No Action Letter from staff of Securities
and Exchange Commission, dated June 28, 1994, and reply, dated
July 6, 1994, filed herewith.
10(o)(vi) --Application of Cabot for Declaration of Non-holding Company
Status Pursuant to Section 2(a)(7) of the Public Utility Holding
Company Act of 1935, dated, July 11, 1994, filed herewith.
11 --Statement Re Computation of Per Share Earnings, filed herewith.
12 --Statement Re Computation of Ratio of Earnings to Fixed Charges,
filed herewith.
13 --Pages 17 through 40 of the 1994 Annual Report to Stockholders of
Cabot Corporation, a copy of which is furnished for the
information of the Securities and Exchange Commission. Portions
of the Annual Report not incorporated herein by reference are
not deemed "filed" with the Commission.
16
17
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------
21 --List of Significant Subsidiaries, filed herewith.
24(a) --Power of attorney for signing of this Annual Report on Form
10-K, dated November 11, 1994, filed herewith.
24(b) --Certified copy of vote of Cabot's Board of Directors of October
14, 1994, authorizing the execution and filing of this Annual
Report on Form 10-K, filed herewith.
27 --Financial Data Schedule, filed herewith.
- ---------------
+ The Registrant agrees to furnish to the Commission upon request a copy of
these instruments with respect to long-term debt (not filed as an exhibit),
none of which relates to securities exceeding 10% of the total assets of the
Registrant and its consolidated subsidiaries.
* Management contract or compensatory plan or arrangement.
(d) Schedules. The following Consolidated Schedules and information appear
on page 20 and pages S-1 to S-5 of this Report:
Report of Independent Accountants on Schedules.
V. Property, Plant and Equipment.
VI. Accumulated Depreciation and Amortization of Property, Plant and
Equipment.
IX. Short-Term Borrowings.
X. Supplementary Income Statement Information.
XIII. Other Investments.
Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or the required information is
shown in the financial statements or notes thereto.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned Registrant undertakes as follows, which undertaking shall be
incorporated by reference into Registrant's Registration Statement on Form S-8,
Registration No. 33-28699 (filed May 12, 1989), the Registrant's Registration
Statement on Form S-8, Registration No. 33-52940 (filed October 5, 1992) and the
Registrant's Registration on Form S-8, Registration No. 33-53659 (filed May 16,
1994).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
17
18
SIGNATURES
Pursuant to the requirements of Section 13 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 (Registrant)
/s/ SAMUEL W. BODMAN
By..................................
SAMUEL W. BODMAN, Chairman of the
Board, President and Chief Executive
Officer
Date: December 20, 1994
Pursuant to the requirement of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
/s/ SAMUEL W. BODMAN Chairman of the Board, December 20, 1994
........................................ President and Director
SAMUEL W. BODMAN (Principal Executive
Officer)
/s/ JOHN G.L. CABOT Director, Vice Chairman of the December 20, 1994
........................................ Board and Chief Financial
JOHN G.L. CABOT Officer (Principal Financial
Officer)
/s/ WILLIAM R. THOMPSON Vice President and Controller December 20, 1994
........................................ (Principal Accounting
WILLIAM R. THOMPSON Officer)
* Director December 20, 1994
........................................
DAMARIS AMES
* Director December 20, 1994
........................................
JANE C. BRADLEY
* Director December 20, 1994
........................................
KENNETT F. BURNES
* Director December 20, 1994
........................................
ROBERT A. CHARPIE
* Director December 20, 1994
........................................
JOHN D. CURTIN, JR.
* Director December 20, 1994
........................................
ROBERT P. HENDERSON
* Director December 20, 1994
........................................
ARNOLD S. HIATT
18
19
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
Director December 20, 1994
........................................
GERRIT JEELOF
* Director December 20, 1994
........................................
JOHN H. MCARTHUR
* Director December 20, 1994
........................................
JOHN F. O'BRIEN
* Director December 20, 1994
........................................
DAVID V. RAGONE
* Director December 20, 1994
........................................
CHARLES P. SIESS, JR.
* Director December 20, 1994
........................................
MORRIS TANENBAUM
* Director December 20, 1994
........................................
LYDIA W. THOMAS
/s/ CHARLES D. GERLINGER
*By.......................................
CHARLES D. GERLINGER
AS ATTORNEY-IN-FACT
19
20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholders of
Cabot Corporation:
Our report on the consolidated financial statements of Cabot Corporation is
incorporated by reference in this Form 10-K from page 40 of the 1994 Annual
Report to Stockholders of Cabot Corporation. In connection with our audits of
such financial statements, we have also audited the related financial statement
schedules listed in the Index on page 17 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 1, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Cabot Corporation on Form S-3 (File No. 33-48686) and on Forms
S-8 (File No. 33-28699, No. 33-52940 and No. 33-53659) of (1) our report dated
November 1, 1994, on our audits of the consolidated financial statements of
Cabot Corporation as of September 30, 1994 and 1993, and for each of the three
years in the period ended September 30, 1994, which report is included in the
1994 Annual Report to Stockholders of Cabot Corporation, filed as Exhibit 13 to
this Annual Report on Form 10-K; and (2) our report dated November 1, 1994, on
our audits of the financial statement schedules of Cabot Corporation as of
September 30, 1994 and 1993, and for each of the three years in the period
ended September 30, 1994, which report is included in this Annual Report on
Form 10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 20, 1994
20
21
CABOT CORPORATION CONSOLIDATED
- --------------------------------------------------------------------------------
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING ADDITIONS TRANSLATION END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials.............. $1,156,692 $70,628 $(18,720) $34,522 $45,525(a) $1,288,647
Energy................... 91,566 2,923 (3,194) 91,295
General corporate........ 1,970 4 (340) 1,634
--------- ------- -------- ------- ------- ----------
Total.......... $1,250,228 $73,555 $(22,254) $34,522 $45,525 $1,381,576
========== ======= ======== ======= ======= ==========
YEAR ENDED SEPTEMBER 30, 1993
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING ADDITIONS TRANSLATION END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials............... $1,182,186 $63,943 $(7,938) $ (87,114) $5,615(b) $1,156,692
Energy.................... 90,860 706 91,566
General corporate......... 1,610 360 1,970
--------- ------- -------- ---------- ------ ----------
Total........... $1,274,656 $65,009 $(7,938) $ (87,114) $5,615 $1,250,228
========== ======= ======= ========= ====== ==========
YEAR ENDED SEPTEMBER 30, 1992
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING ADDITIONS TRANSLATION END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials.............. $1,042,090 $76,519 $(8,542) $42,680 $29,439(c) $1,182,186
Energy................... 89,581 1,279 90,860
General corporate........ 5,162 272 (3,824) 1,610
---------- ------- -------- ------- ------- ----------
Total.......... $1,136,833 $78,070 $(12,366) $42,680 $29,439 $1,274,656
========== ======= ======== ======== ======= ==========
- ---------------
(a) Consolidation of Indonesia subsidiary, which was accounted for on an
equity basis in 1993.
(b) Write-up in basis upon purchase of remaining equity interest in Brazil
subsidiary.
(c) Consolidation of Brazil subsidiary, which was accounted for on an equity
basis in 1991.
S-1
22
CABOT CORPORATION CONSOLIDATED
- --------------------------------------------------------------------------------
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING TRANSLATION END OF
CLASSIFICATION OF PERIOD DEPRECIATION RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials............... $570,125 $76,755 $(15,947) $15,994 $7,008(a) $653,935
Energy.................... 33,036 2,813 (3,185) 32,664
General corporate......... 547 225 (303) 469
-------- ------- -------- ------- ------ --------
Total........... $603,708 $79,793 $(19,435) $15,994 $7,008 $687,068
======== ======= ========= ======= ====== ========
YEAR ENDED SEPTEMBER 30, 1993
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING TRANSLATION END OF
CLASSIFICATION OF PERIOD DEPRECIATION RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials............... $540,886 $74,815 $(5,446) $ (40,130) $570,125
Energy.................... 30,208 2,828 33,036
General corporate......... 346 201 547
-------- ------- ------- --------- ------ --------
Total........... $571,440 $77,844 $(5,446) $ (40,130) $ 0 $603,708
======== ======= ======= ========= ====== ========
YEAR ENDED SEPTEMBER 30, 1992
(DOLLARS IN 000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------
OTHER CHANGES/
ADD (DEDUCT)
-----------------------
BALANCE FOREIGN BALANCE
AT CURRENCY AT
BEGINNING TRANSLATION END OF
CLASSIFICATION OF PERIOD DEPRECIATION RETIREMENTS ADJUSTMENT OTHER PERIOD
- -----------------------------------------------------------------------------------------------
Specialty Chemicals and
Materials.............. $436,819 $72,262 $(6,070) $20,235 $17,640(b) $540,886
Energy................... 27,490 2,718 30,208
General corporate........ 2,098 199 (1,951) 346
-------- ------- -------- ------- ------- --------
Total.......... $466,407 $75,179 $(8,021) $20,235 $17,640 $571,440
======== ======= ======= ======= ======= ========
- ---------------
(a) Consolidation of Indonesia subsidiary, which was accounted for on an equity basis in 1993.
(b) Consolidation of Brazil subsidiary, which was accounted for on an equity basis in 1991.
S-2
23
CABOT CORPORATION CONSOLIDATED
- --------------------------------------------------------------------------------
SCHEDULE IX
SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------
WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING DURING DURING
SHORT-TERM BORROWINGS OF YEAR RATE THE YEAR THE YEAR THE YEAR
- ---------------------------------------------------------------------------------------------
1994
Banks and financial
institutions............ $26,480,000 8% $66,588,000 $33,170,000 7%
1993
Banks and financial
institutions............ $1,501,000 8% $85,619,000 $53,520,000 5%
1992
Banks and financial
institutions............ $74,500,000 4% $222,976,000 $175,384,000 6%
- ---------------------------------------------------------------------------------------------
The short-term borrowings consist primarily of notes payable to and
overdraft facilities with banks and other financial institutions incurred in the
ordinary course of business. Borrowings are arranged on an as-needed basis at
various terms and at the best available rates.
The maximum and average amounts outstanding during the year were based
on month-end outstanding balances and were representative of the year. The
weighted average interest rate during the year is computed based on the average
of rates applicable to individual short-term borrowings during the year.
S-3
24
CABOT CORPORATION CONSOLIDATED
- --------------------------------------------------------------------------------
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1994
(DOLLARS IN 000'S)
CHARGED TO COSTS AND EXPENSES
- -----------------------------------------------------------------------------------------------
COLUMN A COLUMN B
- -----------------------------------------------------------------------------------------------
ITEM 1994 1993 1992
- -----------------------------------------------------------------------------------------------
Maintenance and repairs................................. $56,059 $60,866 $65,484
Amortization of intangible assets....................... * * *
Taxes, other than payroll and income taxes.............. 22,397 18,263 19,849
Royalties............................................... * * *
Advertising costs....................................... * * *
- -----------------------------------------------------------------------------------------------
* Less than 1% of total sales and operating revenues.
S-4
25
CABOT CORPORATION CONSOLIDATED
- --------------------------------------------------------------------------------
SCHEDULE XIII
OTHER INVESTMENTS
SEPTEMBER 30, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------------------------------------------------------------------------------
AMOUNT
MARKET VALUE CARRIED
OF ISSUE AT IN THE
NAME OF ISSUER AND NUMBER OF COST OF SEPTEMBER BALANCE
TITLE OF ISSUE SHARES ISSUE 30, 1994 SHEET
- ---------------------------------------------------------------------------------------------------
K N Energy, Inc.*
Common Stock........................ 4,197,954 $66,554,000 $109,693,000 $109,693,000
- ---------------------------------------------------------------------------------------------------
* Excludes warrants to purchase 642,232 shares of common stock of K N Energy,
Inc. ("KNE stock") at an exercise price of $17.55 per share, which warrants
expire in 1999 and the fair value of which is not readily determinable because
of certain restrictions on the transferability of such warrants and KNE stock.
S-5
26
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994 COMMISSION FILE
NUMBER 1-5667
- --------------------------------------------------------------------------------
CABOT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
EXHIBITS
- --------------------------------------------------------------------------------
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
- --------------------------------------------------------------------------------
10(e)(i)* -- Supplemental Cash Balance Plan.
10(e)(ii)* -- Supplemental Employee Stock Ownership Plan.
10(e)(iii)* -- Supplemental Retirement Incentive Savings Plan.
10(j) -- Agreement for the Sale and Purchase of Liquefied Natural Gas and Transportation Agreement, dated April 13, 1976,
between Sonatrach and Distrigas Corporation, and Amendment No. 3 to said Agreement, dated February 21, 1988.
10(o)(iv) -- KNE By-law provision.
10(o)(v) -- Request of Cabot for No Action Letter from staff of Securities and Exchange Commission, dated June 28, 1994, and
reply, dated July 6, 1994.
10(o)(vi) -- Application of Cabot for Declaration of Non-holding Company Status Pursuant to Section 2(a)(7) of the Public
Utility Holding Company Act of 1935, dated July 13, 1994.
11 -- Statement Re Computation of Per Share Earnings.
12 -- Statement Re Computation of Ratio of Earnings to Fixed Charges.
13 -- Pages 17 through 40 of the 1994 Annual Report to Stockholders of Cabot Corporation.
21 -- List of Significant Subsidiaries.
24(a) -- Power of attorney for signing of this Annual Report on Form 10-K, dated November 11, 1994.
24(b) -- Certified copy of vote of Cabot's Board of Directors of October 14, 1994, authorizing the execution
and filing of this Annual Report on Form 10-K.
27 -- Financial Data Schedule.
- --------
* Management contract or compensatory plan or arrangement.