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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event
reported) July 11, 1995
Cabot Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-5667 04-2271897
(Commission file number) (I.R.S.Employer Identification No.)
75 State Street, Boston, Massachusetts 02109-1806
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 345-0100
Not applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 11, 1995, Cabot Corporation ( "Cabot" or the "Company")
restructured the ownership of its safety products and specialty composites
businesses (the "Safety Business"), which had been conducted primarily through
three subsidiaries: Cabot Safety Corporation (which is now known as Cabot CSC
Corporation ("CSC")), Cabot Safety Limited (which is now known as Cabot CSC
Limited ("CSL")), and Cabot Canada Ltd. ("CCL"). The restructuring consisted of
a series of transactions in which these Cabot subsidiaries transferred their
Safety Business assets to Cabot Safety Acquisition Corporation ("New CSC") and
its subsidiaries, Cabot Safety Limited ("New CSL"), and Cabot Safety Canada
Corporation ("New CCL"). New CSC is a wholly owned subsidiary of Cabot Safety
Holdings Corporation ("Holdings").
In the transactions, the Cabot subsidiaries received aggregate
consideration of approximately $205,000,000 consisting of (i) $169,200,000 in
cash, subject to certain adjustments, (ii) $4,800,000 in assumed debt, (iii)
22,500 shares of Holdings' Preferred Stock with a liquidation preference of
$22,500,000, and (iv) 42,500 shares of Holdings' Common Stock, valued at
$8,500,000. In addition, Holdings and its subsidiaries assumed substantially all
of the third party current liabilities relating to the Safety Business
(approximately $19,800,000 as of June 30, 1995). For accounting purposes, no
value has been ascribed to the Common Stock or Preferred Stock of Holdings on
Cabot's consolidated financial statements.
After giving effect to the restructuring and related transactions, the
outstanding equity of Holdings is owned by CSC, Vestar Equity Partners, L.P. and
affiliated investors ("Vestar") and the management of New CSC. CSC and Vestar
own equal interests in Holdings' Preferred Stock and Common Stock and the
management of New CSC owns the remaining Holdings' Common Stock, approximately
fifteen percent. John D. Curtin, Jr., Chairman and CEO of New CSC and a director
of Holdings, resigned as Executive Vice President and a director of Cabot on
July 14, 1995. Under the restructuring, two of Holdings' directors will be
designated by Cabot.
Item 7. Financial Statements and Exhibits.
Listed below are the pro forma financial information and exhibits filed
as part of this report.
(a) Pro forma consolidated financial statements of Cabot adjusted to
reflect the disposition of assets related to the Safety Business
are attached hereto at pages 4 through 8.
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(b) Exhibits.
The exhibit numbers correspond to the numbers assigned to such
exhibits in the Exhibit Table of Item 601 of Regulation S-K.
Exhibit Number Description
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2(a) 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, filed herewith.
2(b) 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, filed
herewith.
The registrant hereby agrees to furnish supplementally to the
Commission upon request by the Commission a copy of any
exhibit or schedule to the Exhibits listed above, which
exhibit or schedule is not filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CABOT CORPORATION
By: /s/ John G. L. Cabot
Name: John G. L. Cabot
Title: Vice Chairman of the Board
Dated: July 26, 1995
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Cabot Corporation
Pro Forma Balance Sheet (unaudited)
March 31, 1995
(Dollars in Thousands)
The following unaudited pro forma balance sheet shows the effect of the
deconsolidation of the assets and liabilities of Cabot's Safety Business
transferred to Cabot Safety Holdings Corporation and Cabot Safety Acquisition
Corporation (collectively with their subsidiaries "New Cabot Safety") from the
financial position of Cabot Corporation and consolidated subsidiaries as of
March 31, 1995, after giving effect to the adjustments described in the
accompanying notes. Cabot's investment in New Cabot Safety is accounted for
under the equity method after the transaction. Cabot's book value in New Cabot
Safety after the transaction is zero dollars as promulgated by generally
accepted accounting principles.
This pro forma balance sheet in not necessarily indicative of the actual
financial position had the sale of these net assets occurred at March 31, 1995.
This statement should be read in conjunction with the audited financial
statements of Cabot Corporation filed with the Securities and Exchange
Commission (the "SEC") in its Form 10-K for the fiscal year ended September 30,
1994 and the unaudited financial statements of Cabot Corporation filed with the
SEC in its Form 10-Q for the six months ended March 31, 1995.
Cabot's Cabot's
Unaudited Safety Adjustments Unaudited
Actual Business (Note B) Pro Forma
----------- ----------- ------------ ----------
ASSETS:
Current assets:
Cash and cash equivalents $ 34,069 $ 0 $ 34,069
Accounts and notes receivable 327,451 28,982 298,469
Inventories 259,751 29,322 230,429
Prepaid expenses 11,832 1,171 10,661
Deferred income taxes 22,512 22,512
----------- ----------- ----------- -----------
Total current assets 655,615 59,475 0 596,140
Investments: 0
Equity 88,902 0 88,902
Other 105,537 0 105,537
----------- ----------- ----------- -----------
Total investments 194,439 0 0 194,439
Investment in Safety business 0 (113,681) (128,002)(a) 0
14,321 (b)
Property, plant and equipment:
At cost 1,474,988 68,617 1,406,371
Less accumlated depreciation and amortization (749,177) (34,496) (714,681)
----------- ----------- ----------- -----------
725,811 34,121 0 691,690
Intangible assets 70,792 63,150 7,642
Deferred income taxes 6,723 (12,400) 19,123
Other assets 35,604 0 35,604
----------- ----------- ----------- -----------
Total other assets 113,119 50,750 0 62,369
----------- ----------- ----------- -----------
Total Assets $ 1,688,984 $ 30,665 $ (113,681) $ 1,544,638
=========== =========== =========== ===========
See accompanying notes
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Cabot Corporation
Pro Forma Balance Sheet (unaudited)
March 31, 1995
(Dollars in Thousands)
Cabot's
Unaudited Safety Adjustments Unaudited
Actual Business (Note B) Pro Forma
----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes payable to banks $ 148,425 $ 0 $ (128,002)(a) $ 20,423
Current portion of LT debt 14,747 172 14,575
Accounts payable and accrued liabilities 271,245 17,108 254,137
U.S. and foreign income taxes 20,519 20,519
Deferred income taxes 3,944 741 3,203
----------- ----------- ----------- -----------
Total current liabilities 458,880 18,021 (128,002) 312,857
Long-term debt 301,380 4,571 296,809
Deferred income taxes 124,305 8,073 116,232
Other liabilities 149,183 149,183
Stockholders' equity:
Preferred stock 75,336 75,336
Common stock 67,775 67,775
Additional paid-in capital 6,764 6,764
Retained earnings 984,792 14,321 (b) 999,113
----------- ----------- ----------- -----------
1,134,667 0 14,321 1,148,988
Deferred employee benefits (66,670) (66,670)
Treasury stock, at cost (475,866) (475,866)
Unrealized gain on marketable securities 22,995 22,995
----------- ----------- ----------- -----------
615,126 0 14,321 629,447
Foreign currency translation adjustments 40,110 40,110
----------- ----------- ----------- -----------
Total stockholders' equity 655,236 0 14,321 669,557
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,688,984 $ 30,665 $ (113,681) $ 1,544,638
=========== =========== =========== ===========
See accompanying notes
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Cabot Corporation
Pro Forma Statement of Income (unaudited)
For the Fiscal Year ended September 30, 1994
(Dollars in Thousands)
The following unaudited pro forma income statement deconsolidates the
results of operations of Cabot's Safety Business sold to New Cabot Safety from
the results of operations of Cabot Corporation and consolidated subsidiaries for
the year ended September 30, 1994, after giving effect to the adjustments
described in the accompanying notes.
This pro forma gives effect as if the disposition occurred on October 1,
1993. This proforma income statement is not necessarily indicative of the
results which actually would have occurred if the transfer of these assets
occured at October 1, 1993 or which may occur in the future.
This statement should be read in conjunction with the audited financial
statements of Cabot Corporation filed with the Securities and Exchange
Commission (the "SEC") in its Form 10-K for the fiscal year ended September 30,
1994 and the unaudited financial statement of Cabot Corporation filed with the
SEC in its Form 10-Q for the six months ended March 31, 1995.
Cabot's
Safety Adjustments Unaudited
Actual Business (Note C) Pro Forma
----------- ----------- ----------- -----------
Revenues:
Net sales and other operating revenues $ 1,679,819 $ 178,472 $ 1,501,347
Interest and dividend income 6,742 6,742
----------- ----------- ----------- -----------
Total revenues 1,686,561 178,472 0 1,508,089
Costs and expenses:
Cost of sales 1,234,272 99,532 1,134,740
Selling and administrative expenses 222,069 51,920 170,149
Research and technical services 48,701 2,733 45,968
Interest expense 41,668 5,819 3,141(a) 32,708
Specialty Chemical and Materials Group restructuring (4,000) (4,000)
Gain on resolution of matters from divested energy businesses (10,210) (10,210)
Other (income) charges, net 35,736 5,464 30,272
----------- ----------- ----------- -----------
Total costs and expenses 1,568,236 165,468 3,141 1,399,627
Income before income taxes 118,325 13,004 3,141 108,462
Income taxes (44,963) (5,018) (1,162)(a) (41,107)
Equity in net income of affiliated companies 5,329 5,329
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Net income $ 78,691 $ 7,986 $ 1,979 $ 72,684
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Net income per share:
Primary $ 1.96 $ 0.21 $ 0.05 $ 1.80
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Fully Diluted $ 1.84 $ 1.70
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See accompanying notes
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Cabot Corporation
Pro Forma Statement of Income (unaudited)
For the Six Months Ended March 31, 1995
(Dollars in Thousands)
The following unaudited pro forma income statement deconsolidates the
results of operations of Cabot's Safety Business sold to New Cabot Safety from
the results of operations of Cabot Corporation and consolidated subsidiaries for
the six months ended March 31, 1995, after giving effect to the adjustments
described in the accompanying notes.
This pro forma gives effect as if the disposition occurred on October 1,
1994. This proforma income statement in not necessarily indicative of the
results which actually would have occurred if the transfer of these assets
occured at October 1, 1994 or which may occur in the future.
This statement should be read in conjunction with the audited financial
statements of Cabot Corporation filed with the Securities and Exchange
Commission (the "SEC") in its Form 10-K for the fiscal year ended September 30,
1994 and the unaudited financial statements of Cabot Corporation filed with the
SEC in its Form 10-Q for the six months ended March 31, 1995.
Cabot's
Unaudited Safety Adjustments Unaudited
Actual Business (Note C) Pro Forma
--------- --------- --------- ---------
Revenues:
Net sales and other operating revenues $ 909,299 $ 97,704 811,595
Interest and dividend income 4,441 4,441
--------- --------- --------- ---------
Total revenues 913,740 97,704 0 816,036
Costs and expenses:
Cost of sales 626,250 55,182 571,068
Selling and administrative expenses 118,028 28,204 89,824
Research and technical services 26,503 1,585 24,918
Interest expense 18,908 3,577 903(a) 14,428
Specialty Chemical and Materials Group restructuring 0
Gain on resolution of matters from divested energy businesses 0
Other (income) charges, net 7,991 2,813 5,178
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Total costs and expenses 797,680 91,361 903 705,416
Income before income taxes 116,060 6,343 903 110,620
Income taxes (42,771) (2,343) (334)(a) (40,762)
Equity in net income of affiliated companies 6,998 6,998
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Net income $ 80,287 $ 4,000 $ 569 $ 76,856
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Net income per share:
Primary $ 2.03 $ 0.10 $ 0.01 $ 1.94
========= ========= ========= =========
Fully Diluted $ 1.89 $ 1.80
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See accompanying notes
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Cabot Corporation
Notes to Pro Forma Financial Statements
Note A. Basis of Presentation
On July 11, 1995, subsidiaries of the Company completed the restructuring
of the ownership of its Safety Business as more fully described in item 2 of
this Form 8-K. The transaction is accounted for as a sale, with an aggregate
selling price consisting of approximately $169.2 million cash, subject to
certain adjustments, assumption of approximately $4.8 million in debt, 42,500
shares of Cabot Safety Holdings Corporation ("Holdings") common stock,
representing a 42.5% ownership interest, and $22.5 million of Holdings
non-voting 12.5% preferred stock. In addition, Holdings and its subsidiaries
assumed substantially all of the third party current liabilities relating to
the Safety Business (approximately $19.8 million as of June 30, 1995).
The pro forma statement of income for the year ended September 30, 1994
includes the audited consolidated statement of income for Cabot Corporation. The
pro forma combined balance sheet and statement of income for the six months
ended March 31, 1995 includes the unaudited financial statements of Cabot
Corporation.
Note B. Adjustment to the Balance Sheet
The balance sheet as of March 31, 1995, gives effect to the following pro
forma adjustments:
a. To record cash proceeds as a reduction of notes payable to banks.
b. To record gain on sale of safety business.
Note C. Adjustment to Statements of Income
The statements of income for the year ended September 30, 1994 and the six
months ended March 31, 1995 give effect to the following pro forma adjustments:
a. To record reduction of interest expense and associated tax effect resulting
from a reduction of notes payable to banks by the after-tax proceeds of
approximately $128.0 million.
Note D. Preferred Stock
Dividends accrue on the $22.5 million of Holdings preferred stock at 3.125%
per quarter and are cumulative. Dividends are payable in cash, or at the sole
discretion of New Safety, in additional Holdings preferred stock. No dividend
income has been reflected in these pro forma statements due to the uncertainty
of realizing, in cash, the dividends.
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