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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, 1999
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:
67,144,305 SHARES OUTSTANDING BOSTON STOCK EXCHANGE
AT NOVEMBER 30, 1999 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, 1999, was approximately
$1,149,428,400.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for fiscal year
1999 are incorporated by reference in Parts II and IV, and portions of the
Registrant's definitive Proxy Statement for its 2000 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 chemicals, performance
materials, specialty fluids, microelectronics materials, and liquefied natural
gas. 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, 1999,
unless otherwise noted. Information regarding the Company's revenues and profits
by business segment and geographic area appears on pages 21 through 24 and in
Note Q of the Notes to the Company's Consolidated Financial Statements on pages
49 through 51 of the Company's Annual Report to Stockholders for the fiscal year
ended September 30, 1999 ("Annual Report"), which are incorporated herein by
reference.
During the fiscal year ended September 30, 1999, Cabot repurchased
approximately 2 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
during its fiscal year ended September 30, 1999, appears in Management's
Discussion and Analysis of Financial Condition and Results of Operations on
pages 21 through 29 of the Annual Report.
CHEMICALS GROUP
CARBON BLACK
The Company manufactures and sells carbon black, which consists of fine
particles. The Company's carbon black products are grouped generally into three
categories: tire blacks, industrial product blacks and special blacks. Tire
blacks are used as reinforcing agents in tires, and are marketed to tire
companies for use in tires both for commercial and passenger vehicles.
Industrial product blacks are used as reinforcing agents in industrial products
such as extruded profiles, hoses and molded goods. Industrial product blacks are
marketed to the automotive, construction and rubber manufacturing industries,
among others. Special blacks, which are non-rubber grades of carbon black, are
used to provide pigmentation, conductivity and ultraviolet protection, among
other things, 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 primarily with two 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, 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). Because of economic conditions in Asia,
production at the Company's Merak facility, one of the two it owns in Indonesia,
is currently halted. See Note B of the Notes to the Company's Consolidated
Financial Statements on pages 38 and 39 of the Annual Report.
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The principal raw materials used in the manufacture of carbon black are
carbon black oils, a portion of the residual oil pool which is 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 Company's
carbon black business. Raw material costs are influenced by the cost and
availability of oil worldwide and the availability of various types of carbon
black oils. During the second half of fiscal year 1999, the price of raw
materials for the carbon black business increased significantly.
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. In fiscal year 1999, the Company's plastics business took over the
marketing of carbon black to the plastics industry. Sales are made under various
trademarks owned by Cabot. (See "General," below.)
The Company's carbon black business continues to pursue a dual strategy of
cost improvement and new product development. Management continues to support
carbon black new product development initiatives that have significant customer
involvement or sponsorship. The Company's management continues to believe that
if the Company can achieve a combination of effective cost and capacity
management and commercialization of new product initiatives, the Company's
carbon black business should have earnings growth opportunities over the next
several years.
FUMED SILICA
The Company manufactures and sells fumed silica and dispersions thereof
under various trademarks. Fumed silica is an ultra-fine, high-purity particle
used as a reinforcing, thickening, thixotropic, suspending or anti-caking agent
in a wide variety of products produced for the automotive, construction and
consumer products industries, including adhesives, sealants, cosmetics, inks,
silicone rubber, coatings and pharmaceuticals. The headquarters for the
Company's fumed silica business are located in Naperville, Illinois. This
business has two North American fumed silica manufacturing plants, which are
located in Tuscola, Illinois and Midland, Michigan. The Midland plant was
completed in September 1999 and began operations in November 1999. The Company
is in the process of qualifying all grades of fumed silica for production at the
Midland plant. 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. 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 or arrangements in place for the
purchase of feedstock for this business, which it believes will enable it to
meet its raw material requirements for the foreseeable future. In addition, the
Company buys some materials in the spot market in order to help ensure
flexibility and minimize costs. Sales of fumed silica products are made by
Company employees and through distributors and sales representatives. There are
four 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.
PLASTICS
During fiscal year 1999, the Company combined its existing plastics
business, which consisted of concentrates and compounds, with a portion of the
special blacks category of the Company's carbon black business. The Company's
plastics segment now markets carbon black, and produces and markets black and
white thermoplastic concentrates and specialty compounds, to the plastics
industry. Major applications for the materials produced and sold by the
Company's plastics business include pipe and tubing, packaging and agricultural
film, automotive components, cable sheathing and special packaging for use in
the electronics industry. Customers use the carbon black marketed by the
plastics business to provide color, UV protection, electrical conductivity and
opacity in plastics. Sales are made under various Cabot trademarks, each of
which is either registered or pending in one or more countries (see "General"
below). Sales are made by Company
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employees and through sales representatives and distributors primarily in Europe
(concentrates, compounds and carbon black), North America (carbon black) and
Asia (concentrates, compounds and carbon black). The thermoplastic concentrates
and compounds sold are produced in Company facilities in Europe and Hong Kong.
The carbon black sold is produced in Company facilities in Europe, North America
and Asia. The plastics business is headquartered in Leuven, Belgium. In Europe,
the Company is one of the five leading producers of thermoplastic concentrates.
Other than carbon black feedstock, the primary raw materials used in this
business are titanium dioxide, thermoplastic resins and mineral fillers. The
price of thermoplastic resins has increased rapidly during the second half of
fiscal 1999. Such price fluctuations are not unusual in the plastics industry,
but the temporary effect has been to cause customers to increase their
inventories and, hence, to increase the sales volumes for this business. The
Company expects that as the price of thermoplastic resins levels off, the level
of orders will decrease. Raw materials are, in general, readily available.
INKJET COLORANTS
Inkjet colorants are pigment-based black colorants, which are designed to
replace traditional pigment dispersions and dyes used in inkjet printing
applications. Products produced by the Company's inkjet colorants business,
formed in 1996, target various printing markets, including home and office
printers, wide format printers, and commercial and industrial printing
applications. The Company's colorants have become integral components in several
inkjet printing systems introduced to the market during fiscal year 1999. Sales
are made by Company employees and through distributors and sales
representatives. The headquarters of the Company's inkjet colorants business are
located in Billerica, Massachusetts. Raw materials for the inkjet colorants
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 which are custom manufactured for
its inkjet business, and believes that all other raw materials for this business
are in adequate supply.
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, which accounts for the
majority of this business' sales, 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).
SPECIALTY FLUIDS
The Company's specialty fluids business produces and markets cesium formate
as a drilling and completion fluid for use in high pressure and high temperature
oil and gas well operations. Cesium formate is a solids-free high-density fluid
that has a low viscosity, permitting it to flow readily in oil and gas wells.
The
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Company expects the fluid to be especially beneficial to operators of wells
where the oil or gas is difficult to reach. Based on current information, the
fluid is resistant to high temperatures, does not damage producing reservoirs
and is readily biodegradable. The Company has been shipping the fluid to
Aberdeen, Scotland for application in its target market, the North Sea.
Commercial testing of the Company's cesium formate in this region during the
fourth quarter of fiscal year 1999 yielded positive results. The Company expects
those initial test results to boost industry confidence in the fluid, leading to
additional applications. The specialty fluids business has its headquarters in
The Woodlands, Texas, and has a mine and a cesium formate manufacturing facility
in Manitoba, Canada. The Company built a large inventory of cesium formate in
preparation for initial testing and, as a result, has temporarily halted
production at its manufacturing facility as it waits for testing to be completed
and commercial rentals/leases to begin. The Company expects to make cesium
formate sales through existing oil field service companies, with periodic direct
sales to oil and gas operating entities. Customers will either rent or purchase
cesium formate from the Company. Those who rent cesium formate will be required
to purchase any of the product that is not returned to the Company after the job
is completed. The principal raw material used in this business is pollucite ore,
which the Company obtains from its mine. The Company has an adequate supply of
this cesium-rich ore, with approximately 80% of the world's known cesium
reserves. Because each job for which cesium formate is used 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 formate used in each job, which will be
returned to inventory for use in additional well operations. The Company's
specialty fluids business also markets tantalum and spodumene to the electronics
and pyroceramics industries. Sales of those products are made either by Company
employees or its agent.
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 (see "General", below). Sales of polishing
compounds 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
dispersion manufacturing facility and laboratory in Aurora, Illinois, and a
dispersion manufacturing facility in Barry, Wales. A third dispersion
manufacturing facility in Geino, Japan began production in April 1999, with
sales commencing in May 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 facilities provide quality
control management, operations management, marketing support and customer sales
and service for the Company's microelectronics materials business. Cabot plans
an initial public offering of approximately 15% of its microelectronics
materials business, which it expects will occur in the first half of calendar
year 2000. The Company anticipates that the offering will be followed by a
distribution of its remaining shares of this business to the Cabot shareholders.
LIQUEFIED NATURAL GAS
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.
The Company's LNG supplies currently come primarily from two suppliers.
Sonatrading, an affiliate of Sonatrach, the Algerian national oil and gas
company, supplies LNG and Sonatrach provides the associated marine
transportation, both under long-term contracts. Cabot and Sonatrach have each
agreed to assure performance of the obligations of their respective affiliates
under these agreements. The Company also purchases LNG from Atlantic LNG Company
of Trinidad and Tobago ("Atlantic LNG"), described below,
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under a long-term supply contract. The Company received its first delivery of
LNG from Atlantic LNG aboard its LNG tanker the Matthew in May 1999. During the
past two years, the Company also purchased LNG from the North West Shelf project
in Australia, Sonatrach and Enagas under short-term arrangements.
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. Prices are stronger in the winter
months because of heating demands in New England.
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, 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. Shipments of LNG from the Trinidad facility began in April 1999 and
the liquefaction plant was declared commercial in August 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. Those guarantees will expire when Atlantic LNG
completes the funding of a debt reserve account. Atlantic LNG expects that
funding to occur near the end of the first quarter or the beginning of the
second quarter of fiscal year 2000. Atlantic LNG shareholders are presently
evaluating an expansion of the facility.
The Company completed the refurbishment of its LNG tanker, the Matthew, and
brought it into service in January 1999. The Company uses the Matthew to
transport LNG supplies from the Trinidad facility. The Company has also expanded
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 was
completed in November 1998.
GENERAL
The Company owns and is a licensee of various patents, which expire at
various times, covering many of its products, as well as processes and product
uses. 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 business, taken as a whole. The Company sells
its products under a variety of trademarks, the loss of any one of which would
not materially affect the Company's business, taken as a whole.
With the exception of the Company's LNG business, described above, the
Company's 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, 1999,
approximately $98 million of backlog orders for its businesses were firm,
compared to firm backlog orders as of September 30, 1998, of approximately $88
million. All of the 1999 backlog orders are expected to be filled during fiscal
year 2000.
Many of the Company's 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.
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Five major tire and rubber customers, one fumed silica customer, two
capacitor materials customers and one microelectronics customer represent a
material portion of the total net sales and operating revenues of the Company's
businesses; the loss of one or more of these customers might materially
adversely affect the Company's businesses taken as a whole.
Competition in the Company's businesses, other than its LNG business, is
based on price, service, quality, product performance and technical innovation.
Competition in the LNG business is based primarily on price and, to a lesser
degree, service. 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, other than in the
LNG business and the carbon black business, vary by product group. 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 is causing 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. To
date, those changes have not had any appreciable effect on the Company's LNG
business.
OTHER
The Company owns approximately 41.4% of the common stock of 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, 1999, the Company had approximately 4,450 employees.
Approximately 450 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
sites is carried out, the Company expects to spend a significant portion of its
$39 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.
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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.
In October 1999, the California Office of Environmental Health Hazard
Assessment ("OEHHA") published a Notice of Intent to add "carbon black (airborne
particles of respirable size)" to its list of chemicals known to the State to
cause cancer, promulgated pursuant to the California Safe Drinking Water and
Toxic Enforcement Act, commonly referred to as Proposition 65. OEHHA stated it
was taking this action in light of IARC's 1996 reclassification of carbon black.
Proposition 65 requires businesses to give warnings to individuals before they
knowingly or intentionally expose them to chemicals subject to its requirements,
and it prohibits businesses from knowingly discharging or releasing the
chemicals into water or onto land where they could contaminate drinking water.
The Company is working with the International Carbon Black Association and
various customers and carbon black user groups to respond to the decision by
OEHHA to add carbon black to the list of chemicals subject to Proposition 65.
*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, and management's expectations for the Company's product development
program. 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. 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 SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Segment financial data are set forth on pages 21 through 24, and in the
portion of Note Q of the Notes to the Company's Consolidated Financial
Statements that appears on pages 49 and 50, of the Annual Report, and both 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 Company's segments, other than the Company's LNG segment,
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 the portion of Note Q of the Notes to the
Company's Consolidated Financial Statements appearing on page 51 of the Annual
Report 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 21 through 29 of the Annual Report, both
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 use of
foreign currency financial instruments 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 P of the Notes to the Company's
Consolidated Financial Statements, on pages 25 and 26, and 48 and 49,
respectively, of the Annual Report.)
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ITEM 2. PROPERTIES
The Company owns, leases and operates office, production, storage,
distribution, 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; (ii) its
research and development facilities in Illinois, Massachusetts and Pennsylvania;
(iii) the administrative offices and manufacturing plants of its fumed silica
and microelectronics materials businesses in Illinois, and its performance
materials business in Pennsylvania; and (iv) its LNG terminal and storage
facility in Massachusetts.
The Company's principal foreign owned facilities are held through
subsidiaries and consist primarily of manufacturing facilities, together with
administrative facilities and research and development facilities. The largest
of such facilities are located in Australia, China, the Czech Republic, England,
France, India, Indonesia and Italy, and are used by the Company's carbon black
business. 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 subsidiaries in locations outside the
United States are: (i) administrative offices and manufacturing facilities of
the fumed silica and microelectronics materials businesses in Wales; (ii)
administrative offices, research and development facilities, and warehouses of
the carbon black operations in France, Malaysia and England; and (iii)
administrative offices and manufacturing facilities of the specialty fluids
business in Canada. In addition, the Company holds mining rights in Canada.
The principal facilities leased by the Company in the United States are:
(i) its corporate headquarters in Massachusetts; (ii) the administrative offices
and manufacturing facilities of its microelectronics materials business in
Illinois; and (iii) the headquarters of its North American carbon black business
in Georgia. The Company expects to move its corporate headquarters to a new
location within the same city in September 2000. That new space will also be
leased.
The Company's administrative offices are generally suitable and adequate
for their intended purposes. Existing manufacturing facilities of the Company
are sufficient to meet the Company's anticipated requirements for the
foreseeable future.
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, 1999,
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
the portion of the arbitration costs not in dispute. The panel also ordered
Cabot to pay up to 80% of future
8
10
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 $5 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. It is
uncertain whether Cabot may be required to perform additional investigations or
remedial work in the future at this site.
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. In 1997,
the companies entered into an Administrative Consent Order with NJDEP whereby
they agreed to contribute funds toward the cost of 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. The companies are currently
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. Cabot, along with certain
other PRPs ("Plaintiff PRPs") filed litigation against the current owner of the
property (Spiral Metal), the United States of America, and several other parties
in U. S. District Court for the District of New Jersey in January 1999. The
purpose of the litigation is to obtain deed restrictions on the property
(allowing for non-residential clean-up standards to be applied) from the current
owner and to obtain monetary contributions from the United States and the other
parties which would be applied to future response costs at the site. The
Plaintiff PRPs have commenced settlement discussions with the defendants and the
litigation has essentially been stayed for a designated period to focus the
parties' resources on the settlement discussions. Union Carbide Corp. and Oakite
Products, two PRPs, filed separate related actions, which include contribution
claims against the Plaintiff PRPs. The court has consolidated the three actions,
all of which are subject to the stay on litigation activity pending settlement
discussions.
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 against Cabot, NGK and their
oversight consultant seeking to recover its cost overruns from the project.
Cabot and NGK resolved the dispute with the contractor in late 1999 by agreeing
to pay the contractor a portion of the extra costs. 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.
9
11
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; EPA made certain changes to that remedy in response to its finding
low levels of previously undetected radioactive material in the Brook. In
addition, EPA's cost recovery claims through the end of 1989 have been settled,
and the companies have negotiated consent decrees with EPA, the State of Ohio
and the Natural Resource Trustees that settle the governments' claims for past
costs and natural resource damages and obligates the companies to implement the
agreed remedy. Those consent decrees were entered by the United States District
Court for the Northern District of Ohio on July 7, 1999. Cabot's share of the
settlement amount is approximately $585,000; Cabot's estimated share of future
remediation costs is approximately $5.6 million. 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.
During the summer of 1998, Cabot joined a group of companies in forming the
Ashtabula River Cooperative Group ("ARCG") which collectively agreed on an
allocation for funding private party shares of a public/private partnership
established to conduct dredging and remediation of the Ashtabula River (the
"River") in Ashtabula, Ohio. The Ashtabula River Partnership ("ARP") was formed
to address contaminants in the River through a quicker and less expensive
approach than traditionally available under the formal Superfund process. The
ARP also expects to employ substantial public funds from both the federal and
state governments for the project. In September 1999, the ARP issued a
Comprehensive Management Plan ("CMP") proposing a "deep dredging" program for
addressing contaminated River sediment. The CMP estimates the deep dredging
project would cost approximately $42 million, although the ARCG's experts
believe the costs are likely to be significantly higher. Under the statutory
formula available for funding this project, approximately 68% of its cost is to
be borne by the federal government, leaving 32% of the cost for non-federal
participants. The State of Ohio has pledged a contribution of $7 million to the
project. The ARCG expects to be asked to bear a substantial percentage of the
remaining costs. The ARCG and its consultants are working with the ARP to refine
the project in an effort to reduce project costs and uncertainties.
In 1994, Detrex Chemical Industries, Inc. filed third-party complaints
against eight companies, including Cabot, in connection with material allegedly
sent to the Koski/Reserve Environmental Services ("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. The NRC has asked Cabot for additional information
concerning its plan, and Cabot is in the process of obtaining the information
the NRC has requested.
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
10
12
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.
After further study, the EPA agreed that the alternative remedy is feasible. The
companies' consultant estimates the cost to implement the alternative remedy at
the site is approximately $13 million to $18 million. EPA is in the process of
negotiating a Consent Decree with the companies, including Cabot, concerning
implementation of the alternative remedy. EPA also has claimed approximately $16
million in past costs at the site, and the companies are also negotiating this
claim with EPA.
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 the former Cabot beryllium alloy plant 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 estimated the 30-year present net worth of these measures at
approximately $6 million. In 1998, EPA issued Unilateral Administrative Orders
("UAOs") to a number of the companies requiring them to implement the ROD. Cabot
did not receive a UAO. In September 1999, EPA wrote Cabot and a number of other
companies informing them that it was considering offering them a de minimis
settlement for their liability at the site. The letter indicated Cabot's share
of this settlement would be $187,500. EPA subsequently withdrew this offer.
Cabot is in negotiations with the plaintiffs concerning a possible settlement of
their claims related to the site. If a settlement with the plaintiffs can be
agreed to, Cabot anticipates that it would include an indemnity against any
claims by EPA for costs related to 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 mostly 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 million, not including certain unreimbursed
costs claimed by EPA. Cabot has initiated communications with the parties that
conducted the work in order to explore whether settlement of Cabot's potential
liability at the site may be feasible. Those discussions are on-going. In August
1999, Cabot received a letter from the U.S. Department of Justice ("DOJ"), which
stated that EPA had asked the DOJ to bring an enforcement action against Cabot
for its failure to comply with the EPA order. Cabot has entered into settlement
discussions with the DOJ and EPA in an attempt to resolve that dispute.
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. Cabot is aware that EPA is investigating certain areas
surrounding the Boyertown facility with a view to determining what conditions
exist in those areas and whether those conditions are related to Cabot's
Boyertown facility. EPA's investigation was prompted by media reports of
complaints by area farmers of health impacts and damage to livestock and crops.
As of November 24, 1999, EPA had neither taken any formal action nor alleged
that Cabot has any responsibility for conditions in the area. In addition, the
Pennsylvania Department of Environmental Protection has requested that Cabot
conduct additional groundwater investigations at the Boyertown facility to
supplement studies conducted in the early 1990s. In November 1999, Cabot
received a letter from an attorney
11
13
representing certain farmers in the area threatening litigation concerning
environmental contamination alleged to be caused by the Boyertown plant.
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. In early 1999,
UCF voluntarily provided the DRIRE with information concerning UCF's use of the
landfill. UCF has had no further communications with the DRIRE since that date.
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.
In January 1999, DRIRE notified Cabot France S.A., a French subsidiary of
Cabot, that the DRIRE was investigating groundwater pollution in the Montee des
Pins area where Cabot France S.A.'s carbon black plant in Berre l'Etang, France
is located. The DRIRE convened meetings of various industries in the area and
asked them to work together on a study of groundwater conditions in the area.
Ten companies, including Cabot France S.A., are working together to fund and
undertake the initial study requested by the DRIRE. Cabot estimates that its
share of this initial study will cost less than $10,000. It is not possible at
this point to predict whether groundwater remediation will be required, how much
it will cost or what Cabot France S.A.'s share of such groundwater remediation
will be.
Cabot, along with a number of other companies, is 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 a December 22, 1998 letter to Cabot
and the other four companies, EPA demanded approximately $4.1 million in past
costs at the site. Cabot expects that this dispute will be resolved through
settlement negotiations between the group of companies and EPA for significantly
less than the $4.1 million demand. The prior agreement among Cabot and the four
other companies fixes each party's respective share of any costs to be paid to
EPA.
On June 5, 1999, there was a break in the pipeline used to transport carbon
black feedstock from a nearby port to a Ravenna, Italy carbon black facility
owned by Cabot Italiana S.p.A., a wholly-owned subsidiary of Cabot. The break
was in a portion of the pipeline adjacent to a neighboring facility. As a
result, a substantial amount of carbon black feedstock was released at the
neighboring facility. An investigation of the facts to determine
responsibilities is ongoing, but preliminary information from the investigation
indicates the pipeline was damaged from drilling activity conducted by a third
party. In the interim, emergency remediation efforts were undertaken by the
Company following the spill. Claims have been asserted against the Company by
the owner of the facility where the spill occurred and by the owners of a sewer
system into which some of the oil flowed. In addition, the Company has asserted
a claim against the third parties that the Company believes damaged the pipeline
and, thus, caused the spill. The municipal environmental authorities have issued
an order to the Company and the parties believed to have damaged the pipeline
ordering them to undertake further activities to address conditions caused by
the spill. The Company and the other parties have challenged issuance of the
order, and the matter is being heard by the administrative courts in Italy. The
parties believed to have damaged the pipeline have to date refused to accept
responsibility for the spill. The Company has notified its insurers and they are
involved in the matter. At this point, the Company does not know the likely
course that legal proceedings will take, and does not have an estimate of the
costs, if any, that the Company will ultimately bear.
12
14
The Louisiana Department of Environmental Quality ("LADEQ") notified Cabot
in a January 5, 1995 letter of its potential liability with respect to the Great
National Oil/Ida Gas site in Ida, Louisiana (the "Ida Site") and requested
information regarding Cabot's activities related to the Ida Site or involvement
with the Hartsell Oil Company of Rodessa, Louisiana. Cabot responded on February
15, 1995 by indicating that during the 1982 to 1984 time period, Cabot's
Arcadia, Louisiana facility sold used oil to Hartsell for reprocessing. Cabot's
Arcadia facility was sold to Haynes International, Inc. ("Haynes") in December
1986. Cabot believes that it is entitled to indemnity from Haynes pursuant to
the acquisition agreement by which Haynes acquired the facility. Haynes has
denied Cabot's request for indemnification but also requested additional
information concerning this claim. In 1997, Cabot and eight other parties
received a demand letter from LADEQ for oversight costs incurred in connection
with the site from July 1989 to December 1996. Cabot paid its pro-rata share of
those costs in April 1997, which payment was an immaterial amount. Cabot has
received no further written communications concerning the Ida Site.
Cabot has received various requests for information and notifications that
it may be a PRP at several other Superfund sites.
As of September 30, 1999, approximately $39 million was reserved for
environmental matters by the Company. This 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, they should not, in the
aggregate, have a material adverse effect on the Company's financial position.
(See Note O of the Notes to the Company's Consolidated Financial Statements on
pages 47 and 48 of the Annual Report.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below for each person who was an executive officer of Cabot at
the end of the 1999 fiscal year, is information, as of November 30, 1999,
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... 44 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...... 61 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
13
15
NAME AGE OFFICES HELD/BUSINESS EXPERIENCE DATES HELD
---- --- -------------------------------- ----------
Kennett F. Burnes..... 56 Cabot Corporation
President February 1995 to present
Chief Operating Officer March 1996 to present
Executive Vice President October 1988 to February 1995
Robert L. Culver...... 51 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 41 Cabot Corporation
Lacy................
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.... 41 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....... 50 Cabot Corporation
Vice President and
General Counsel October 1993 to present
Roland R. Silverio.... 52 Cabot Corporation
Vice President May 1998 to present
Director of Human Resources/
Organizational Effectiveness May 1998 to present
Director of Organizational Development January 1998 to May 1998
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....... 42 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
14
16
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, 1999, there were
approximately 1,900 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 1999
Cash dividends per share................... $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.44
Price range of common stock:
High..................................... $31.69 $29.81 $28.50 $25.44 $31.69
Low...................................... $22.63 $19.75 $21.31 $21.63 $19.75
Close.................................... $27.94 $21.25 $24.19 $23.75 $23.75
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
15
17
ITEM 6. SELECTED FINANCIAL DATA
Cabot Corporation Selected Financial Data:
YEARS ENDED SEPTEMBER 30
---------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Financial Highlights
Net sales and other operating revenues........ $1,695 $1,644 $1,625 $1,856 $1,830
------ ------ ------ ------ ------
Income before cumulative effect of
accounting changes....................... $ 97 $ 122 $ 93 $ 194 $ 172
------ ------ ------ ------ ------
Long-term debt.............................. $ 419 $ 316 $ 286 $ 322 $ 306
Minority interest........................... 32 25 23 27 8
Stockholders' equity........................ 706 706 728 745 685
------ ------ ------ ------ ------
Total capitalization................ $1,157 $1,047 $1,037 $1,094 $ 999
------ ------ ------ ------ ------
Total assets........................ $1,842 $1,805 $1,826 $1,857 $1,654
------ ------ ------ ------ ------
Income per common share:
Basic....................................... $ 1.47 $ 1.80 $ 1.33 $ 2.74 $ 2.29
Diluted..................................... $ 1.31 $ 1.61 $ 1.19 $ 2.42 $ 2.03
Cash dividends (declared and paid).......... $ 0.44 $ 0.42 $ 0.40 $ 0.36 $ 0.30
------ ------ ------ ------ ------
Weighted average common shares outstanding in
millions.................................... 73 75 77 79 84
------ ------ ------ ------ ------
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 and 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
53 and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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18
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 2000 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, 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.
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19
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 Balance Sheets at September 30, 1999 and
1998.................................................... 30-31
(2) Consolidated Statements of Income for each of the three
fiscal years in the period ended September 30, 1999..... 32
(3) Consolidated Statements of Cash Flows for each of the
three fiscal years in the period ended September 30,
1999.................................................... 33
(4) Consolidated Statements of Changes in Stockholders'
Equity.................................................. 34-35
(5) Notes to Consolidated Financial Statements.............. 36-51
(6) Statement of Management Responsibility and Report of
Independent Accountants relating to the Consolidated
Financial Statements listed above....................... 52
(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).
18
20
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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(b)(iii)* -- 1999 Equity Incentive Plan (incorporated herein by
reference to Exhibit 10.1 of Cabot's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1999,
file reference 1-5667, filed with the Commission on May
17, 1999).
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).
19
21
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10(e) -- 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(f)* -- 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(g) -- 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(h) -- 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(i) -- 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(j)(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(j)(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(k)* -- 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(l)* -- 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(m)* -- Cabot Corporation Short-Term Incentive Compensation Plan
(incorporated herein by reference to Exhibit 10.2 of Cabot's
Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, file reference 1-5667, filed with
the Commission on May 17, 1999).
12 -- Statement Re: Computation of Ratios of Earnings to Fixed
Charges, filed herewith.
13 -- Pages 21 through 53 of the 1999 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.
20
22
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.
27.1 -- Financial Data Schedule for fiscal year ended September
30, 1999, filed herewith.
27.2 -- Restated Financial Data Schedule for fiscal year ended
September 30, 1998, filed herewith.
27.3 -- Restated Financial Data Schedule for fiscal year ended
September 30, 1997, 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.
21
23
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 29, 1999
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 29, 1999
- --------------------------------------------------- Board and Chief Executive
SAMUEL W. BODMAN Officer (principal executive
officer)
* Director and President December 29, 1999
- ---------------------------------------------------
KENNETT F. BURNES
/s/ ROBERT L. CULVER Executive Vice President and December 29, 1999
- --------------------------------------------------- Chief Financial Officer
ROBERT L. CULVER (principal financial officer)
/s/ WILLIAM T. ANDERSON Controller December 29, 1999
- --------------------------------------------------- (principal accounting officer)
WILLIAM T. ANDERSON
* Director December 29, 1999
- ---------------------------------------------------
JANE C. BRADLEY
* Director December 29, 1999
- ---------------------------------------------------
JOHN G.L. CABOT
* Director December 29, 1999
- ---------------------------------------------------
JOHN S. CLARKESON
* Director December 29, 1999
- ---------------------------------------------------
ARTHUR L. GOLDSTEIN
* Director December 29, 1999
- ---------------------------------------------------
ROBERT P. HENDERSON
* Director December 29, 1999
- ---------------------------------------------------
ARNOLD S. HIATT
22
24
SIGNATURES TITLE DATE
---------- ----- ----
* Director December 29, 1999
- ---------------------------------------------------
GAUTAM S. KAJI
* Director December 29, 1999
- ---------------------------------------------------
RODERICK C.G. MACLEOD
* Director December 29, 1999
- ---------------------------------------------------
JOHN H. MCARTHUR
* Director December 29, 1999
- ---------------------------------------------------
JOHN F. O'BRIEN
* Director December 29, 1999
- ---------------------------------------------------
DAVID V. RAGONE
* Director December 29, 1999
- ---------------------------------------------------
CHARLES P. SIESS, JR.
* Director December 29, 1999
- ---------------------------------------------------
LYDIA W. THOMAS
* Director December 29, 1999
- ---------------------------------------------------
MARK S. WRIGHTON
*By: /s/ SARAH W.S. KISH
---------------------------------------------
SARAH W.S. KISH
AS ATTORNEY-IN-FACT
23
25
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(b)(iii)* -- 1999 Equity Incentive Plan (incorporated herein by
reference to Exhibit 10.1 of Cabot's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1999,
file reference 1-5667, filed with the Commission on May
17, 1999).
26
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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) -- 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(f)* -- 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(g) -- 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(h) -- 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).
27
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10(i) -- 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(j)(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(j)(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(k)* -- 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(l)* -- 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(m)* -- Cabot Corporation Short-Term Incentive Compensation Plan
(incorporated herein by reference to Exhibit 10.2 of Cabot's
Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, file reference 1-5667, filed with
the Commission on May 17, 1999).
12 -- Statement Re: Computation of Ratios of Earnings to Fixed
Charges, filed herewith.
13 -- Pages 21 through 53 of the 1999 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.
27.1 -- Financial Data Schedule for fiscal year ended September
30, 1999, filed herewith.
27.2 -- Restated Financial Data Schedule for fiscal year ended
September 30, 1998, filed herewith.
27.3 -- Restated Financial Data Schedule for fiscal year ended
September 30, 1997, 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.