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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, 1998
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:
67,215,250 SHARES OUTSTANDING BOSTON STOCK EXCHANGE
AT NOVEMBER 30, 1998 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. [ ]
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 30, 1998, was approximately
$1,821,968,766.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for fiscal year
1998 are incorporated by reference in Parts II and IV, and portions of the
Registrant's definitive Proxy Statement for its 1999 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, 1998,
unless otherwise noted. Information regarding the Company's revenues and
operating profits by business segment and geographic area appears on pages 21
and 46 through 47 of the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1998 ("Annual Report") which are incorporated herein by
reference.
During the fiscal year ended September 30, 1998, the Company repurchased
approximately 3.8 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, 1998, appears in Management's Discussion
and Analysis of Financial Condition and Results of Operations on pages 21
through 29 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 products
(previously referred to as industrial rubber blacks) and special blacks. Carbon
black is used as a reinforcing agent in tires and in industrial 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 the Company are located in Argentina,
Australia, Brazil, Canada, China, 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 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). Some of the plants listed above are built on leased
land (see "Properties," below). The recent economic crisis in Asia resulted in
the Company's halting production at its Merak facility, one of the two it owns
in Indonesia. (See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Special Items," on pages 22 through 23 of the
Annual Report.)
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
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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 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's carbon black business continues to pursue a dual strategy of
cost improvement and new product development. The Company is currently
reconfiguring its manufacturing management organization to help speed the
implementation of best manufacturing practices. Additionally, the Company has
several ongoing carbon black new product initiatives. Over the past twelve
months, management has more narrowly focused the carbon black new product
development projects to include only projects that have significant customer
involvement or sponsorship. Generally, the carbon black new products targeting
the tire market have taken longer to commercialize than management anticipated.
For example, during 1998, the anticipated commercialization timetable for the
elastomer composites initiative was extended when initial tire road tests proved
inconclusive on certain performance characteristics of the elastomer composites
product. The Company believes it has identified the reasons why the product did
not exhibit the anticipated performance characteristics and is making those
process changes it believes are necessary to produce a product with the desired
attributes. Once those process changes are made, additional road tests will be
performed to further examine the product's performance and commercial viability.
The Company's management continues to believe that the combination of effective
cost and capacity management and the commercialization of new product
initiatives will provide earnings growth opportunities for the carbon black
business over the next several years.*
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.
The Company leases a manufacturing plant in Wales and owns a manufacturing plant
in Germany; prior to October 1997, the plant in Germany was owned by a joint
venture in which the Company held a 50% interest. In addition, a joint venture
owned 50% by the Company and 50% by an Indian entity owns a plant in India,
which began operations in the spring of 1998. 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 for its plants in Germany and Wales, which it believes will
enable it to meet its raw material requirements for those plants. The Company
does not anticipate difficulty in obtaining raw materials for its Tuscola,
Illinois plant in the foreseeable future. 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 compounds, made
from fine metal oxide particles and a variety of chemistries. The polishing
materials are used in the manufacture of multi-layer 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 compounds are made by Company employees and
through distributors and sales representatives. Raw materials, a
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significant portion of which are manufactured by the Company's fumed silica
business, are readily available. The Company has a dispersion manufacturing
facility and laboratory in Aurora, Illinois, and a dispersion manufacturing
facility in Barry, Wales. Construction of a third dispersion manufacturing
facility in Geino, Japan was recently completed and is expected to begin
production in January of 1999, with sales anticipated in April of 1999. In
addition, the Company has dispersions mixed for it by a contract manufacturer in
Hammond, Indiana. The headquarters and technology center for the Company's
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.
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 specialty chemicals 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, or an expansion of current sources, to support future demand. Sales in
the United States are made by Company employees, 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
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 black colorant products for use in inkjet printing applications.
The Company's pigment-based black 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, as well as
other products, some of which are custom manufactured, from various sources. The
Company does not anticipate any difficulties in obtaining those raw materials
that are custom
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manufactured for its inkjet business, and believes that all other raw materials
for this business are in adequate supply. Management believes that the Company's
colorants will become integral components of certain inkjet printing systems to
be introduced to the market within the next twelve to eighteen months.*
SPECIALTY FLUIDS
The Company's specialty fluids business is developing cesium brine to be
marketed as a drilling and completion fluid for use in high temperature and high
pressure 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. The fluid is resistant to high temperatures and yet it is
biodegradable. The Company has been shipping the fluid to Aberdeen, Scotland in
anticipation of commercial testing of this product in the North Sea. Such
testing is expected to begin in the first half of fiscal year 1999. If such
tests yield positive results, the Company expects market acceptance such that
the business will become profitable in 1999.* The specialty fluids business has
its headquarters in The Woodlands, Texas and a cesium brine manufacturing
facility near its mine in Manitoba, Canada. The principal raw material used in
this business is pollucite ore, which the Company obtains from that mine. The
Company has an adequate cesium supply. Because each job for which a customer
will rent/lease the cesium brine requires a large volume of the product, the
specialty fluids business must carry a large inventory. Based on its current
information, the Company expects to reclaim between 60% and 90% of the cesium
brine used in each job, which will be returned to inventory.
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 summer plant shutdowns. The Company
believes that as of September 30, 1998, approximately $108.6 million of backlog
orders for its specialty chemicals and materials businesses were firm, compared
to firm backlog orders as of September 30, 1997, of approximately $105.6
million. All of the 1998 backlog orders are expected to be filled during fiscal
year 1999.
Many of the Company's specialty chemicals and materials are used in
products 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.
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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
products, 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.
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 the second half of fiscal 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.
Cabot Trinidad owns 10% of Atlantic LNG. The plant is designed to export 385
million cubic feet of natural gas per day in the form of 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. The Company is also expanding its terminal in Everett to vaporize
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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.
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, 1998, the Company owned approximately 650,000 shares of
common stock, $5.00 par value per share (approximately 1.4% 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,
1998.
As of September 30, 1998, the Company owned 7.5 million shares of common
stock, AUD 0.25 par value per share (approximately 6.7% of the then outstanding
shares), of Sons of Gwalia Ltd. ("Gwalia"). The Company has reflected its
investment in the common stock of Gwalia at its fair market value on September
30, 1998.
The Company has maintained an approximate 41.4% 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.
OTHER INFORMATION
EMPLOYEES
As of September 30, 1998, the Company had approximately 4,800 employees.
Approximately 560 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 32 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.
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
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sites is carried out, the Company expects to spend a significant portion of its
$35.6 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 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
Included herein are statements relating to management's projections of
future profits, the possible achievement of the Company's financial goals and
objectives, management's expectations for the Company's product development
program, Year 2000 risks and the impact of the euro conversion. 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,
patent rights of others, Year 2000 disruptions, demand for the Company's
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 or competitors' new
products, as well as difficulties in moving from the experimental stage to the
production stage. The risk management discussion and the estimated amounts
generated from the analyses are forward-looking statements of market risk
assuming certain adverse market conditions occur. Actual results in the future
may differ materially from these projected results due to actual developments in
the global financial markets. The methods used by the Company to assess and
mitigate risks should not be considered projections of future events or losses.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Industry segment financial data are set forth in tables on pages 21 and 46
through 47 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 P 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 46 through 47
and pages 21 through 29, respectively, in the Annual Report and incorporated
herein by reference.) Currency fluctuations and nationalization and
expropriation of assets are risks inherent in international operations. In
addition, the recent economic crisis in Asia has reduced volumes and profits of
the Company's carbon black and plastics businesses in that region. 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 to reduce the risk associated with
changes in the value of certain foreign currencies compared to the U.S. dollar.
(See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Risk Management" and Note O of the Notes to the Consolidated
Financial Statements on pages 25 through 26 and 45 through 46, respectively, of
the Annual Report.)
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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 9,342,000 square feet); (ii) its research and development
facilities in Illinois, Massachusetts and Pennsylvania and its applications
development facility in Georgia (collectively comprising approximately 112,800
square feet); (iii) administrative offices and manufacturing plants of its fumed
silica and microelectronics materials businesses in Illinois and its performance
materials business in Pennsylvania (comprising approximately 601,300 square
feet); and (iv) its LNG terminalling and storage facility in Massachusetts
(comprising approximately 37,700 square feet).
The Company's principal foreign owned facilities are held through
subsidiaries and together they comprise approximately 7,230,500 square feet of
manufacturing facilities, 39,400 square feet of research and development
facilities, and 923,000 square feet of administrative offices. Portions of the
owned facilities in the Czech Republic, France, Japan and Spain, and all of the
owned facilities in China, Hong Kong, India, Indonesia and The Netherlands are
located on leased land.
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 107,600
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, administrative offices and research and development facilities of the
carbon black operations in France and Malaysia, and administrative offices and
manufacturing facilities of the specialty fluids business in Canada
(collectively comprising approximately 305,925 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 a new plant to produce fumed silica in Midland, Michigan, and is
undertaking projects to expand carbon black production capacity in China, India
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, 1998,
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 July 1998, an arbitration panel ordered
Cabot to pay $3.38 million for past response costs incurred by KNE as well as an
unspecified amount for prejudgment interest and arbitration costs. KNE contends
that the interest on the past cost award and costs of arbitration amount to
approximately $729,000. Cabot has disputed the interest and a portion of the
cost figures, but has paid KNE the amount awarded for past response costs and
8
10
the portion of the arbitration costs not in dispute. The panel also ordered
Cabot to pay up to 80% of future groundwater remediation costs at six of the
sites as such costs are incurred by KNE. Finally, the panel ordered KNE to
ensure that future remedial actions are cost-effective and based on health
risks, with a preference for natural attenuation of contamination. Cabot has
appealed the panel's award of future costs. Future remediation costs are
estimated to be in a range from less than $2 million to up to $8 million. Cabot
and KNE continue to explore settlement of this matter.
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 paid the United
States Environmental Protection Agency ("EPA") $416,000 for costs incurred by
EPA at the site. 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
applicable requirements and is currently operating and maintaining the
groundwater collection system at the site and monitoring site conditions. Recent
monitoring of the groundwater collection system revealed slightly elevated
levels of certain contaminants. Cabot has until June 30, 1999 to continue to
monitor the levels of these contaminants while the local sewer authority seeks
revisions to its discharge standards that would permit the discharge of the
contaminants at these slightly higher levels. If those revisions are not made,
Cabot will evaluate whether further activities will be necessary to address this
condition. In November 1998, Cabot completed a search which identified the
location of three historic water wells on the property. Oil was discovered in
one well and has been removed. Groundwater samples from the wells have not
identified the presence of significant levels of contamination, although Cabot's
environmental consultant for this site is evaluating the results to determine
whether any further investigation is warranted. Until this evaluation is
completed, it is unknown whether any further action will be necessary. Cabot
plans to decommission the wells it located during this search in accordance with
applicable requirements.
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 NJDEP. In January 1996, ten companies, including
Cabot, entered into an Administrative Consent Order with NJDEP which required
them to perform an additional study of the site and to handle minor remedial
work. Most of the work required by the 1996 order is complete, and the companies
have submitted the results of their soils investigation to NJDEP. NJDEP has not
determined what, if anything, will be required to address site soils, but the
investigation results indicate that no remediation of site soils is necessary to
eliminate exposure risks. The companies also plan to excavate certain areas of
an adjacent site where NJDEP believes additional material may be buried. In
1997, the companies entered into an Administrative Consent Order with NJDEP
whereby they agreed 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. Cabot contributed
approximately $107,000 to the cost of this effort. During the two year period,
the companies are collecting data and evaluating whether a remedy of natural
attenuation for groundwater contamination associated with the site may be
acceptable. Until additional studies are complete, it is not 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. Finally, in 1997, Cabot joined with the other parties at the site in
settling claims by CPS Chemical Company, an adjacent property owner, alleging
that contaminated groundwater from the site contaminated its property.
In 1986, Cabot sold a manufacturing facility in Reading, Pennsylvania to
NGK Metals, Inc. ("NGK"). In doing so, Cabot agreed to share 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, disputed this
claim, and in 1998, the contractor brought suit
9
11
against Cabot, NGK and their oversight consultant seeking to recover its cost
overruns from the project. During the soil cleanup project, an area of
additional contamination was discovered by NGK's consultants. The groundwater
remediation component of the work is currently being designed.
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 began preparing detailed design documents necessary to
implement this remedy. Subsequent to these events, investigations have detected
low levels of previously undetected radioactive material in sediment in the
Brook, and EPA conducted further investigations of that issue. EPA's
investigation confirmed the presence of this contamination, and EPA has informed
the companies involved in the site that the presence of this radioactive
material will require changes to the remedy EPA previously approved for the
site. It is unclear at this time what those changes will be and what the cost
impact of any changes might be. Remedial activities are likely to be delayed as
a result of the recent findings, and are unlikely to occur prior to 2000. EPA's
cost recovery claims through the end of 1989 have been settled, and the
companies have negotiated a consent decree with EPA and the Natural Resource
Trustees that settles the government's claims for past costs and natural
resource damages and obligates the companies to implement the agreed remedy.
This consent decree has not been finalized pending resolution of the issues
concerning the newly-discovered radioactive material. Cabot's share of the
settlement amount is approximately $585,000; Cabot's estimated share of future
remediation costs based on the original remedy is approximately $5.5 million. It
is not clear how the additional radioactive material will affect these figures.
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. In May 1998, Cabot and certain other defendants agreed to settle their
liability for this matter by agreeing to fund and conduct a portion of the
remedy at the landfill site and to loan RES $1.2 million to fund cleanup
activities of RES on other portions of the site. Cabot is one of five of the
settling defendants that agreed to conduct the work; the others made one-time
cash payments to resolve their liabilities at the site. Cabot anticipates that
the cost of the settlement to Cabot, including the loan to RES, is approximately
$600,000.
Cabot is the holder of a Nuclear Regulatory Commission ("NRC") license for
certain slag waste material deposited on industrial property on Tulpehocken
Street in Reading, Pennsylvania in the late 1960s by a predecessor of Cabot that
had leased a portion of the site to process tin slags. The slag material
contains low levels of uranium and thorium, thus subjecting it to NRC
jurisdiction. A consultant for Cabot has prepared a site decommissioning plan
for the slag material which concludes that the levels of radioactivity in the
slag are low enough that the material can be safely left in place and still meet
NRC requirements for license termination without restrictions. Cabot's
decommissioning plan proposing this in-place remedy was filed with the NRC in
late August 1998. The current owner of the Tulpehocken Street site, the City of
Reading and the Reading Redevelopment Authority have filed requests for a
hearing with the NRC concerning Cabot's decommissioning plan alleging various
deficiencies with the plan. Cabot has discussed its decommissioning plan with
these parties and continues to explore settlement discussions with them
concerning their claims.
10
12
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 a Focused Feasibility Study ("FFS") 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 contributed $26,000 to the cost of this study. The FFS
was completed and submitted to EPA in 1998. The FFS concludes that the
alternative remedy is feasible, and the companies' consultant estimates the cost
to implement the alternative remedy at the site is approximately $13 to $18
million. EPA is in the process of negotiating a Consent Decree with the
companies concerning implementation of the alternative remedy. EPA also has
indicated that it has incurred $23 million in past costs at the site. A
consultant hired by the companies has estimated that Cabot's volumetric share of
waste shipped to the site is much less than 1% of the total volume of waste
shipped to the site. As such, while Cabot is unsure of what its total cost will
be to settle EPA's claims and fund remediation at the site, it anticipates that
such cost should be a small fraction of the total costs incurred by the
defendants 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. When those negotiations
failed, EPA issued Unilateral Administrative Orders ("UAO") to a number of the
companies requiring them to implement the ROD. Cabot did not receive the UAO,
and it has been informed by EPA that it has been included in a group of
companies EPA believes will be eligible for a de minimis settlement for this
site. EPA has not yet offered this group of companies the de minimis settlement,
but the companies expect to receive one in 1999. 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 Chemical Site"). The order required the respondents to design and
implement several remedial measures at the Revere Chemical Site. Cabot 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. Certain other recipients of the
order proceeded to conduct the work required by EPA, and Cabot understands that
work has been partially completed. Cabot has been informed by the parties
performing the work that the total cost of remediation activities at the site is
estimated to be approximately $12.2 million, not including approximately
$600,000 in past EPA enforcement costs. Cabot has initiated communication with
the parties that conducted the work in order to explore whether settlement of
Cabot's liability for the costs incurred by the parties and by EPA at the site
may be feasible. Those discussions are continuing, and it is not possible to
estimate Cabot's share of those costs at this time.
In July 1998, EPA informed Cabot that it will be undertaking corrective
action under the Resource Conservation and Recovery Act at Cabot's facility in
Boyertown, Pennsylvania. The Army Corps of Engineers performed a site visit in
September 1998 to initiate this action. It is unclear at this time what
corrective action, if any, will be required at the site and what costs Cabot may
incur as a result.
11
13
In October 1998, the Direction Regionale de L'Industrie, de la Recherche et
de L'Environment ("DRIRE") and the Prefecture de la Seine-Maratime (the
"Prefecture") notified United Chemical France, S.A. ("UCF"), a French subsidiary
of Cabot, that DRIRE planned to seek an order (the "Proposed Order") from the
Prefecture requiring UCF to undertake an initial investigation of a waste dump
allegedly operated by UCF from the mid-1960s to the early 1980s in the Town of
Notre Dame de Gravenchon. The Prefecture issued a draft order to UCF dated
November 19, 1998, requiring an investigation of the former waste dump. UCF
responded to the draft order by submitting formal comments, noting that it is
not the proper party to address conditions at the dump as it is currently being
used by the Town of Notre Dame de Gravenchon for waste disposal. A final order
has not been issued as of December 14, 1998. When Cabot purchased UCF in 1985,
the seller indemnified Cabot for matters relating to events occurring prior to
the sale, including environmental matters. Cabot has notified the seller that
Cabot believes that the indemnification would cover costs related to the
Proposed Order.
Cabot, along with a number of other companies, was a PRP under the
Superfund law with respect to the King of Prussia Technical Corp. site in
Winslow Township, New Jersey. Work on site remediation was completed several
years ago except for ongoing operation and maintenance of groundwater treatment
facilities. Cabot and four other companies involved have agreed on the portions
of the costs to be borne by each company. In December 1998, EPA advised one of
the companies that EPA intends to assert a claim in January 1999 for past
oversight costs of approximately $4.1 million. As of December 14, 1998, Cabot
had not received any formal notification of this claim from EPA.
Cabot has received various requests for information and notifications that
it may be a PRP at several other Superfund sites.
As of September 30, 1998, approximately $35.6 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 those suits and claims may impact the Company's
financial statements in a particular period, they should not, in the aggregate,
have a material adverse effect on the Company's financial position. (See Note N
of the Notes to the Company's Consolidated Financial Statements on pages 44
through 45 of the Annual Report.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
12
14
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below for each person who was an executive officer of Cabot at
the end of the 1998 fiscal year, is information, as of November 30, 1998,
regarding his or her age, position(s) with Cabot, the periods during which he or
she served as an officer and his or her business experience during at least the
past five years:
NAME AGE OFFICES HELD/BUSINESS EXPERIENCE DATES HELD
---- --- -------------------------------- ----------
William T. Anderson......... 43 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............ 60 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........... 55 Cabot Corporation
President February 1995 to present
Chief Operating Officer March 1996 to present
Executive Vice President October 1988 to February 1995
Winfred R. Cates............ 58 Cabot Corporation
Senior Vice President May 1996 to December 31, 1998
Vice President May 1990 to May 1996
Robert L. Culver............ 50 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
Catharine M. de Lacy........ 40 Cabot Corporation
Vice President April 1998 to present
Allied Signal, Inc.
Vice President, Health, Safety,
Environment and Remediation April 1995 to April 1998
Occidental Petroleum Corporation
Vice President, Health, Safety,
Environment and Risk
Management April 1993 to April 1995
William P. Noglows.......... 40 Cabot Corporation
Executive Vice President March 1998 to present
Vice President February 1994 to March 1998
Director of Global
Manufacturing November 1997 to present
General Manager, Cab-O-Sil
Division November 1992 to November 1997
Robert Rothberg............. 49 Cabot Corporation
Vice President and
General Counsel October 1993 to present
13
15
NAME AGE OFFICES HELD/BUSINESS EXPERIENCE DATES HELD
---- --- -------------------------------- ----------
Roland R. Silverio.......... 51 Cabot Corporation
Vice President May 1998 to present
Director of Organizational
Development January 1998 to present
October 1992 to October 1995
Manager of Training and
Development July 1990 to October 1992
The Franklin Group
Managing Partner October 1995 to January 1998
Donald R. Young............. 41 Cabot Corporation
Executive Vice President March 1998 to present
Vice President September 1993 to March 1998
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
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, 1998, there were
approximately 2,055 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.
STOCK PRICE AND DIVIDEND DATA
DECEMBER MARCH JUNE SEPTEMBER YEAR
-------- ------ ------ --------- ------
FISCAL 1998
Cash dividends per share................... $ 0.10 $ 0.10 $ 0.11 $ 0.11 $ 0.42
Price range of common stock:
High..................................... $28.19 $39.94 $38.81 $33.38 $39.94
Low...................................... $23.63 $25.25 $31.06 $21.75 $21.75
Close.................................... $27.63 $36.88 $32.31 $24.94 $24.94
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
14
16
ITEM 6. SELECTED FINANCIAL DATA
Cabot Corporation Selected Financial Data:
YEARS ENDED SEPTEMBER 30
---------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Financial Highlights
Net sales and other operating revenues...... $1,648 $1,630 $1,856 $1,830 $1,680
------ ------ ------ ------ ------
Income before cumulative effect of
accounting changes....................... $ 122 $ 93 $ 194 $ 172 $ 79
------ ------ ------ ------ ------
Long-term debt.............................. $ 316 $ 286 $ 322 $ 306 $ 308
Minority interest........................... 25 23 27 8 --
Stockholders' equity........................ 706 728 745 685 563
------ ------ ------ ------ ------
Total capitalization................ $1,047 $1,037 $1,094 $ 999 $ 871
------ ------ ------ ------ ------
Total assets........................ $1,805 $1,826 $1,857 $1,654 $1,617
------ ------ ------ ------ ------
Income per common share:
Basic....................................... $ 1.80 $ 1.33 $ 2.74 $ 2.29 $ 1.03
Diluted..................................... $ 1.61 $ 1.19 $ 2.42 $ 2.03 $ 0.92
Cash dividends (declared and paid).......... $ 0.42 $ 0.40 $ 0.36 $ 0.30 $ 0.27
------ ------ ------ ------ ------
Weighted average common shares outstanding in
millions (diluted).......................... 74.6 76.7 79.3 83.6 82.7
------ ------ ------ ------ ------
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
29 and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required appears in the Annual Report on pages 25 through
26 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required appears in the Annual Report on pages 30 through
48 and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
17
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 information required regarding the directors of Cabot is
contained in the Registrant's Proxy Statement for the 1999 Annual Meeting of
Stockholders ("Proxy Statement") under the heading "Certain Information
Regarding Directors." Certain information required regarding the failure of any
person subject to Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to timely file reports required by Section 16(a) of the
Exchange Act is contained in the Proxy Statement under the heading "Compliance
with Section 16(a) of the Exchange Act." All of such information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required is contained in the Proxy Statement 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 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 under the
heading "Certain Relationships and Related Transactions." All of such
information is incorporated herein by reference.
16
18
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, 1998.... 32
(2) Consolidated Balance Sheets at September 30, 1998 and
1997................................................... 30-31
(3) Consolidated Statements of Cash Flows for each of the
three fiscal years in the period ended September 30,
1998................................................... 33
(4) Notes to Consolidated Financial Statements............. 34-47
(5) Statement of Management Responsibility for Financial
Reporting and Report of Independent Accountants
relating to the Consolidated Financial Statements
listed above........................................... 48
(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).
17
19
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4(b)(iv) -- Third Supplemental Indenture, dated as of November 20, 1998,
between Cabot Corporation and State Street Bank and Trust
Company, Trustee (incorporated herein by reference to
Exhibit 4.1 of Cabot's Current Report on Form 8-K, dated
November 20, 1998, file reference 1-5667, filed with the
Commission on November 20, 1998).
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 (incorporated herein by reference
to Exhibit 10(d)(vi) of Cabot's Annual Report on Form 10-K
for the year ended September 30, 1997, file reference
1-5667, filed with the Commission on December 24, 1997).
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).
18
20
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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).
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 July 17, 1992).
10(k)(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 July
26, 1995).
10(k)(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 July 26, 1995).
10(l) -- Cabot Corporation Senior Management Severance Protection
Plan, effective January 9, 1998 (incorporated herein by
reference to exhibit 10(a) of Cabot's Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 1997,
file reference 1-5667, filed with the Commission February
17, 1998).
10(m) -- Cabot Corporation Key Employee Severance Protection Plan,
effective January 9, 1998 (incorporated herein by reference
to exhibit 10(b) of Cabot's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1997, file
reference 1-5667, filed with the Commission February 17,
1998).
10(n)* -- Cabot Corporation Short-Term Incentive Compensation Plan,
effective November 12, 1998 (subject to approval at the 1999
Annual Meeting of Shareholders of Cabot Corporation, to be
held March 11, 1999), filed herewith.
12 -- Statement Re: Computation of Ratios of Earnings to Fixed
Charges, filed herewith.
13 -- Pages 21 through 48 of the 1998 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.
19
21
EXHIBIT
NUMBER DESCRIPTION
------- -----------
21 -- List of Significant Subsidiaries, filed herewith.
23 -- Consent of PricewaterhouseCoopers LLP, filed herewith.
24 -- Power of attorney for signing of this Annual Report on Form
10-K, filed herewith.
27(a) -- Financial Data Schedule for the fiscal year ended September
30, 1998, filed herewith.
27(b) -- Restated Financial Data Schedule for the fiscal year ended
September 30, 1997, filed herewith.
27(c) -- Restated Financial Data Schedule for the fiscal year ended
September 30, 1996, filed herewith.
- ---------------
* 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.
20
22
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 22, 1998
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 22, 1998
- ----------------------------------------------------- Board and Chief Executive
Samuel W. Bodman Office (principal
executive officer)
* Director and President December 22, 1998
- -----------------------------------------------------
Kennett F. Burnes
/s/ Robert L. Culver Executive Vice President and December 22, 1998
- ----------------------------------------------------- Chief Financial Officer
Robert L. Culver (principal financial
officer)
/s/ William T. Anderson Controller December 22, 1998
- ----------------------------------------------------- (principal accounting
William T. Anderson officer)
* Director December 22, 1998
- -----------------------------------------------------
Jane C. Bradley
* Director December 22, 1998
- -----------------------------------------------------
John G.L. Cabot
* Director December 22, 1998
- -----------------------------------------------------
John S. Clarkeson
* Director December 22, 1998
- -----------------------------------------------------
Arthur L. Goldstein
* Director December 22, 1998
- -----------------------------------------------------
Robert P. Henderson
21
23
SIGNATURES TITLE DATE
---------- ----- ----
* Director December 22, 1998
- -----------------------------------------------------
Arnold S. Hiatt
* Director December 22, 1998
- -----------------------------------------------------
Gautam S. Kaji
* Director December 22, 1998
- -----------------------------------------------------
Roderick C.G. MacLeod
* Director December 22, 1998
- -----------------------------------------------------
John H. McArthur
* Director December 22, 1998
- -----------------------------------------------------
John F. O'Brien
* Director December 22, 1998
- -----------------------------------------------------
David V. Ragone
* Director December 22, 1998
- -----------------------------------------------------
Charles P. Siess, Jr.
* Director December 22, 1998
- -----------------------------------------------------
Morris Tanenbaum
* Director December 22, 1998
- -----------------------------------------------------
Lydia W. Thomas
* Director December 22, 1998
- -----------------------------------------------------
Mark S. Wrighton
*By /s/ Sarah W. Saunders
-------------------------------------------------
Sarah W. Saunders
as Attorney-in-Fact
22
24
EXHIBIT INDEX
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).
4(b)(iv) -- Third Supplemental Indenture, dated as of November 20, 1998,
between Cabot Corporation and State Street Bank and Trust
Company, Trustee (incorporated herein by reference to
Exhibit 4.1 of Cabot's Current Report on Form 8-K, dated
November 20, 1998, file reference 1-5667, filed with the
Commission on November 20, 1998).
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).
25
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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 (incorporated herein by reference
to Exhibit 10(d)(vi) of Cabot's Annual Report on Form 10-K
for the year ended September 30, 1997, file reference
1-5667, filed with the Commission on December 24, 1997).
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).
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 July 17, 1992).
26
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10(k)(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 July
26, 1995).
10(k)(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 July 26, 1995).
10(l) -- Cabot Corporation Senior Management Severance Protection
Plan, effective January 9, 1998 (incorporated herein by
reference to exhibit 10(a) of Cabot's Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 1997,
file reference 1-5667, filed with the Commission February
17, 1998).
10(m) -- Cabot Corporation Key Employee Severance Protection Plan,
effective January 9, 1998 (incorporated herein by reference
to exhibit 10(b) of Cabot's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1997, file
reference 1-5667, filed with the Commission February 17,
1998).
10(n)* -- Cabot Corporation Short-Term Incentive Compensation Plan,
effective November 12, 1998 (subject to approval at the 1999
Annual Meeting of Shareholders of Cabot Corporation, to be
held March 11, 1999), filed herewith.
12 -- Statement Re: Computation of Ratios of Earnings to Fixed
Charges, filed herewith.
13 -- Pages 21 through 48 of the 1998 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 PricewaterhouseCoopers LLP, filed herewith.
24 -- Power of attorney for signing of this Annual Report on Form
10-K, filed herewith.
27(a) -- Financial Data Schedule for the fiscal year ended September
30, 1998, filed herewith.
27(b) -- Restated Financial Data Schedule for the fiscal year ended
September 30, 1997, filed herewith.
27(c) -- Restated Financial Data Schedule for the fiscal year ended
September 30, 1996, filed herewith.
- ---------------
* Management contract or compensatory plan or arrangement.