Cabot Corp. Reports Operating Results (10-Q)

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Feb 09, 2011
Cabot Corp. (CBT, Financial) filed Quarterly Report for the period ended 2010-12-31.

Cabot Corp. has a market cap of $2.79 billion; its shares were traded at around $44.2 with a P/E ratio of 12 and P/S ratio of 1. The dividend yield of Cabot Corp. stocks is 1.7%.Hedge Fund Gurus that owns CBT: Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates. Mutual Fund and Other Gurus that owns CBT: Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates, Pioneer Investments, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

As of December 31, 2010, our goodwill balance is allocated between three reporting units: Rubber Blacks, $26 million, Fumed Metal Oxides, $11 million, and New Business, $1 million. There have been no goodwill impairment charges during the periods presented in these financial statements.

The cost of most raw materials, work in process and finished goods inventories in the U.S. is determined by the last-in, first-out (LIFO) method. Had we used the first-in, first-out (FIFO) method instead of the LIFO method for such inventories, the value of those inventories would have been $95 million and $98 million higher as of December 31, 2010 and September 30, 2010, respectively. The cost of other U.S. and all non-U.S. inventories is determined using the average cost method or the FIFO method. In periods of rapidly rising or declining raw material costs, the inventory method we employ can have a significant impact on our profitability. Under our current LIFO method, when raw material costs are rising, our most recent higher priced purchases are the first to be charged to cost of sales, thereby reducing our profitability. If, however, we were using a FIFO method, our purchases from earlier periods, which were at lower prices, would instead be the first charged to cost of sales, thereby increasing our profitability.

During the three months ended December 31, 2010 and 2009, inventory quantities were reduced at our U.S. Supermetals site causing a liquidation of LIFO inventory quantities carried at lower costs that were prevailing in prior years when compared to the current year prices. These reductions resulted in a decrease in cost of goods sold of $6 million and $3 million and an increase in net income of $4 million ($0.06 per diluted common share) and $2 million ($0.03 per diluted common share) for the three months ended December 31, 2010 and 2009, respectively.

In the first quarter of fiscal 2011, we reported net income attributable to Cabot Corporation of $75 million ($1.13 per diluted common share). This is compared to $29 million ($0.44 per diluted common share) in the first quarter of fiscal 2010.

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