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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, 1997
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:
68,213,732 SHARES OUTSTANDING BOSTON STOCK EXCHANGE
AT NOVEMBER 28, 1997 NEW YORK STOCK EXCHANGE
PACIFIC 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. [X]
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 28, 1997, was approximately
$1,621,706,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for fiscal year
1997 are incorporated by reference in Parts I, II, and IV, and portions of the
Registrant's definitive Proxy Statement for its 1998 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 more than 20 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, 1997,
unless otherwise noted. Information regarding the Company's revenues and
operating profits by business segment and geographic area appears on pages 23
and 43 of the Company's Annual Report to Stockholders for fiscal year 1997
("Annual Report") which are incorporated herein by reference.
During the fiscal year ended September 30, 1997, the Company repurchased
approximately 3.5 million shares of its common stock, $1.00 par value per share
(the "Common Stock"), for the purpose of reducing the total number of shares
outstanding as well as offsetting 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, 1997, appears in Management's Discussion
and Analysis of Financial Condition and Results of Operations on pages 21
through 28 of the Annual Report.
SPECIALTY CHEMICALS AND MATERIALS
CARBON BLACK
The Company manufactures and sells carbon black, a fine powder. The
Company's carbon black business includes tire blacks, industrial rubber blacks
and special blacks. Carbon black is used as a reinforcing agent in tires and in
industrial rubber products such as extruded profiles, hoses and molded goods.
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, with an estimated one-quarter of the worldwide production capacity and
market share of carbon black. The Company competes in the manufacture of carbon
black with three companies having an international presence and with at least 20
other companies in various regional markets in which it operates (see "General,"
below).
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. Headquarters for the Company's carbon black business are
located in Billerica, Massachusetts, with regional headquarters in Atlanta,
Georgia (North America), Sao Paulo, Brazil (South America), Suresnes, France
(Europe) and Kuala Lumpur, Malaysia (Pacific Asia). In April 1997, the Company
increased its ownership of its Indian carbon black subsidiary from 51% to 60%.
Some of the plants listed above are built on leased land (see "Properties,"
below).
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.
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Sales are generally made by employees of the Company or its affiliates 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, including
Cabot(R), Black Pearls(R), Elftex(R), Mogul(R), Monarch(R), Regal(R),
Spheron(TM), Sterling(R) and Vulcan(R) (see "General," below).
The Company has developed three new carbon-based products with substantial
demand potential. The first new product, sold under the Ecoblack trademark,
utilizes a new technology to produce particles consisting of carbon and silica.
It can be used to reduce a tire's rolling resistance and thereby improve an
automobile's gas mileage. The Company's best estimate, at this time, of the
annual revenues to be derived from the Ecoblack product by the year 2000 is $20
million to $80 million.* The Company has recently completed a semi-works plant
in Malaysia in connection with its plans to commercially develop and produce
elastomer composites, the second new product. The Company began test production
of an initial line of elastomer composites in 1997. The Company believes that
its new elastomer composites will provide a significant improvement in tire
performance. The Company's best estimate, at this time, of the annual revenues
to be derived from elastomer composites by the year 2000 is $50 million to $100
million.* The third new 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 $40
million.*
FUMED SILICA
The Company manufactures and sells fumed silica and dispersions thereof
under various trademarks including Cabot(R), Cab-O-Sil(R) and Cab-O-Sperse(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 industry, construction
industry and consumer products industries, including adhesives, cosmetics, inks,
silicone rubber, coatings and pharmaceuticals. The headquarters for the
Company's fumed silica business are located in Naperville, Illinois and its
North American fumed silica manufacturing plant is located in Tuscola, Illinois.
Subsidiaries of Cabot lease a manufacturing plant in Wales and own a
manufacturing plant in Germany. A plant to manufacture fumed silica is under
construction in India by a joint venture which is owned 50% by the Company and
50% by an Indian entity. The Company began construction in the summer of 1997 of
a second fumed silica plant in the United States, to be located in Midland,
Michigan. 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 Company has long-term procurement contracts in
place which it believes will enable it to meet the raw material requirements for
the production of fumed silica. 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," below).
The Company believes it is the leading producer and seller of this chemical in
the United States and second worldwide.
MICROELECTRONICS MATERIALS
The Company manufactures and sells high-purity polishing materials, made
from fumed metal oxides and a variety of chemistries. The polishing materials
are used in the manufacture of integrated circuit chips and other electronic
devices by the semiconductor industry. These products are sold under various
Cabot trademarks including Cab-O-Sperse(R) and Semi-Sperse(R). Sales of
polishing materials are made by Company employees and through distributors and
sales representatives. Raw materials, a significant portion of which are
manufactured by the Company's fumed silica business, are readily available. The
Company 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 for the Company's
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* Estimates of future contributions and performances are contingent on various
internal and external factors as described on page 7 of this Report.
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microelectronics materials business are located in Aurora, Illinois. The Aurora,
Illinois facility provides quality control management, operations management,
marketing support and customer sales and service for the Company's
microelectronics materials business.
PLASTICS
The Company 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, Plastech, Plaswite and Rainbow, each of which is
either registered or pending in one or more countries. 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 Asia. This business has
manufacturing facilities in Belgium (two plants), England, Hong Kong and Italy,
and its headquarters are located in Leuven, Belgium. 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 operated a small plastics recycling facility in
Belgium until it was sold in September 1997.
PERFORMANCE MATERIALS
The Company produces tantalum, niobium (columbium) and their alloys for the
electronic materials and refractory metals industries, and cesium, germanium,
rubidium and tellurium for a wide variety of industries including the fiber
optics and superconductor industries. 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 produced by the
Company is also used in ballistic munitions by the defense industry. The
headquarters and principal manufacturing facility for this business are in
Boyertown, Pennsylvania. An affiliate of the Company has a manufacturing plant
in Japan. 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 and Thailand. Raw materials are currently in
adequate supply. The Company is presently seeking new sources of tantalum supply
to support future demand. Sales in the United States are made by personnel of
the Company with export sales to Europe handled by Company employees,
independent European sales representatives and 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, with an emerging competitor in China.
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).
INKJET COLORANTS
The Company's inkjet colorants business, which was formed in 1996,
manufactures colorant products for use in inkjet printing applications. The
Company's pigment-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 will target various printing markets, including home and office
printers, wideformat printers, and commercial and industrial printing
applications. The headquarters of this business are located in Billerica,
Massachusetts. Raw materials for this business include carbon black, which is
obtained from the Company, as well as other products from various sources. All
of those materials are in adequate supply. The Company's best estimate, at this
time, of the revenues which may be derived from these products in the year 2000
is $15 million to $25 million.*
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* Estimates of future contributions and performances are contingent on various
internal and external factors as described on page 7 of this Report.
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SPECIALTY FLUIDS
The Company is developing cesium brine to be marketed as a drilling fluid
for use in high temperature drilling of oil and gas wells. Cesium brine has a
high density but, because it has no solid additives, it has a low viscosity
permitting it to flow readily; it is resistant to high temperatures and yet it
is biodegradable. The headquarters of this business are located in The
Woodlands, Texas and, in the fourth quarter of fiscal 1997, the Company
completed construction of a manufacturing facility to produce cesium brine near
its mine in Manitoba, Canada. The principal raw material used in this business
is cesium, which the Company obtains from that mine. The Company has an adequate
cesium supply. The Company's best estimate, at this time, of the revenues that
may be derived from this product in the year 2000 is $15 million to $35
million.*
GENERAL
The Company owns and is a licensee of various patents, which expire at
various times, covering many products, processes and product uses of the
Company's specialty chemicals and materials businesses. Although the products
made and sold under these patents and licenses are important to the Company, the
loss of any particular patent or license would not materially affect the
Company's specialty chemicals and materials businesses, taken as a whole. The
Company sells its specialty chemicals and materials products under a variety of
trademarks, the loss of any one of which would not materially affect the
Company's specialty chemicals and materials businesses, taken as a whole.
Many of the Company's specialty chemicals and materials businesses are
generally not seasonal in nature, although they experience some decline in sales
in the fourth fiscal quarter due to European seasonal plant shutdowns. The
Company believes that as of September 30, 1997, approximately $108.1 million of
backlog orders for its specialty chemicals and materials businesses were firm,
compared to firm backlog orders as of September 30, 1996, of approximately
$102.3 million. All of the 1997 backlog orders are expected to be filled during
fiscal year 1998.
The Company's specialty chemicals and materials are used in products which
are 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. Those
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.
Six major tire and rubber companies operating worldwide, several special
blacks customers operating in Europe and the United States, one fumed silica
customer operating in Europe and the United States and one capacitor materials
customer represent a material portion of the total net sales and operating
revenues of the Company's specialty chemicals and materials businesses; the loss
of one or more of these customers might materially adversely affect the
Company's specialty chemicals and materials businesses, taken as a whole. The
largest customer of the Company's fumed silica business, 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 Company's
fumed silica business.
Competition in the specialty chemicals and materials businesses is based on
price, service, quality, product performance and technical innovation.
Competitive conditions also necessitate carrying an inventory of raw materials
and finished goods in order to meet 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, inkjet colorants, microelectronics materials and
tantalum businesses. The Company's competitors in the specialty chemicals and
materials businesses, other than the carbon black business, vary by product
group.
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* Estimates of future contributions and performances are contingent on various
internal and external factors as described on page 7 of this Report.
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ENERGY
The Company, through its wholly owned subsidiary, Cabot LNG Corporation,
purchases liquefied natural gas ("LNG") from foreign suppliers, and stores and
resells it in both vapor and liquid form in the northeast United States through
a terminal facility in Everett, Massachusetts. The headquarters for this
business are located in Boston, Massachusetts.
LNG SUPPLIES
The Company's LNG supplies currently come primarily 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 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 Sonatrading, but, to date, the Company has experienced no
direct adverse effect. In the short term, the loss of supply from the Algerian
supplier could have a material adverse effect on the Company's energy business
until the Trinidad LNG project, described below, commences commercial
operations.
During the past two years, the Company also purchased LNG from ADGAS, an
LNG exporter in the United Arab Emirates, and from the North West Shelf project
in Australia. Beginning in 1999, the Company expects to purchase substantial
quantities of LNG from the Trinidad LNG project, described below.
THE TRINIDAD LNG PROJECT
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. are shareholders of Atlantic LNG Company
of Trinidad and Tobago ("Atlantic LNG"), a corporation formed to construct, own
and operate a new LNG liquefaction plant in the Republic of Trinidad and Tobago.
The plant is designed to export 385 million cubic feet of natural gas per day in
the form of LNG. Cabot Trinidad owns 10% of Atlantic LNG. Cabot LNG Corporation
and Enagas, S.A., the largest importer and wholesaler of natural gas in Spain,
have entered into 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 currently under construction and is expected to be completed
and deliveries of LNG to commence in fiscal year 1999. In June 1997, Atlantic
LNG concluded a $600 million limited recourse financing with a consortium of
international banks to provide funds for the construction of the new
liquefaction plant, for which the Company, as well as the other Atlantic LNG
shareholders or their respective affiliates, have issued limited completion
guarantees. The plant construction is proceeding on schedule and on budget and
the Atlantic LNG shareholders are presently evaluating an expansion of the
facility.
OTHER EXPANSION ACTIVITIES
The Company expects to complete the refurbishment of its LNG tanker, now
renamed the Matthew, and to bring it into service in early fiscal 1999. The
Company expects to use the Matthew to transport LNG supplies from the Trinidad
LNG project. Also, in 1997, the Company received approval from the Federal
Energy Regulatory Commission to expand its terminal in Everett to vaporize an
additional 150 million cubic feet of natural gas per day, an approximate 50%
increase in capacity. That expansion is presently under way and is scheduled to
be completed in the first quarter of fiscal 1999.
MARKETS
The Company markets LNG to local gas distribution companies, natural gas
marketers and electric generators. These markets are characterized by
substantial price competition and numerous competitors, including natural gas
suppliers and suppliers of alternative fuels. Sales are stronger in the winter
months because of heating demands in New England.
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Both the natural gas and the electric businesses in the northeast United
States are in the process of being deregulated and restructured, thereby making
them subject to greater competition. This restructuring may cause significant
changes in the Company's LNG customer base, including a shift in the
responsibility for gas supplies from the local gas distribution companies to
natural gas marketers.
OTHER
As of September 30, 1997, the Company owned 2,990,186 shares of common
stock, $5.00 par value per share (approximately 9.5% of the then outstanding
shares), of K N Energy, Inc. ("KNE"). The Company has reflected its investment
in the common stock of KNE at its fair market value on September 30, 1997.
The Company has maintained an approximate 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 a principal subsidiary ("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.
OTHER INFORMATION
EMPLOYEES
As of September 30, 1997, the Company had approximately 4,800 employees.
Approximately 487 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 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 29 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 $18.5 million
in fiscal year 1997 and are expected to be approximately $5.4 million in fiscal
year 1998, and approximately $26.8 million in fiscal year 1999. Most of these
expenditures for fiscal years 1997 through 1999 are to enable Cabot's United
States 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 "Legal Proceedings,"
below). During the next several years, as remediation of various environmental
sites is carried out, the Company expects to spend a significant portion of its
$39.7 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.
In 1996, 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
responses to the inhalation of carbon black. The Company has communicated this
change in IARC's evaluation of carbon black to its customers and employees and
has made changes to its material safety data
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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, fluctuations in currency exchange rates, cost of raw
materials, demand for customers' products and 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. All estimates of future
performance of the Company and its affiliates and subsidiaries are best
estimates based on current information.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Industry segment financial data are set forth in tables on pages 23 and 43
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 page 43 and pages 21 through 28,
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, options, swaps 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 42 of the Annual Report and incorporated herein by reference.)
ITEM 2. PROPERTIES
The Company owns, leases and operates 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 9,321,800 square feet); (ii) its research and development
facilities in Illinois, Massachusetts and Pennsylvania and its applications
development facility in Georgia (collectively comprising approximately 146,900
square feet); (iii) administrative offices and manufacturing plants of its fumed
silica, microelectronics materials and performance materials business units in
Illinois and Pennsylvania (comprising approximately 601,300 square feet); and
(iv) its LNG terminalling and storage facility in Massachusetts (comprising
approximately 37,700 square feet). Portions of plants in Louisiana referred to
above are constructed on long-term ground leases.
The Company's principal foreign owned facilities are held through
subsidiaries and together they comprise approximately 6,511,500 square feet of
manufacturing facilities, 39,400 square feet of research and development
facilities, and 907,600 square feet of administrative offices. Portions of the
owned facilities in Canada, the Czech Republic, France and Spain, and all of the
owned facilities in Hong Kong, India, Indonesia, Japan and The Netherlands are
located on leased land. On December 18, 1997, a subsidiary of the Company
purchased the remaining interest in its fumed silica joint venture in
Rheinfelden, Germany. The square
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footage of the Rheinfelden facility was not available at the time of the filing
of this Report and, thus, is not included in the numbers provided in this
paragraph.
The principal facilities leased by the Company in the United States are its
corporate headquarters in Boston, Massachusetts, and its carbon black
administrative offices in Georgia (collectively comprising approximately 104,000
square feet). In addition, the Company leases a warehouse for its performance
materials business in Pennsylvania (comprising approximately 21,400 square
feet).
The principal facilities leased by subsidiaries in locations outside the
United States are administrative offices and manufacturing facilities of the
fumed silica and microelectronics materials businesses in Wales, and
administrative offices and research and development facilities of the carbon
black operations in France and Malaysia (collectively comprising approximately
214,700 square feet). In addition, the Company holds mining rights in Canada.
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 anticipated requirements for the future
and are being supplemented by additional production facilities in several
locations inside and outside the United States. The Company is currently
constructing new plants to produce fumed silica in Midland, Michigan, and, as
part of a joint venture, in India; the Company is undertaking projects to expand
carbon black production capacity in China, India, Malaysia and The Netherlands.
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, 1997,
unless otherwise specified.
Environmental Proceedings
In November 1997, Cabot was sued in the District Court of Potter County,
Texas by K N Energy, Inc. ("KNE") and various related entities for environmental
remediation costs at approximately 45 gas plants and compressor stations located
in New Mexico, Oklahoma and Texas. Cabot sold its subsidiaries that owned those
properties in two separate transactions in 1989, and, in doing so, undertook
certain contractual obligations with respect to environmental conditions at the
properties. KNE alleges to be the assignee of those contract rights and,
pursuant thereto, has attempted to require Cabot to pay for costs KNE has
incurred and will incur in the future to remediate environmental contamination
alleged to be on those properties.
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. Cabot also resolved claims of
the United States Environmental Protection Agency ("EPA") for the site by paying
a fine of $416,000. The site included a parcel of land on which Cabot previously
owned and operated a pine tar distillation plant. Cabot has completed the
implementation of a soil and groundwater remedy at the site in accordance with
requirements of EPA and is currently operating and maintaining the groundwater
collection system at the site, monitoring site conditions and negotiating a work
plan with EPA concerning the search for and closure of historic water wells on
the property. Recent monitoring of the groundwater collection system revealed
slightly elevated levels of certain contaminants, and Cabot is evaluating
whether further activity is necessary to address this condition. In 1995, Cabot
filed a cost recovery suit against other responsible parties at the site seeking
reimbursement of their share of Cabot's response costs. Settlements have been
reached with several defendants and the action is proceeding against the others.
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 PRPs
contributed funds for a remedial investigation and feasibility study which was
conducted by a consultant to the NJDEP. In January 1996, ten companies,
including Cabot, entered into an Administrative Consent Order with NJDEP which
requires them to perform an additional study of the site and to handle minor
remedial work. Most of the minor remedial
8
10
work required by the 1996 Order is complete, and the companies are preparing to
conduct further soil sampling at the site. The companies are also negotiating
with NJDEP to contribute costs to an interim groundwater remedy involving the
collection of contaminated groundwater at the site and its conveyance to a local
sewer authority over a two year period pending a final decision concerning
long-term groundwater cleanup. Until additional studies are complete, it will
not be possible to identify what remediation, if any, will be required at the
site, what the total cost of the remediation will be, or what Cabot's portion of
any such costs will be.
In 1986, Cabot sold a manufacturing facility in Reading, Pennsylvania to
NGK Metals, Inc. ("NGK"). In doing so, Cabot agreed to share on an equal basis
with NGK the costs of certain environmental remediation of the Reading plant
site. After the sale, EPA issued an order to NGK requiring it to address soil
and groundwater contamination at the site. In 1996 and 1997, NGK's contractor
completed the soil remediation component of the work. In August 1997, after
completion of the soil cleanup project, the contractor notified NGK that it had
incurred substantial additional costs over the base contract for the work and
that NGK was responsible for these extra costs. NGK, with support from Cabot,
has disputed this claim. The groundwater remediation component of the work is
currently being designed.
In 1995, Cabot was named as a third party defendant in a case concerning
the Louisiana Oil and Recycling ("LOR") Site in Baton Rouge, Louisiana. The
complaint alleges that Cabot's former facility in Arcadia, Louisiana shipped
wastes to the site based on a waste manifest dated April 28, 1987. Cabot's
Arcadia facility was sold to Haynes International, Inc. in 1986, and Cabot has
notified Haynes that it is responsible for Cabot's liability, if any, at the LOR
Site.
Cabot is one of approximately 25 parties identified by EPA as PRPs under
the Superfund law with respect to the cleanup of Fields Brook (the "Brook"), a
tributary of the Ashtabula River in northeast Ohio. From 1963 to 1972, Cabot
owned two manufacturing facilities located beside the Brook. Pursuant to an EPA
administrative order, 13 companies, including Cabot, are performing the design
and other preliminary work relating to remediation of sediment in the Brook and
soil in the floodplain and wetlands areas adjacent to the Brook. In 1997, EPA
and the companies reached agreement on the remedy for these areas, and the
companies' consultants are preparing detailed design documents necessary to
implement this remedy. Remedial activities are not expected to occur until at
least 1999. EPA's cost recovery claims through the end of 1989 have been
settled, and the companies are negotiating an administrative order with EPA and
the Natural Resources Trustees to settle remaining EPA past cost claims and
natural resource damage claims. 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.
In 1997, Cabot and the other parties responding to EPA requirements at the
Brook reached a conditional agreement to contribute funds to the Ashtabula River
Partnership to assist the Partnership in its efforts to dredge and remediate
sediments in the Ashtabula River downstream from the Brook. If the Partnership
is successful, this work will be conducted outside the traditional federal
Superfund law process through a public-private consortium that will involve
substantial public sources of funding for the work. If such sources, along with
additional private funds become available, it is expected to be less expensive
and easier to complete the project than it would to address the issues involving
the Ashtabula River pursuant to the traditional Superfund law process.
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. Discovery in the case is nearing completion, and a trial date has been
set for July 1998.
In July 1991, EPA instituted litigation against a number of parties, not
including Cabot, seeking to recover its costs incurred in connection with an
investigation of the Berks Associates Superfund Site in Douglassville,
Pennsylvania. Cabot was joined in this litigation as a third-party defendant.
The litigation has been stayed pending settlement negotiations. In April 1996,
EPA proposed that ten companies, including Cabot, undertake the remaining
remediation required at the site and indicated it would be willing to
reconsider, to some extent, the remediation technology to be used. An
administrative consent order to conduct
9
11
a Focused Feasibility Study of the practicability of the alternative remedy
(materials stabilization and containment in lieu of incineration) was entered
into by the companies and EPA in September 1997. Cabot currently is unable to
project its total liability at the site, although it believes the total volume
of waste that could be attributed to it is a small fraction of the total volume
of waste at the site.
In 1994, five plaintiffs filed suit in the U.S. District Court for the
Eastern District of Pennsylvania against 24 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
plaintiffs claim to have incurred approximately $3 million on investigations and
interim remedial measures at the site. In 1997, EPA issued a Record of Decision
("ROD") for the site. The ROD selected as a remedy the repair and maintenance of
an existing cap at the landfill, the operation and maintenance of a leachate
management system, long-term monitoring of groundwater and implementation of
deed restrictions at the site. EPA estimates the 30-year present net worth of
these measures at approximately $6 million. In September 1997, EPA issued
special notice letters to Cabot and approximately 30 other parties requesting
them to enter into negotiations to implement the ROD, and Cabot is participating
in those negotiations. A consultant to the PRP group which Cabot joined has
reviewed allocation information in the record and attributes to Cabot a small
percentage of waste at the site relative to the total volume of waste believed
to have been shipped there. It is not possible at this time to determine the
amount Cabot will be required to contribute to settle EPA's and the plaintiffs'
costs at the site.
In 1994, 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 EPA's Order by indicating that it should not have been
named as a respondent and by raising several objections to the Order. Cabot
continues to monitor the efforts of the other parties to implement the remedial
measures called for by the EPA 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, 1997, approximately $39.7 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.
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 41 and 42 of the Annual Report.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
10
12
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below for each person who was an executive officer of Cabot at
the end of the 1997 fiscal year, is information, as of November 28, 1997,
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:
OFFICES HELD/BUSINESS
NAME AGE EXPERIENCE DATES HELD
- ----------------------- ---- ------------------------------ ------------------------------
William T. Anderson.... 42.. Cabot Corporation
Controller September 1997 to present
Acting Corporate Controller
and Assistant Controller February 1997 to September
1997
Assistant Controller July 1995 to February 1997
Private Eyes Sunglass
Corporation
Chief Operating Officer 1991 to 1995
Chief Financial Officer 1990 to 1991
Samuel W. Bodman....... 59.. 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...... 54 Cabot Corporation
President and Chief Operating
Officer February 1995 to present
Executive Vice President October 1988 to February 1995
Winfred R. Cates....... 57 Cabot Corporation
Senior Vice President May 1996 to present
Vice President May 1990 to May 1996
Robert L. Culver....... 49 Cabot Corporation
Executive Vice President and
Chief Financial Officer April 1997 to present
Northeastern University
Senior Vice President and
Treasurer October 1990 to April 1997
Robert Rothberg........ 48 Cabot Corporation
Vice President and
General Counsel October 1993 to present
Choate, Hall & Stewart
(law firm), Partner January 1982 to October 1993
Donald R. Young........ 40 Cabot Corporation
Vice President September 1993 to present
General Manager,
Carbon Black October 1996 to present
Director of Carbon Black
Marketing and
General Manager of Global
Tire Sector January 1996 to October 1996
General Manager, Pacific Asia
Carbon Black August 1993 to December 1995
Director of Cogeneration
Projects, Carbon Black September 1992 to August 1993
11
13
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, 1997, there were
approximately 2,130 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 1997
Cash dividends per share................... $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.40
Price range of Common Stock:
High..................................... $29.38 $25.38 $28.56 $ 29.25 $29.38
Low...................................... $23.00 $22.63 $21.50 $ 25.75 $21.50
Close.................................... $25.13 $24.00 $28.38 $ 26.94 $26.94
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
ITEM 6. SELECTED FINANCIAL DATA
Cabot Corporation Selected Financial Data:
YEARS ENDED SEPTEMBER 30
----------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Financial Highlights
Net sales and other
operating revenues.... $1,629,989 $1,856,269 $1,830,393 $1,679,819 $1,614,315
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of accounting
changes............... $ 92,745 $ 194,057 $ 171,932 $ 78,691 $ 37,410
---------- ---------- ---------- ---------- ----------
Long-term debt........... $ 285,544 $ 321,497 $ 306,443 $ 307,828 $ 459,275
Minority interest........ $ 22,780 $ 27,138 $ 7,411 $ -- $ --
Stockholders' equity..... $ 727,793 $ 744,931 $ 685,000 $ 562,489 $ 442,273
---------- ---------- ---------- ---------- ----------
Total
capitalization.. $1,036,117 $1,093,566 $ 998,854 $ 870,317 $ 901,548
---------- ---------- ---------- ---------- ----------
Total assets..... $1,823,589 $1,857,581 $1,654,333 $1,616,757 $1,489,473
---------- ---------- ---------- ---------- ----------
Per Share:
Income before cumulative
effect of accounting
changes............... $ 1.27(a) $ 2.60 $ 2.17 $ 0.98 $ 0.45(b)
Net income............... $ 1.27(a) $ 2.60 $ 2.17 $ 0.98 $ 0.10(c)
Cash dividends........... $ 0.40 $ 0.36 $ 0.30 $ 0.27 $ 0.26
---------- ---------- ---------- ---------- ----------
Average shares
outstanding--
thousands................ 70,730 73,237 77,452 76,498 74,876
---------- ---------- ---------- ---------- ----------
- ---------------
(a) Includes charges of $0.15 per share for the restructuring of the Company's
specialty chemicals and materials businesses. These charges were for asset
impairments and severance.
(b) 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.
(c) Includes a charge of $0.35 per share for the cumulative effect of required
accounting changes.
12
14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required appears in the Annual Report on pages 21 through
28 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required appears in the Annual Report on pages 29 through
43 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 1998 Annual Meeting of
Stockholders ("Proxy Statement") on pages 2 through 6 under the heading "Certain
Information Regarding Directors." All of such information is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required is contained in the Proxy Statement on pages 10
through 15 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 8 and
9 under the heading "Beneficial Stock Ownership of Directors, Nominees,
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 is contained in the Proxy Statement on pages 16
and 17 under the heading "Certain Relationships and Related Transactions". All
of such information is incorporated herein by reference.
13
15
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, 1997.............................. 29
(2) Consolidated Balance Sheets at September 30, 1997 and 1996.......... 30 to 31
(3) Consolidated Statements of Cash Flows for each of the three fiscal
years in the period ended September 30, 1997........................ 32
(4) Notes to Consolidated Financial Statements.......................... 33 to 43
(5) Statement of Management Responsibility for Financial Reporting and
Report of Independent Accountants relating to the Consolidated
Financial Statements listed above................................... 44
(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 (incorporated herein
by reference to Exhibit 3(a) of Cabot's Annual Report on Form 10-K for the
year ended September 30, 1996, file reference 1-5667, filed with the
Commission on December 24, 1996).
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 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 on June 18, 1992).
4(b)(iii) -- Second Supplemental Indenture, dated as of January 31, 1997, between Cabot
Corporation and State Street Bank and Trust Company, Trustee (incorporated
herein by reference to Exhibit 4 of Cabot's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1996, file reference 1-5667,
filed with the Commission on February 14, 1997).
14
16
EXHIBIT
NUMBER DESCRIPTION
- ---------- ----------------------------------------------------------------------------
4(c)(i)+ -- Facility Agreement and Acknowledgment of Indebtedness (The Hongkong and
Shanghai Banking Corporation Limited), dated January 10, 1992.
4(c)(ii)+ -- Project Completion Agreement between Cabot, PT. Cabot Chemical and The
Hongkong and Shanghai Banking Corporation Limited, dated April 28, 1992.
10(a) -- Credit Agreement, dated as of January 3, 1997, among Cabot Corporation, the
banks listed therein and Morgan Guaranty Trust Company of New York, as Agent
(incorporated herein by reference to Exhibit 10 of Cabot's Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 1997, file reference
1-5667, filed with the Commission on May 14, 1997).
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(d)(vi)* -- Amendment 1997-I to Cabot Corporation Deferred Compensation Plan dated June
30, 1997, filed herewith.
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).
15
17
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) -- 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(i) -- 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(j) -- 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(k) -- K N Energy, Inc. 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(l)(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(l)(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 21 through 44 of the 1997 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.
23 -- Consent of Coopers & Lybrand L.L.P.
24 -- Power of attorney 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 exhibits), 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.
16
18
(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), the
Registrant's Registration Statement on Form S-8 No. 333-06629 (filed June 21,
1996), the Registrant's Registration Statement on Form S-8 No. 333-19103 (filed
December 31, 1996) and the Registrant's Registration Statement on Form
S-8 No. 333-19099 (filed December 31, 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.
17
19
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 23, 1997
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 Director, Chairman of the December 23, 1997
- --------------------------------------------- Board and Chief Executive
Samuel W. Bodman Office (principal
executive officer)
* Director and President December 23, 1997
- ---------------------------------------------
Kennett F. Burnes
/s/ Robert L. Culver Executive Vice President and December 23, 1997
- --------------------------------------------- Chief Financial Officer
Robert L. Culver (principal financial
officer)
/s/ William T. Anderson Controller December 23, 1997
- --------------------------------------------- (principal accounting
William T. Anderson officer)
* Director December 23, 1997
- ---------------------------------------------
Jane C. Bradley
* Director December 23, 1997
- ---------------------------------------------
John G.L. Cabot
* Director December 23, 1997
- ---------------------------------------------
Arthur L. Goldstein
* Director December 23, 1997
- ---------------------------------------------
Robert P. Henderson
* Director December 23, 1997
- ---------------------------------------------
Arnold S. Hiatt
18
20
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
* Director December 23, 1997
- ---------------------------------------------
John H. McArthur
* Director December 23, 1997
- ---------------------------------------------
John F. O'Brien
* Director December 23, 1997
- ---------------------------------------------
David V. Ragone
* Director December 23, 1997
- ---------------------------------------------
Charles P. Siess, Jr.
* DIrector December 23, 1997
- ---------------------------------------------
Morris Tanenbaum
* Director December 23, 1997
- ---------------------------------------------
Lydia W. Thomas
* Director December 23, 1997
- ---------------------------------------------
Mark S. Wrighton
*By
/s/ Sarah W. Saunders
- ---------------------------------------------
Sarah W. Saunders
as Attorney-in-Fact
19