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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
OR
[ ]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 (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
75 STATE STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(617) 345-0100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE PER SHARE:
70,446,881 SHARES OUTSTANDING BOSTON STOCK EXCHANGE
AT NOVEMBER 29, 1996 NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS
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 the Registrant's knowledge, in the 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 29, 1996, was approximately
$1,634,283,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for fiscal year
1996 are incorporated by reference in Parts II and IV, and portions of the
Registrant's definitive Proxy Statement for its 1997 Annual Meeting of
Stockholders are incorporated by reference in Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
Cabot's business was founded in 1882 and incorporated in the State of
Delaware in 1960. The Company has businesses in specialty chemicals and
materials and in energy. The Company and its affiliates have manufacturing
facilities in the United States and 21 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, 1996,
unless otherwise noted. Information regarding the revenues and operating profits
of the Company's business segments and geographic areas appears on pages 19 and
38 and 39 of the Company's Annual Report to Stockholders for fiscal year 1996
("Annual Report") which are incorporated herein by reference.
In February 1996, the Company acquired an 80% controlling interest in an
Indonesian carbon black company for approximately $50 million, plus the
assumption of $9 million of debt. In July 1996, the Company sold 1.85 million
shares of the common stock of K N Energy, Inc., for which the Company received
cash proceeds of $57.6 million. See pages 5 and 6 for further information
regarding the Company's investment in K N Energy, Inc.
Effective September 30, 1996, Cabot sold all of the stock of its
subsidiary, TUCO INC., to TUCO Acquisition, Inc. for consideration of $77
million ($27 million in cash plus the repayment of $50 million of TUCO INC. debt
by the buyer), plus $8 million of working capital adjustments.
On November 10, 1995, Cabot's Board of Directors authorized a two-for-one
stock split of Cabot's common stock, $1.00 par value per share ("Common Stock"),
in the form of a stock dividend subject to stockholder approval of an amendment
to Cabot's Certificate of Incorporation to increase the authorized number of
shares to 200,000,000 shares. Stockholders approved such amendment at the
Company's Annual Meeting on March 7, 1996. Pursuant to the previously authorized
stock split, the shares of Common Stock were distributed on March 22, 1996 to
stockholders of record on March 15, 1996.
In May 1996, Cabot's Board of Directors authorized the repurchase of up to
4,000,000 shares of its Common Stock in an effort to reduce the total number of
shares of Common Stock outstanding. Pursuant to that authorization, Cabot
purchased approximately 736,000 shares through September 30, 1996. Prior to that
authorization, Cabot had purchased approximately 1,870,000 shares under a
previous Common Stock repurchase authorization during fiscal year 1996 in open
market transactions and 1,347,300 shares in private and open market transactions
during fiscal 1995 for the purpose of reducing the total number of shares
outstanding as well as replacing shares issued under the Company's employee
incentive compensation programs.
Additional information regarding significant events affecting the Company
in its fiscal year ended September 30, 1996, appears in Management's Discussion
and Analysis of Financial Condition and Results of Operations on pages 17
through 24 of the Annual Report.
SPECIALTY CHEMICALS AND MATERIALS
CARBON BLACK DIVISIONS
The Company's Carbon Black Divisions manufacture and sell carbon black, a
very fine black powder. Carbon black is used as a reinforcing agent in tires
(tire blacks) and industrial rubber products such as extruded profiles, hoses
and molded goods (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
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worldwide production capacity and market share of 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 of this Report).
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.
Carbon black plants owned by Cabot or a subsidiary are located in Argentina,
Australia, Brazil, Canada, the Czech Republic, England, France (two plants),
India, Indonesia (two plants), Italy, Japan, The Netherlands, Spain and the
United States (four plants). Affiliates of the Company own carbon black plants
in Colombia, Japan (two plants), Malaysia, Mexico, The People's Republic of
China and Venezuela. The Company consolidated the operating results of its
affiliates in the Czech Republic and India effective October 1, 1995.
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 Cabot[Registered Trademark],
Black Pearls[Registered Trademark], Elftex[Registered Trademark],
Mogul[Registered Trademark], Monarch[Registered Trademark], Regal[Registered
Trademark], Spheron[Trademark], Sterling[Registered Trademark] and
Vulcan[Registered Trademark] are the best known.
The Company has developed three new carbon black products with substantial
demand potential. The first such product is a tire innerliner carbon black which
can reduce the amount of expensive halobutyl polymers in a tire. The innerliner
carbon black can both lower the cost of producing tires and improve the tires'
performance. The Company's best estimate, at this time, of the annual revenues
innerliner carbon black may produce by the year 2000 is $25 million to $60
million*. Ecoblack[Trademark] carbon black, the second new product, utilizes a
new technology for surface modification of the chemistry of carbon black. It can
be used in place of silica to reduce a tire's rolling resistance and improve an
automobile's gas mileage at a cost significantly less than that using a silica
compound. The Company's best estimate, at this time, of the annual revenues to
be derived from the Ecoblack[Trademark] product by the year 2000 is $20 million
to $80 million*. The Company is building a semi-works plant in Malaysia in
connection with its plans to commercially develop and produce elastomer
composites, the third new product. The Company believes that its new elastomer
composites will provide a significant improvement in tire performance. The
Company estimates that by the year 2000 elastomer composites may produce
revenues of $200 million to $250 million annually*.
CAB-O-SIL DIVISION
The Company's Cab-O-Sil Division manufactures and sells fumed silica and
dispersions thereof under various trademarks including Cabot[Registered
Trademark], Cab-O-Sil[Registered Trademark], Cab-O-Sperse[Registered Trademark]
and Cab-O-Guard[Trademark]. 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
industry, construction industry and consumer industries, including adhesives,
cosmetics, inks, lubricants, paints and pharmaceuticals. The headquarters of the
Cab-O-Sil Division is located in Aurora, Illinois, and its North American
manufacturing plant is located in Tuscola, Illinois. A subsidiary of Cabot
leases a manufacturing plant in Wales, and an affiliate of Cabot owns a
manufacturing plant in Germany. A plant to manufacture fumed silica is under
construction in India by a joint venture which is 50% owned by the Company and
50% owned by an Indian entity. 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
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*Estimates of future contributions and performance are contingent on various
internal and external factors as described on page 7 of this Report.
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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 of this Report). The Company believes it
is the leading producer and seller of this chemical in the United States and
second worldwide.
MICROELECTRONICS MATERIALS DIVISION
The Company's Microelectronics Materials Division manufactures and sells
high-purity polishing compounds, made from fumed metal oxides and a variety of
chemistries. The polishing compounds are used in the manufacture of wafers,
chips and other electronic devices by the semiconductor industry. These products
are sold under various Cabot trademarks including Cab-O-Sperse[Registered
Trademark] and Semi-Sperse[Registered Trademark]. Sales of polishing compounds
are made by Company employees and through distributors. Raw materials are
readily available. The Microelectronics Materials Division has a newly
constructed dispersion manufacturing facility and laboratory in Aurora,
Illinois, as well as a dispersion manufacturing facility in Barry, Wales. The
headquarters and technology center of the Microelectronics Materials Division is
located in Aurora, Illinois. The Aurora, Illinois facility provides quality
control management, operations management, marketing support and customer sales
and service for the Division.
PLASTICS DIVISION
The Company's Plastics Division produces black and white thermoplastic
concentrates and specialty compounds for sale to plastic resin producers and the
plastics processing industry. Sales are made under various Cabot trademarks
including Cabelec, Plasadd, Plasblak, Plasdeg, Plastech, Plaswite and Rainbow.
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. The plastics business is operated through
four sectors: polymer producers, specialty compounds, proprietary products in
Europe and proprietary products in Asia. Sales are made by Company employees and
through sales representatives and distributors primarily in Europe and Asia.
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 concentrates. 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 DIVISION
The Cabot Performance Materials Division serves the electronic materials
and refractory metals industries and produces tantalum, niobium (columbium) and
their alloys, and cesium, germanium, rubidium and tellurium and their compounds.
Tantalum is produced in various forms including powder and wire for electronic
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 and aerospace
applications. Tantalum is also used in ballistic munitions by the defense
industry. The headquarters and the principal manufacturing facility of this
business are in Boyertown, Pennsylvania. Subsidiaries in Canada hold leasehold
interests in land and certain mineral rights with respect to such land in
Manitoba, Canada. These subsidiaries mine and sell tantalite, spodumene,
lepidolite and pollucite. An affiliate of the Company has a manufacturing plant
in Japan. Raw materials are currently in adequate supply. The Company is
presently seeking new sources of supply to support future demand. Raw materials
are obtained by the Company from ores mined principally in Africa, Australia,
Brazil and Canada and from by-product tin slags from tin smelting mainly in
Malaysia. 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. Sales in Europe are made by an affiliated company. Sales
in Japan and other parts of Asia are handled primarily through employees of the
Company's Japanese affiliate. There are currently two 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).
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OTHER
The Company has formed two new business units to develop and market two new
products which are currently not providing a material amount of revenues for the
Company. The first is the Ink Jet Colorants Division which manufactures a
product for use in computer ink jet printers. Pigments based colorants are
designed to replace traditional pigment dispersions and dyes. These colorants
deliver enhanced color, stability, durability, ink formulation flexibility and
high print quality. These new products serve printing markets, such as home and
office printers, wide format, and commercial and industrial printing
applications. The Company's best estimate, at this time, of the revenues from
this product in the year 2000 is $18 million to $30 million*. The other new
business is Cabot Specialty Fluids, Inc. which will develop and market cesium
brine as a drilling fluid to be used when drilling oil and gas wells with high
drilling temperatures. Cesium brine has a high density without solid additives,
but a low viscosity so it will readily flow; it is resistant to high
temperatures and yet it is biodegradable. The Company's best estimate, at this
time, of the revenues from this product in the year 2000 is $15 million to $35
million*. The Company is constructing a manufacturing facility to produce cesium
brine near its mine in Manitoba, Canada. This facility is scheduled for
completion in March of 1997.
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 the rights of the Company and
the products made and sold under these patents and licenses are important to the
Specialty Chemicals and Materials Group, the loss of any particular patent or
license would not materially affect the businesses of this Group, taken as a
whole. 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, taken as a whole.
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, 1996 were approximately $103.1 million, compared to firm backlog
orders as of September 30, 1995, of approximately $104.8 million. All of the
1996 backlog orders are expected to be filled during fiscal year 1997.
Six major tire and rubber companies operating worldwide, several special
blacks customers 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 Cab-O-Sil
Division's largest customer, Dow Corning Corp., filed for protection against its
creditors under the bankruptcy laws in 1995. That filing is not expected to have
a material adverse effect on the Cab-O-Sil Division.
The Company's specialty chemicals and materials are used in many end-uses
associated with the automotive industry such as tires, extruded profiles, hoses,
molded goods, capacitors and paints. The Company's financial results are
affected by the cyclical nature of the automotive industry, although a large
portion of the market is for replacement tires and other parts which are less
subject to automobile industry cycles. The Company has long-term carbon black
supply contracts with certain of its North American tire customers. These
contracts are designed to provide such customers with a secure supply of carbon
black and reduce the volatility in the Company's carbon black volumes and
margins caused, in part, by 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 in the European market for carbon black are also affected
by sales of carbon black produced in Croatia, Egypt, Hungary and Russia.
Competitive conditions
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* Estimates of future contributions and performance are contingent on various
internal and external factors as described on page 7 of this Report.
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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 and tantalum businesses. Competition affecting the businesses of the
non-carbon black parts of the Group comes from different firms for each product
group.
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 and, when available
at competitive prices, from other sources. 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 terminal facility in Everett, Massachusetts. The Company has received
authorizations from the U.S. Department of Energy to import LNG under the
contracts with Sonatrading, as well as blanket authorization to import LNG from
other foreign suppliers on both a long-term and short-term basis. The Company
has also received authorization from the Federal Energy Regulatory Commission
for sales services. Currently, the Company's supply of LNG is limited primarily
by the amount of LNG available from 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 deliveries of LNG from its Algerian supplier to improve
in fiscal year 1997 as Sonatrach's renovation project progresses. The Company
has been able to continue to meet its firm sales obligations to customers and
has secured an additional limited source of supply from ADGAS, an LNG exporter
in the United Arab Emirates. 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, but to date, no direct adverse effect
has been experienced. The loss of supply from the Algerian supplier could have a
material adverse effect on the Company until additional sources of supply are
obtained.
A consortium of companies consisting of Amoco Trinidad (LNG) B.V., British
Gas Trinidad LNG Limited, Cabot Trinidad LNG Limited ("Cabot Trinidad", a wholly
owned subsidiary of Cabot LNG Corporation), NGC Trinidad and Tobago LNG Limited
and Repsol International Finance B.V. own Atlantic LNG Company of Trinidad and
Tobago ("Atlantic LNG"), a corporation formed to construct, own and operate a
new LNG plant in the Republic of Trinidad and Tobago designed to export 385
million cubic feet of natural gas per day in the form of LNG. Cabot Trinidad
owns ten percent of Atlantic LNG. Cabot LNG Corporation and Enagas, S.A., the
largest importer and wholesaler of natural gas in Spain, have entered into sales
contracts with Atlantic LNG under which Cabot LNG Corporation will purchase 60%
and Enagas, S.A. will purchase the remaining 40% of the LNG to be produced by
Atlantic LNG's new plant. The plant is expected to be completed and deliveries
of LNG to commence in fiscal year 1999. In fiscal year 1996, the consortium
concluded agreements with subsidiaries of Bechtel Corporation to design and
construct the new LNG plant. Construction is now underway. In November 1995, the
Company received authorization from the U.S. Department of Energy to import up
to 100 billion cubic feet of LNG per year from Trinidad and other countries for
a period of 40 years.
The LNG business is not materially dependent upon any patent, trademark or
other intellectual property license. Backlog orders are not significant to this
business. Sales by the LNG business are stronger in the winter months because of
heating demands in New England.
Price competition characterizes the markets served by the LNG business. The
business has numerous competitors including natural gas suppliers and suppliers
of alternative fuels.
OTHER
The Company acquired its investment in K N Energy, Inc. ("KNE") in
connection with the merger of American Oil and Gas Corporation with a subsidiary
of KNE in July 1994. The Company has reflected its
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investment in the common stock of KNE at its fair market value on September 30,
1996. An officer of the Company is a director and a member of the Audit
Committee of KNE.
The Company has maintained an approximately 42.5% ownership interest in
Aearo Corporation (formerly Cabot Safety Holdings Corporation) after the
restructuring of the Company's safety products and specialty composites business
in July 1995. The Company has two representatives serving on the Board of
Directors of Aearo Corporation and its principal subsidiaries ("Aearo"). Aearo
manufactures and sells personal safety products, as well as energy absorbing,
vibration damping and impact absorbing products for industrial noise control and
environmental enhancement.
TUCO INC., which the Company sold effective September 30, 1996, purchases
coal mined in Wyoming pursuant to long-term and short-term (spot) contracts and
has it transported by rail to Texas where it is processed and sold to
Southwestern Public Service Company pursuant to long-term sales contracts for
use in generating electricity.
OTHER INFORMATION
EMPLOYEES
As of September 30, 1996, the Company had approximately 4,700 employees.
Approximately 600 employees in the United States are covered by collective
bargaining agreements. The Company believes that its relations with its
employees are satisfactory.
RESEARCH AND DEVELOPMENT
The Company's Specialty Chemicals and Materials Group develops new and
improved products and processes and greater operating efficiencies 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 25 of the Annual Report which is incorporated
herein by reference.
SAFETY, HEALTH AND ENVIRONMENT
The Company's operations are subject to various environmental laws and
regulations. Over the past several years, the Company has expended considerable
sums to add, improve, maintain and operate facilities for environmental
protection. Expenditures for equipment or facilities intended solely for
environmental protection are estimated to have been approximately $22 million in
fiscal year 1996 and are expected to be approximately $20 million in fiscal year
1997, and approximately $20 million in fiscal year 1998. Most of these
expenditures for fiscal years 1996-1998 are to enable Cabot's U.S. plants to
comply with the new requirements of the Clean Air Act.
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 8 through 10 of this Report for a description of various
environmental proceedings). During the next several years, as remediation of
various environmental sites is carried out, the Company expects to spend a
significant portion of its $44.5 million environmental reserve for costs
associated with such remediation. Additions are made to the reserve based on the
Company's continuing analysis of its share of costs likely to be incurred at
each site. The sites are primarily associated with divested businesses.
The International Agency for Research on Cancer ("IARC") revised its
evaluation of carbon black from Group 3 (insufficient evidence to make a
determination regarding carcinogenicity) to Group 2B (known animal carcinogen,
possible human carcinogen), based solely on results of studies of female rat
response to the
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inhalation of carbon black. The Company has communicated this change in IARC
evaluation of carbon black to its customers and employees and has made changes
to its material safety data sheets and elsewhere, as appropriate. The Company
continues to believe that available evidence, taken as a whole, indicates that
carbon black is not carcinogenic to humans, and does not present a health hazard
when handled in accordance with good housekeeping and safe workplace practices
as described in the Company's material safety data sheets.
*FORWARD LOOKING INFORMATION
Actual results may differ materially from the results anticipated in the
statements included herein due to a variety of factors including market supply
and demand conditions, costs of raw materials, demand for our customers'
products and our competitors' reactions to market conditions. Timely
commercialization of products under development by the Company 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.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Industry segment financial data are set forth in tables on pages 19 and 38
and 39 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. The 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
currently 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 Financial
Condition and Results of Operations, appearing on pages 38 and 39 and pages 17
through 24, 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, including the purchase of forward
foreign currency contracts and options and writing of options to reduce the risk
associated with changes in the value of certain foreign currencies compared to
the U.S. dollar. (See Note M of the Notes to the Consolidated Financial
Statements on page 38 of the Annual Report.)
ITEM 2. PROPERTIES
The Company owns, operates and leases office, manufacturing, production,
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)
the administrative offices and manufacturing plants of its carbon black
operations in Louisiana, Massachusetts, Texas and West Virginia (comprising
approximately 90,400 square yards); (ii) its research and development facilities
in Illinois, Massachusetts, Pennsylvania and Texas and its applications
development facility in Georgia (comprising approximately 24,700 square yards);
(iii) administrative offices and manufacturing plants of its Cab-O-Sil,
Microelectronics Materials Division and Cabot Performance Materials business
units in Illinois and Pennsylvania (comprising approximately 56,400 square
yards); and (iv) its LNG terminalling and storage facility in Massachusetts
(comprising approximately 3,200 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 670,700 square yards of manufacturing
facilities, 4,300 square yards of research and development facilities, and
94,600 square yards of administrative facilities. Portions of the facilities in
the Czech Republic, India and Indonesia are located on leased land.
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The principal facilities leased by the Company in the United States are its
corporate headquarters in Boston, Massachusetts, the carbon black administrative
offices in Georgia and the administrative offices of the Cabot Performance
Materials business in Pennsylvania (comprising approximately 16,200 square
yards).
The principal facilities leased by subsidiaries in locations outside of the
United States are administrative offices and manufacturing facilities of the
Cab-O-Sil business in Wales and the Plastics business in Belgium and
administrative offices and manufacturing and research and development facilities
of the carbon black operations in France, Malaysia and Spain, as well as certain
leasehold interests in Canada (collectively comprising approximately 109,800
square yards).
The Company's administrative offices are generally suitable and adequate
for their intended purposes. Existing manufacturing facilities of the Company
are not sufficient to meet the Company's increased requirements for the future
and are being supplemented by additional production facilities in several
locations in the U.S. and outside the U.S. A new plant to produce fumed silica
is planned to be constructed in Midland, Michigan; projects to expand carbon
black production capacity are being undertaken in North America, South America
and Indonesia; projects to expand tantalum powder and wire capacity are planned
in Boyertown, Pennsylvania; and a cesium brine plant is under construction in
Manitoba, Canada. The cesium brine plant is scheduled for completion in
March of 1997.
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, 1996:
Environmental Proceedings
In 1994, Cabot and the State of Florida agreed to 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 previously owned and operated a pine tar distillation plant.
Cabot has filed a cost recovery suit against other responsible parties at the
site seeking reimbursement of their share of response costs. Settlements have
been reached with several defendants and the action is proceeding against the
others.
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") was issued by the EPA specifying a combination of remedial
actions for the site at an estimated cost of almost $15 million. The EPA issued
an administrative order directing Cabot and four other companies to design and
complete the remedial measures. Most of the work on site remediation has been
completed. Cabot and the other companies involved have reached an agreement on
the portions of the costs to be borne by each company.
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 a six acre site in
Old Bridge Township 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. A group of companies, including Cabot, has reached an
agreement with the NJDEP to perform an additional study of the site and to
handle minor remedial work. Until the study is complete, it will not be possible
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 U.S. 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. The Pennsylvania Department of Environmental Protection ("PADEP")
intervened in this lawsuit. The government plaintiffs estimated their claims to
total $48 million. For several years
8
10
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 and PADEP have reached settlements with numerous parties,
including Cabot, and settlement documents have been filed with the Court.
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 PADEP. An environmental consultant
retained by Cabot has designed and implemented certain of the remedial measures
described in the study after consultation with the PADEP. The remedial work was
completed in 1996.
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 1997 or 1998. Pursuant to an EPA
administrative order, 15 companies, including Cabot, are performing the design
and other preliminary work relating to sediment cleanup. Concurrently, the
companies and the EPA are evaluating remedial alternatives for the floodplain
and wetlands areas adjacent to the Brook. The EPA has not selected the remedy
for these areas. Consequently, it is not possible to determine future remedial
costs for the floodplain and wetlands. The EPA's cost recovery claims through
the end of 1989 have been settled; the companies, including Cabot, that have
paid for work at the site are seeking to recover a share of those costs from
other responsible parties. At one of the plants formerly operated by Cabot, two
subsequent owners are working with Cabot in evaluating site conditions and
potential remedies. The EPA has not selected the remedy for this plant site or
any other plant along the Brook. It is not possible at this time to determine
future remedial costs or Cabot's share of those costs. 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 engaged in arbitration
proceedings with the 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. Cabot and other third-party
defendants filed complaints against five additional companies that sent waste to
the site. It is not possible at this time to determine future remedial costs or
Cabot's share, if any, of such costs.
In 1994, five plaintiffs filed suit in the U.S. District Court for the
Eastern District of Pennsylvania against 18 defendants, including Cabot, under
the Superfund law and State law seeking recovery of remediation costs at the
Berks Landfill site, which is located in the vicinity of Reading, Pennsylvania.
The plaintiffs claim that a beryllium alloy plant formerly owned by Cabot and
located in Reading, Pennsylvania sent waste to the Berks Landfill. The EPA has
not selected a remedy for the site. It is not possible at this time to determine
future remedial costs or the amount of those costs which Cabot may share with
the current owner.
In 1994, the EPA issued a Unilateral Administrative Order to Cabot and 11
other respondents pursuant to the Superfund law with respect to the Revere
Chemical Site (a/k/a Echo Site) in Nockamixon Township, Bucks County,
Pennsylvania (the "Revere Site"). The Order requires the respondents to design
and implement several remedial measures at the Revere Site, estimated to cost
approximately $15 million. Cabot's portion of that cost, if any, has not yet
been determined. Cabot has responded to the EPA's Order by indicating that it
should not have been named as a respondent and by raising several objections to
the Order.
Cabot has received various requests for information and notifications that
it may be a PRP at several other Superfund sites.
As of September 30, 1996, approximately $44.5 million was accrued for
environmental matters 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, alternative cleanup methods available, abilities
of other responsible parties to contribute and its interpretation of laws and
regulations applicable to each site.
9
11
Breast Implant Litigation
Cabot was named as a defendant in fewer than 100 breast implant lawsuits.
As a result of dismissals, without any settlement payments, in a number of cases
and summary judgments granted to Cabot in the remainder of the cases, Cabot is
not a defendant in any breast implant lawsuits. Cabot cannot at this time
predict with accuracy whether any of the cases that were dismissed will be
reinstated, or whether it will be added as a defendant in any other breast
implant lawsuits.
Other Proceedings
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
pages 37 and 38 of the Annual Report).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below for each person who was an executive officer of Cabot at
the end of the fiscal year is information as of December 20, 1996, regarding his
age, position(s) with Cabot, the periods during which he served as an officer
and his business experience during at least the past five years:
NAME AGE OFFICES HELD/BUSINESS EXPERIENCE DATES HELD
- ------------------------ --- ----------------------------------- ------------------------------
Samuel W. Bodman........ 58 Cabot Corporation
Chairman of the Board October 1988 to present
President February 1991 to February 1995
January 1987 to October 1988
Chief Executive Officer February 1988 to present
Kennett F. Burnes....... 53 Cabot Corporation
President February 1995 to present
Executive Vice President October 1988 to February 1995
Vice President and General November 1987 to October 1988
Counsel
Winfred R. Cates........ 56 Cabot Corporation
Senior Vice President May 1996 to present
Vice President May 1990 to May 1996
Kenyon C. Gilson........ 53 Cabot Corporation
Chief Financial Officer October 1995 to present
Executive Vice President March 1996 to present
Vice President August 1989 to present
Paul J. Gormisky........ 43 Cabot Corporation
Controller April 1995 to present
Vice President February 1994 to present
Director of Finance, May 1993 to April 1995
Carbon Black
Director of Corporate May 1990 to May 1993
Planning
Robert Rothberg......... 47 Cabot Corporation
Vice President and October 1993 to present
General Counsel
Choate, Hall & Stewart January 1982 to October 1993
(law firm), Partner
10
12
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, 1996, 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 cash dividends for the past two years are shown below, restated to
reflect the two-for-one stock split in March 1996.
STOCK PRICE AND DIVIDEND DATA
DECEMBER MARCH JUNE SEPTEMBER YEAR
-------- ------ ------ --------- ------
FISCAL 1996
Cash dividends per share................... $ 0.09 $ 0.09 $ 0.09 $ 0.09 $ 0.36
Price range of common stock:
High..................................... $27.00 $31.38 $31.38 $28.75 $31.38
Low...................................... $23.25 $26.69 $24.50 $22.88 $22.88
Close.................................... $26.94 $30.50 $24.50 $27.88 $27.88
DECEMBER MARCH JUNE SEPTEMBER YEAR
-------- ------ ------ --------- ------
FISCAL 1995
Cash dividends per share................... $ 0.07 $ 0.07 $ 0.07 $ 0.09 $ 0.30
Price range of common stock:
High..................................... $14.38 $18.57 $26.38 $28.94 $28.94
Low...................................... $12.82 $14.06 $18.44 $24.07 $12.82
Close.................................... $14.19 $18.44 $26.38 $26.57 $26.57
ITEM 6. SELECTED FINANCIAL DATA
Cabot Corporation Selected Financial Data:
YEARS ENDED SEPTEMBER 30
-------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Financial Highlights
Net sales and other operating
revenues................... $1,856,269 $1,830,393 $1,679,819 $1,614,315 $1,556,986
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of accounting
changes.................... $ 194,057 $ 171,932 $ 78,691 $ 37,410 $ 62,223
---------- ---------- ---------- ---------- ----------
Long-term debt................ $ 321,497 $ 306,443 $ 307,828 $ 459,275 $ 479,882
Minority interest............. $ 27,138 $ 7,411 $ -- $ -- $ 9,756
Stockholders' equity.......... $ 744,931 $ 685,000 $ 562,489 $ 442,273 $ 492,955
---------- ---------- ---------- ---------- ----------
Total
capitalization...... $1,093,566 $ 998,854 $ 870,317 $ 901,548 $ 982,593
---------- ---------- ---------- ---------- ----------
Total assets.......... $1,857,581 $1,654,333 $1,616,756 $1,489,473 $1,554,529
---------- ---------- ---------- ---------- ----------
Per Share:
Income before cumulative
effect of accounting
changes...................... $ 2.60 $ 2.17 $ 0.98 $ 0.45(a) $ 0.79
Net income.................... $ 2.60 $ 2.17 $ 0.98 $ 0.10(b) $ 0.79
Cash dividends................ $ 0.36 $ 0.30 $ 0.27 $ 0.26 $ 0.26
---------- ---------- ---------- ---------- ----------
Average shares outstanding --
thousands..................... 73,237 77,452 76,498 74,876 73,604
---------- ---------- ---------- ---------- ----------
- ---------------
(a) Includes charges of $0.42 per share for the restructuring of the Company's
Specialty Chemicals and Materials businesses and favorable energy accrual
adjustment of $0.12 per share. (see Item 7)
(b) Includes a charge of $0.35 per share for the cumulative effect of required
accounting changes. (see Item 7)
11
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item appears in the Annual Report on pages
17 to 24 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
25 through 39 and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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 Registrant's Proxy Statement for the 1997 Annual Meeting of
Stockholders ("Proxy Statement") on pages 2 through 5 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 16 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 and
8 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
The information required by this item is contained in the Proxy Statement
on page 15. All of such information is incorporated herein by reference.
12
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, 1996................................ 25
(2) Consolidated Balance Sheets at September 30, 1996 and 1995............ 26 to 27
(3) Consolidated Statements of Cash Flows for each of the three fiscal
years in the period ended September 30, 1996.......................... 28
(4) Notes to Consolidated Financial Statements............................ 29 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, November 18, 1988, November 24, 1995 and March
12, 1996, filed herewith.
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) -- Rights Agreement, dated as of November 10, 1995, between Cabot
Corporation and The First National Bank of Boston as Rights Agent
(incorporated herein by reference to Exhibit 1 of Cabot's
Registration Statement on Form 8-A, file reference 1-5667, filed
with the Commission on November 13, 1995).
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 on December 10, 1987).
4(b)(ii) -- First Supplement 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 on
June 18, 1992).
4(c)(i)+ -- Finance Agreement between PT. Cabot Chemical and Overseas Private
Investment Corporation dated September 10, 1991.
4(c)(ii)+ -- Facility Agreement and Acknowledgment of Indebtedness (The Hongkong
and Shanghai Banking Corporation Limited) dated January 10, 1992.
4(c)(iii)+ -- Project Completion Agreement between Cabot, PT. Cabot Chemical and
The Hongkong and Shanghai Banking Corporation Limited dated April
28, 1992.
13
15
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------
10(a)(i) -- 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(a)(ii) -- Amendment No. 1, dated January 13, 1995, to 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 herein by reference to Exhibit 10(b)(ii) of Cabot's
Annual Report on Form 10-K for the year ended September 30, 1995,
file reference 1-5667, filed with the Commission on
December 29, 1995).
10(a)(iii) -- Amendment No. 2, dated as of May 31, 1996, to 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,
filed herewith.
10(b)(i)* -- Equity Incentive Plan, as amended (incorporated herein by reference
to Exhibit 99 of Cabot's Registration Statement on Form S-8,
Registration No. 33-28699, filed with the Commission on
May 12, 1989).
10(b)(ii)* -- 1996 Equity Incentive Plan (incorporated herein by reference to
Exhibit 28 of Cabot's Registration Statement on Form S-8,
Registration No. 333-03683, filed with the Commission on
May 14, 1996).
10(c) -- 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 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(d)(i)* -- Supplemental Cash Balance Plan (incorporated herein by reference to
Exhibit 10(e)(i) of Cabot's Annual Report on Form 10-K for the year
ended September 30, 1994, file reference 1-5667, filed with the
Commission on December 22, 1994).
10(d)(ii)* -- Supplemental Employee Stock Ownership Plan (incorporated herein by
reference to Exhibit 10(e)(ii) of Cabot's Annual Report on Form 10-K
for the year ended September 30, 1994, file reference 1-5667, filed
with the Commission on December 22, 1994).
10(d)(iii)* -- Supplemental Retirement Incentive Savings Plan (incorporated herein
by reference to Exhibit 10(e)(iii) of Cabot's Annual Report on Form
10-K for the year ended September 30, 1994, file reference 1-5667,
filed with the Commission on December 22, 1994).
10(d)(iv)* -- Supplemental Employee Benefit Agreement with 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(d)(v)* -- Cabot Corporation Deferred Compensation Plan dated January 1, 1995
(incorporated herein by reference to Exhibit 10(e)(v) of Cabot's
Annual Report on Form 10-K for the year ended September 30, 1995,
file reference 1-5667, filed with the Commission on
December 29, 1995).
10(e)* -- Form of severance agreement entered into between Cabot Corporation
and various managers (incorporated herein 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(f) -- 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).
14
16
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------
10(g)* -- 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(h)(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(h)(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).
10(h)(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(i) -- Agreement for the Sale and Purchase of Liquefied Natural Gas and
Transportation Agreement, dated April 13, 1976, between L'Entreprise
Nationale pour la Recherche, la Production, le Transport, la
Transformation et la Commercialisation des Hydrocarbures
("Sonatrach") and Distrigas Corporation, and Amendment No. 3 to said
Agreement, dated February 21, 1988 (incorporated herein by reference
to Exhibit 10(j) of Cabot's Annual Report on Form 10-K for the year
ended September 30, 1994, file reference 1-5667, filed with the
Commission on December 22, 1994).
10(j) -- Agreement for the Sale and Purchase of Liquefied Natural Gas, dated
December 11, 1988, between Sonatrading Amsterdam B.V.
("Sonatrading") and Distrigas Corporation and Transportation
Agreement, dated December 11, 1988, between Sonatrach 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(k) -- Mutual Assurances Agreements among Cabot Corporation, Sonatrach,
Distrigas Corporation and Sonatrading 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(l)(i) -- Agreement between K N Energy, Inc. ("KNE"), American Oil and Gas
Corporation ("AOG") and Cabot Corporation, 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(l)(ii) -- Registration Rights Agreement between KNE and Cabot Corporation,
dated July 13, 1994 (incorporated herein by reference to Exhibit 2
of the KNE Schedule 13D).
10(l)(iii) -- Share Transfer and Registration Agreement between KNE and Cabot
Corporation, dated July 13, 1994 (incorporated herein by reference
to Exhibit 3 of the KNE Schedule 13D).
15
17
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------
10(l)(iv) -- KNE By-law provision (incorporated herein by reference to Exhibit
10(o)(iv) of Cabot's Annual Report on Form 10-K for the year ended
September 30, 1994, file reference 1-5667, filed with the Commission
on December 22, 1994).
10(m)(i) -- Asset Transfer Agreement, dated as of June 13, 1995, among Cabot
Safety Corporation, Cabot Canada Ltd., Cabot Safety Limited, Cabot
Corporation, Cabot Safety Holdings Corporation and Cabot Safety
Acquisition Corporation (incorporated herein by reference to Exhibit
2(a) of Cabot Corporation's Current Report on Form 8-K, dated July
11, 1995, file reference 1-5667, filed with the Commission).
10(m)(ii) -- Stockholders' Agreement, dated as of July 11, 1995, among Vestar
Equity Partners, L.P., Cabot CSC Corporation, Cabot Safety Holdings
Corporation, Cabot Corporation and various other parties thereto
(incorporated herein by reference to Exhibit 2(b) of Cabot
Corporation's Current Report on Form 8-K, dated July 11, 1995, file
reference 1-5667, filed with the Commission).
11 -- Statement Re: Computation of Per Share Earnings, filed herewith.
12 -- Statement Re: Computation of Ratios of Earnings to Fixed Charges,
filed herewith.
13 -- Pages 17 through 40 of the 1996 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.
21 -- List of Significant Subsidiaries, filed herewith.
24 -- Power of attorney dated November 8, 1996 for signing 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 Schedules have been 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
No. 33-28699 (filed May 12, 1989), the Registrant's Registration Statement on
Form S-8 No. 33-52940 (filed October 5, 1992), the Registrant's Registration
Statement on Form S-8 No. 33-53659 (filed May 16, 1994), the Registrant's
Registration Statement on Form S-8 No. 333-03683 (filed May 14, 1996) and the
Registrant's Registration Statement on Form S-8 No. 333-06629 (filed
June 21, 1996).
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.
16
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)
By /s/ Samuel W. Bodman,
------------------------------------
Samuel W. Bodman,
Chairman of the Board and
Chief Executive Officer
Date: December 20, 1996
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 and December 20, 1996
- --------------------------------------------- Director (Principal
Samuel W. Bodman Executive Officer)
/s/ Kenyon C. Gilson Executive Vice President and December 20, 1996
- --------------------------------------------- Chief Financial Officer
Kenyon C. Gilson (Principal Financial
Officer)
/s/ Paul J. Gormisky Vice President and December 20, 1996
- --------------------------------------------- Controller (Principal
Paul J. Gormisky Accounting Officer)
* Director December 20, 1996
- ---------------------------------------------
Jane C. Bradley
/s/ Kennett F. Burnes Director and President December 20, 1996
- ---------------------------------------------
Kennett F. Burnes
* Director December 20, 1996
- ---------------------------------------------
John G.L. Cabot
* Director December 20, 1996
- ---------------------------------------------
Arthur L. Goldstein
* Director December 20, 1996
- ---------------------------------------------
Robert P. Henderson
* Director December 20, 1996
- ---------------------------------------------
Arnold S. Hiatt
* Director December 20, 1996
- ---------------------------------------------
John H. McArthur
17
19
SIGNATURES TITLE DATE
---------- ----- ----
* Director December 20, 1996
- ---------------------------------------------
John F. O'Brien
* Director December 20, 1996
- ---------------------------------------------
David V. Ragone
* Director December 20, 1996
- ---------------------------------------------
Charles P. Siess, Jr.
* Director December 20, 1996
- ---------------------------------------------
Morris Tanenbaum
* Director December 20, 1996
- ---------------------------------------------
Lydia W. Thomas
*By /s/ William F. Robinson, Jr.
----------------------------------
William F. Robinson, Jr.
as Attorney-in-Fact
18
20
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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, 1996 COMMISSION FILE NUMBER 1-5667
------------------------
CABOT CORPORATION
(Exact Name of Registrant as Specified in Charter)
------------------------
EXHIBITS
EXHIBIT INDEX
EXHIBIT
NUMBER
---------
3(a) -- Certificate of Incorporation of Cabot Corporation restated effective
October 24, 1983, as amended February 14, 1985, December 3, 1986, February
19, 1987, November 18, 1988, November 24, 1995 and March 12, 1996.
10(a)(iii) -- Amendment No. 2, dated as of May 31, 1996, to 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.
11 -- Statement Re: Computation of Per Share Earnings.
12 -- Statement Re: Computation of Ratios of Earnings to Fixed Charges.
13 -- Pages 17 through 40 of the 1996 Annual Report to Stockholders of Cabot
Corporation.
21 -- List of Significant Subsidiaries.
24 -- Power of attorney for signing of this Annual Report on Form 10-K.
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