Cabot Announces Third Quarter Operating Results

Reported Earnings Increased More Than 40% Compared To A Year Ago

BOSTON, July 23 /PRNewswire-FirstCall/ -- Cabot Corporation (NYSE: CBT)
today announced results for its third fiscal quarter ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000323/CABOTLOGO )
Highlights:
-- Significantly improved operating results: higher unit margins and
seasonally strong volumes in Rubber Blacks and Performance Products; strong
demand in emerging markets offset weaker volumes in the U.S. and Western
Europe
-- Continued investments in emerging markets: Performance Segment
announces a new masterbatch facility in Dubai and the signing of a joint
venture agreement to build a second fumed silica facility in China
-- Achievements in new business development: letter of intent to
commercialize Cabot Elastomer Composites (CEC), first shipments of cesium
formate to Kazakhstan and new Aerogel shipments in construction sector
-- Active management of new business pipeline: closure of an
under-performing project in Superior MicroPowders and reduction in inkjet
manufacturing costs

(In millions, except per share amounts) Third Quarter
Ended June 30,
2008 2007

Net sales $ 840 $ 649
Income from operations 50 33
Diluted earnings per share $ 0.43 $ 0.30
Less: Certain items per share (0.09) (0.04)
Less: Discontinued operations per share - (0.01)
Adjusted earnings per share $ 0.52 $ 0.35

Cabot Corporation reported third quarter 2008 net income of $27 million
($0.43 per diluted common share). Adjusted EPS was $0.52 per diluted common
share, which excludes $6 million ($0.09 per diluted common share) of charges
from certain items. This compares to third quarter 2007 net income of $20
million ($0.30 per diluted common share). Adjusted EPS was $0.35 per diluted
common share, which excluded $3 million ($0.05 per diluted common share) of
charges from certain items and discontinued operations. Details of the
Company's financial results and certain items are provided in the accompanying
tables.
Commenting on the results, Patrick Prevost, Cabot's President and CEO,
stated, "I am pleased with our performance this quarter. Our ability to
improve margins and profitability is particularly notable given the volatile
feedstock environment. Our geographic breadth and strong positions in
emerging markets allowed us to maintain solid volumes despite weakening market
conditions in the U.S. and Western Europe. We also made progress in our new
business development efforts exemplified by the signing of a letter of intent
with Michelin to commercialize our CEC technology, first shipments to
Kazakhstan of cesium formate and new revenues for Aerogel. We will have to
remain vigilant in light of the continued risks posed by raw material price
volatility and a potential economic slowdown in developed economies."
Segment Results
Core Segment
Rubber Blacks profitability increased compared to the third quarter of
2007 on strong unit margins ($15 million contribution) as price increases
matched feedstock cost increases for most of the quarter. Volumes were stable
(down 1%) with weaker demand in Western Europe and continued softness in North
America offset by strong Asia Pacific volumes, particularly in China.
Sequentially, profitability improved on strong unit margins ($13 million
contribution) and increased overall volumes (up 2%). The time lag of
feedstock related pricing adjustments in the Company's rubber blacks supply
contracts and the immediate recognition of feedstock costs in North America
due to the use of LIFO accounting had an unfavorable impact of $10 million
versus $13 million in the third quarter of 2007 and $15 million in the second
quarter of 2008.
Supermetals profitability declined compared to the third quarter of 2007
and sequentially, principally from lower volumes ($7 million and $9 million,
respectively) due to softness in capacitor demand and a highly competitive
market environment. The business continued to focus on cash, generating $18
million during the quarter, including a further reduction of inventory levels.
Additionally, the business minimized purchases of raw materials and continued
to assess additional fixed cost reductions.
Performance Segment
Profitability was flat compared to the third quarter of 2007 driven
principally by an $8 million unfavorable LIFO impact associated with carbon
black feedstock costs. Despite increasing feedstock costs, Performance
Products increased unit margins both year over year and sequentially. Volumes
remained strong, increasing 3% compared to the third quarter of 2007 and 2%
sequentially, with strong growth in emerging regions. Fumed metal oxides was
unfavorably impacted by increased raw material and energy costs. Overall
demand remained solid. Volumes increased 2% compared to the third quarter of
2007 but declined 4% sequentially. Current quarter results were affected by a
one time manufacturing disruption.
Specialty Fluids Segment
Performance met expectations during the third quarter. Profitability was
down versus 2007 but remained in line with the second quarter's results.
Shipments of cesium formate fluid to Kazakhstan commenced during the quarter
as the business continues to diversify its geographic presence.
New Business Segment
Sales declined versus the third quarter of 2007 and were flat
sequentially. Decreased volumes and an unfavorable product mix in inkjet
colorants offset a continued recovery in the inkjet aftermarket sector,
increased Aerogel revenues in construction and new business in the Superior
MicroPowders security market. During the quarter, steps were taken to
actively manage the portfolio of new business opportunities, which will
improve performance immediately. These actions included workforce reductions
and the elimination of under-performing projects. The associated costs for
these actions are included in certain items outlined in the accompanying
tables.
Cash Flow
Cabot's operations generated $40 million in cash during the third quarter
of 2008, despite a continued increase in working capital from high carbon
black feedstock costs. Capital expenditures were $54 million including
spending on rubber blacks expansions in China and several energy centers. The
Company repurchased 84,000 shares on the open market at a cost of $2.5
million.
Outlook
Commenting on the outlook for the remainder of fiscal 2008 and beyond,
Prevost said, "We remain solidly committed to our strategy and long term
financial targets. Our Company is well positioned to meet our commitments to
improve earnings and create shareholder value. We continue to aggressively
manage the impact of increasing feedstock costs through price increases but we
will continue to experience negative effects in the fourth fiscal quarter due
to substantial hydrocarbon price increases in June and July. We are planning
to eliminate most of the time lag in our rubber blacks supply contracts over
the coming 18 to 24 months and have implemented monthly pricing adjustments
where feasible. Demand remains solid across most of our businesses with our
leading positions in emerging markets providing strong support. We are
managing our new business efforts with renewed discipline, including taking
concrete steps to work more closely with lead users and key partners and
terminating under-performing projects where appropriate. Our commitment to
high return investments in energy recovery projects and to attractive growth
opportunities in emerging regions continues."
Earnings Call
The Company will host a conference call with industry analysts to discuss
its performance for the third quarter ended June 30, 2008. The call will be
at 2:00 p.m. Eastern time on July 24, 2008 and can be accessed through Cabot's
investor relations website at http://investor.cabot-corp.com.
Cabot Corporation, headquartered in Boston, Massachusetts, is a global
performance materials company. Cabot's major products are carbon black, fumed
silica, inkjet colorants, capacitor materials, and cesium formate drilling
fluids. The Company's website is: http://www.cabot-corp.com.
Forward-Looking Statements
This earnings release contains forward-looking statements based on
management's current expectations, estimates and projections. All statements
that address expectations or projections about the future (including
statements about the company's plans to manage the impact of changing raw
material costs including plans to eliminate the time lag of feedstock related
pricing adjustments in its rubber blacks supply contracts), strategy for
growth, market position, and expected financial results are forward-looking
statements. Some of the forward-looking statements may be identified by words
like "expects," "anticipates," "plans," "intends," "projects," "indicates,"
and similar expressions. These statements are not guarantees of future
performance and involve a number of risks, uncertainties and assumptions.
Many factors, including those discussed more fully elsewhere in this release
and in documents filed with the Securities and Exchange Commission by Cabot,
particularly its latest annual report on Form 10-K, could cause results to
differ materially from those stated. These factors include, but are not
limited to changes in raw material costs; costs associated with the research
and development of new products, including regulatory approval and market
acceptance; competitive pressures; successful integration of structural
changes, including restructuring plans, and joint ventures; the laws,
regulations, policies and economic conditions, including inflation, interest
and foreign currency exchange rates, of countries in which the company does
business; and severe weather events that cause business interruptions,
including plant and power outages, or disruptions in supplier or customer
operations.
Use of Non-GAAP Financial Measures
The preceding discussion of our results and the accompanying financial
tables report adjusted EPS and also include information on our reportable
segment sales and segment (or business) operating profit before taxes ("PBT").
Adjusted EPS and segment PBT are non-GAAP financial measures and are not
intended to replace EPS and income (loss) from continuing operations before
taxes, equity in net income of affiliated companies and minority interest,
respectively, the most directly comparable GAAP financial measures. Both EPS
and adjusted EPS are calculated on a diluted share basis. In calculating
adjusted EPS and segment PBT, we exclude certain items, meaning items that are
significant and unusual or infrequent and not believed to reflect the true
underlying business performance, and, therefore, are not allocated to a
segment's results or included in adjusted EPS. Further, in calculating
segment PBT we include equity in net income of affiliated companies, royalties
paid by equity affiliates, minority interest and allocated corporate costs but
exclude interest expense, foreign currency translation gains and losses,
interest income and dividend income. Our chief operating decision-maker uses
adjusted EPS to evaluate the underlying earnings power of the Company.
Segment PBT is used to evaluate changes in the operating results of each
segment before non-operating factors and before certain items and to allocate
resources to the segments. We believe that these non-GAAP measures also
assist our investors in evaluating the changes in our results and the
Company's performance. A reconciliation of adjusted EPS to EPS is shown in
the table titled Certain Items and Reconciliation of Adjusted EPS, and a
reconciliation of total segment PBT to income (loss) from operations before
taxes, equity in net income of affiliated companies and minority interest is
shown in the table titled Summary Results by Segments. The certain items that
are excluded from our calculation of adjusted EPS and segment PBT are detailed
in the table titled Certain Items and Reconciliation of Adjusted EPS.

Third Quarter Earnings Announcement, Fiscal 2008

CABOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS

Periods ended June 30
Dollars in millions, except per share Three Months Nine Months
amounts (unaudited) 2008 2007 2008 2007

Net sales and other operating revenues $840 $649 $2,337 $1,941
Cost of sales 703 543 1,966 1,547
Gross profit 137 106 371 394

Selling and administrative expenses 67 56 190 183
Research and technical expenses 20 17 55 49
Income from operations 50 33 126 162

Other income and expense
Interest and dividend income - 3 3 8
Interest expense (9) (8) (28) (26)
Other income (expense) (2) 3 (5) 4
Total other income and expense (11) (2) (30) (14)

Income from continuing operations
before income taxes, equity in net
income of affiliated companies and
minority interest 39 31 96 148

Provision for income taxes (8) (9) (13) (40)
Equity in net income of affiliated
companies, net of tax 2 3 6 9
Minority interest in net income, net
of tax (6) (4) (15) (11)
Income from continuing operations 27 21 74 106
Discontinued operations, net of tax (A) - (1) - (1)
Net income 27 20 74 105
Dividends on preferred stock, net of
tax benefit - - - (1)
Net income available to common shares $27 $20 $74 $104

Diluted earnings per share of common
stock
Income from continuing operations $0.43 $0.31 $1.16 1.55
Discontinued operations, net of
tax (A) - (0.01) - (0.01)
Net income $0.43 $0.30 $1.16 $1.54
Weighted average common shares
outstanding
Diluted 63 68 63 68

(A) Amount relates to legal settlements in connection with our
discontinued operations, net of tax.

Third Quarter Earnings Announcement, Fiscal 2008

CABOT CORPORATION SUMMARY RESULTS BY SEGMENTS

Periods ended June 30
Dollars in millions, except per share Three Months Nine Months
amounts (unaudited) 2008 2007 2008 2007

SALES

Core Segment $537 $399 $1,511 $1,226
Rubber blacks (A) 499 351 1,364 1,048
Supermetals 38 48 147 178
Performance Segment 247 208 695 598
Performance products (A) 175 142 481 399
Fumed metal oxides 72 66 214 199
New Business Segment 13 14 34 38
Inkjet colorants 11 13 30 36
Aerogel 1 1 2 1
Superior MicroPowders 1 - 2 1
Specialty Fluids Segment 17 16 49 42
Segment sales 814 637 2,289 1,904
Unallocated and other (B) 26 12 48 37
Net sales and other operating
revenues $840 $649 $2,337 $1,941
SEGMENT PROFIT
Core Segment $33 $11 $70 $101
Rubber blacks 37 11 75 86
Supermetals (4) - (5) 15
Performance Segment 31 31 87 101
New Business Segment (9) (8) (30) (24)
Specialty Fluids Segment 5 7 18 18
Total Segment Profit ( C ) 60 41 145 196

Interest expense (9) (8) (28) (26)
General unallocated expense (D) (10) 1 (15) (13)
Less: Equity in net income of
affiliated companies, net of tax (2) (3) (6) (9)
Income from continuing operations
before income taxes, equity in net
income of affiliated companies and
minority interest 39 31 96 148
Provision for income taxes (8) (9) (13) (40)
Equity in net income of affiliated
companies, net of tax 2 3 6 9
Minority interest in net income, net
of tax (6) (4) (15) (11)
Income from continuing operations 27 21 74 106
Discontinued operations, net of tax (E) - (1) - (1)
Net Income 27 20 74 105
Dividends on preferred stock, net of
tax benefit - - - (1)
Net income available to common shares $27 $20 $74 $104

Diluted earnings per share of common
stock
Income from continuing operations $0.43 $0.31 $1.16 $1.55
Discontinued operations, net of
tax (E) - (0.01) - (0.01)
Net Income $0.43 $0.30 $1.16 $1.54
Weighted average common shares
outstanding
Diluted 63 68 63 68

Note: During the third quarter of fiscal 2008, Management changed the way
it manages the Company's businesses. Accordingly, the segment results for all
periods presented has been revised to reflect these changes. The segment
results represents the Company's current best estimate of these values,
however, because the calculations are being refined, the values reported in
the Company's future SEC filings may vary materially from those presented in
this table.
(A) During the third quarter of fiscal 2008, the Company purchased
additional shares of one of its equity affiliates which resulted in the
consolidation of its operating results in the Company's consolidated financial
statements beginning April 1, 2008. Prior to the consolidation, segment sales
for certain operating segments within the rubber blacks and performance
products product lines included 100% of the sales of this equity affiliate at
market-based prices, therefore there is no impact to the reported segment
sales for the rubber blacks and performance products product lines.
(B) Unallocated and other reflects an elimination for sales of one equity
affiliate, prior to the consolidation of its results beginning April 1, 2008,
offset by royalties paid by equity affiliates and other operating revenues and
external shipping and handling fees.
( C ) Segment profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess segment
performance and allocate resources. Segment profit includes equity in net
income of affiliated companies, royalties paid by equity affiliates, minority
interest and allocated corporate costs.
(D) General unallocated expense includes foreign currency transaction
gains (losses), interest income, dividend income, and the certain items listed
in the Certain Items and Reconciliation of Adjusted EPS table.
(E) Amount relates to legal settlements in connection with our
discontinued operations, net of tax.

Third Quarter Earnings Announcement, Fiscal 2008

CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION

June 30, September 30,
Dollars in millions, except share and 2008 2007
per share amounts (unaudited) (audited)

Current assets:

Cash and cash equivalents $107 $154
Short-term marketable securities 1 2
Accounts and notes receivable, net
of reserve for doubtful accounts
of $5 and $6 677 563
Inventories:
Raw materials 204 154
Work in process 59 77
Finished goods 261 184
Other 34 27
Total inventories 558 442
Prepaid expenses and other current assets 92 72
Deferred income taxes 38 35
Assets held for sale 7 7
Total current assets 1,480 1,275

Investments:
Equity affiliates 52 65
Long-term marketable securities
and cost investments 1 3
Total investments 53 68

Property, plant and equipment 3,084 2,823
Accumulated depreciation and amortization (1,985) (1,807)
Net property, plant and equipment 1,099 1,016

Other assets:
Goodwill 37 34
Intangible assets, net of accumulated
amortization of $11 and $10 3 4
Assets held for rent 44 42
Deferred income taxes 134 120
Other assets 91 77
Total other assets 309 277

Total assets $2,941 $2,636

Third Quarter Earnings Announcement, Fiscal 2008

CABOT CORPORATION CONDENSED CONSOLIDATED FINANCIAL POSITION

June 30, September 30,
Dollars in millions, except share and 2008 2007
per share amounts (unaudited) (audited)

Current liabilities:
Notes payable to banks $171 $67
Accounts payable and accrued liabilities 450 427
Income taxes payable 37 36
Deferred income taxes 2 2
Current portion of long-term debt 39 15
Total current liabilities 699 547

Long-term debt 483 503
Deferred income taxes 19 16
Other liabilities 345 300

Minority interest 110 76

Stockholders' equity:
Preferred stock:
Authorized: 2,000,000 shares of $1 par value - -
Series B ESOP Convertible Preferred
Stock 7.75% Cumulative
Authorized: 200,000 shares
Issued: None
Outstanding: None
Common stock:
Authorized: 200,000,000 shares of $1 par value 64 65
Issued: 64,348,116 and 65,424,674 shares
Outstanding: 64,221,766 and 65,279,803 shares
Less cost of 126,349 and 144,871
shares of common treasury stock (4) (5)
Additional paid-in capital - -
Retained earnings 1,146 1,119
Deferred employee benefits (31) (34)
Notes receivable for restricted stock (16) (19)
Accumulated other comprehensive income 126 68
Total stockholders' equity 1,285 1,194

Total liabilities and stockholders' equity $2,941 $2,636

CABOT CORPORATION
Fiscal 2007
In millions, except per share
amounts (unaudited) Dec. Q. Mar. Q. June Q. Sept. Q. FY

Sales
Core Segment $428 $399 $399 $423 $1,649
Rubber blacks (A) 351 346 351 368 1,416
Supermetals 77 53 48 55 233
Performance Segment 188 202 208 213 811
Performance products (A) 123 134 142 142 541
Fumed metal oxides 65 68 66 71 270
New Business Segment 11 13 14 11 49
Inkjet colorants 10 13 13 10 46
Aerogel - - 1 - 1
Superior MicroPowders 1 - - 1 2
Specialty Fluids Segment 16 10 16 16 58
Segment Sales 643 624 637 663 2,567
Unallocated and other (B) 12 13 12 12 49
Net sales and other
operating revenues $655 $637 $649 $675 $2,616

Segment Profit
Core Segment $56 $33 $11 $9 $109
Rubber blacks 40 34 11 8 93
Supermetals 16 (1) - 1 16
Performance Segment 34 36 31 30 131
New Business Segment (11) (4) (8) (10) (33)
Specialty Fluids Segment 8 3 7 7 25
Total Segment Profit ( C ) 87 68 41 36 232

Interest expense (9) (9) (8) (8) (34)
General unallocated income
(expense) (D) - (15) 1 (5) (18)
Less: Equity in net income of
affiliated companies, net of tax (3) (3) (3) (3) (12)

Income from continuing operations
before income taxes, equity in net
income of affiliated companies
and minority interest 75 41 31 20 168
Benefit (provision) for
income taxes (19) (11) (9) 2 (38)
Equity in net income of affiliated
companies, net of tax 3 3 3 3 12
Minority interest in net income,
net of tax (5) (2) (4) (4) (15)

Income from continuing operations 54 31 21 21 127
Discontinued operations, net
of tax (E) - - (1) 3 2

Net income 54 31 20 24 129
Dividends on preferred stock, net
of tax benefit - (1) - - (1)

Net income available to
common shares $54 $30 $20 $24 $128

Diluted earnings per share of
common stock
Income from continuing
operations $0.79 $0.45 $0.31 $0.32 $1.87
Discontinued operations, net
of tax (E) - - (0.01) 0.04 0.03
Net income $0.79 $0.45 $0.30 $0.36 $1.90
Weighted average common
shares outstanding
Diluted 69 69 68 66 68

Fiscal 2008
In millions, except per share
amounts (unaudited) Dec. Q. Mar. Q. June Q. Sept. Q. FY

Sales
Core Segment $463 $511 $537 $- $1,511
Rubber blacks (A) 410 454 499 1,364
Supermetals 53 57 38 147
Performance Segment 211 236 247 695
Performance products (A) 141 164 175 481
Fumed metal oxides 70 72 72 214
New Business Segment 9 13 13 34
Inkjet colorants 8 11 11 30
Aerogel - 1 1 2
Superior MicroPowders 1 1 1 2
Specialty Fluids Segment 16 16 17 49
Segment Sales 699 776 814 2,289
Unallocated and other (B) 12 10 26 48
Net sales and other operating
revenues $711 $786 $840 $- $2,337

Segment Profit
Core Segment $15 $23 $33 $- $70
Rubber blacks 14 24 37 75
Supermetals 1 (1) (4) (5)
Performance Segment 27 28 31 87
New Business Segment (12) (9) (9) (30)
Specialty Fluids Segment 7 5 5 18
Total Segment Profit ( C ) 37 47 60 - 145

Interest expense (9) (9) (9) (28)
General unallocated income
(expense) (D) 8 (13) (10) (15)
Less: Equity in net income of
affiliated companies, net of tax (2) (2) (2) (6)
Income from continuing operations
before income taxes, equity in net
income of affiliated companies
and minority interest 34 23 39 96
Benefit (provision) for
income taxes 6 (11) (8) (13)
Equity in net income of affiliated
companies, net of tax 2 2 2 6
Minority interest in net income,
net of tax (6) (3) (6) (15)
Income from continuing operations 36 11 27 74
Discontinued operations,
net of tax (E) - - - -
Net income 36 11 27 74
Dividends on preferred stock,
net of tax benefit - - - -
Net income available to
common shares $36 $11 $27 $74
Diluted earnings per share of
common stock
Income from continuing
operations $0.56 $0.17 $0.43 $1.16
Discontinued operations,
net of tax (E) - - - -
Net income $0.56 $0.17 $0.43 $1.16
Weighted average common shares
outstanding
Diluted 64 64 63 63

Note: During the third quarter of fiscal 2008, Management changed the way
it manages the Company's businesses. Accordingly, the segment results for all
periods presented has been revised to reflect these changes. The segment
results represents the Company's current best estimate of these values,
however, because the calculations are being refined, the values reported in
the Company's future SEC filings may vary materially from those presented in
this table.
(A) During the third quarter of fiscal 2008, the Company purchased
additional shares of one of its equity affiliates which resulted in the
consolidation of its operating results in the Company's consolidated financial
statements beginning April 1, 2008. Prior to the consolidation, segment sales
for certain operating segments within the rubber blacks and performance
products product lines included 100% of the sales of this equity affiliate at
market-based prices, therefore there is no impact to the reported segment
sales for the rubber blacks and performance products product lines.
(B) Unallocated and other reflects an elimination for sales of one equity
affiliate, prior to the consolidation of its results beginning April 1, 2008,
offset by royalties paid by equity affiliates and other operating revenues and
external shipping and handling fees.
( C ) Segment profit is a measure used by Cabot's Chief Operating
Decision-Maker to measure consolidated operating results, assess segment
performance and allocate resources. Segment profit includes equity in net
income of affiliated companies, royalties paid by equity affiliates, minority
interest and allocated corporate costs.
(D) General unallocated expense includes foreign currency transaction
gains (losses), interest income, dividend income and certain items listed in
the Certain Items and Reconciliation of Adjusted EPS table.
(E) Amounts relate to legal and tax settlements in connection with our
discontinued operations.

Third Quarter Earnings Announcement, Fiscal 2008

CABOT CORPORATION CERTAIN ITEMS AND RECONCILIATION OF ADJUSTED EPS

CERTAIN ITEMS:
Periods ended June 30 Three Months
Dollars in millions, except per 2008 2008 2007 2007
share amounts (unaudited) $ per share(A) $ per share(A)

Certain items before income taxes
Environmental reserves and legal
settlements $(2) $(0.03) $(1) $(0.01)
Carbon Black federal antitrust
litigation - - - -
CEO transition costs - - - -
Restructuring initiatives:
- Global (5) (0.05) - -
- Altona, Australia - - - -
- North America (1) (0.01) (3) (0.03)
- Europe (B) - - - -
Total certain items (8) (0.09) (4) (0.04)
Discontinued operations ( C ) - - (1) (0.01)
Total certain items and
discontinued operations (8) (0.09) (5) (0.05)
Tax impact of certain items and
discontinued operations 2 - 2 -
Total certain items and discontinued
operations, after tax $(6) $(0.09) $(3) $(0.05)

CERTAIN ITEMS:
Periods ended June 30
Dollars in millions, except per Nine Months
share amounts (unaudited) 2008 2008 2007 2007
$ per share(A) $ per share(A)

Certain items before income taxes

Environmental reserves and legal
settlements $(3) $(0.04) $(6) $(0.07)
Carbon Black federal antitrust
litigation - - (10) (0.09)
CEO transition costs (4) (0.04) - -
Restructuring initiatives:
- Global (5) (0.05) (4) (0.04)
- Altona, Australia 18 0.20 (1) (0.01)
- North America (14) (0.16) (3) (0.03)
- Europe (B) (2) (0.02) - -
Total certain items (10) (0.11) (24) (0.24)
Discontinued operations(C) - - (1) (0.01)
Total certain items and
discontinued operations (10) (0.11) (25) (0.25)
Tax impact of certain items and
discontinued operations 3 - 8 -
Total certain items and discontinued
operations, after tax (7) $(0.11) $(17) $(0.25)

Periods ended June 30 Three Months Nine Months
Dollars in millions (unaudited) 2008 2007 2008 2007

Statement of Operations Line Item
Cost of sales $(4) $(3) $(1) $(11)
Selling and administrative expenses (4) (1) (9) (13)
Total certain items $(8) $(4) $(10) $(24)

NON-GAAP MEASURE:
Periods ended June 30 Three Months Nine Months
Dollars in millions, except per 2008 2007 2008 2007
share amounts (unaudited) per per per per
share(A) share(A) share(A) share(A)
Reconciliation of Adjusted EPS to
GAAP EPS
Diluted EPS $0.43 $0.30 $1.16 $1.54
Total certain items (0.09) (0.04) (0.11) (0.24)
Discontinued operations - (0.01) - (0.01)
Adjusted EPS $0.52 $0.35 $1.27 $1.79

(A) Per share amounts are calculated after tax.
(B) Charges relate to former carbon black facilities.
( C ) Amounts relate to legal settlements in connection with our
discontinued operations.
SOURCE Cabot Corporation

Susannah Robinson, Director, Investor Relations of Cabot Corporation,
+1-617-342-6129