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Restructuring | 6 Months Ended
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Mar. 31, 2016
Restructuring And Related Activities [Abstract] |
Restructuring | J. Restructuring Cabot’s restructuring activities were recorded in the Consolidated Statements of Operations as follows:
|  | Three Months Ended |  |  | Six Months Ended |
|  | March 31, |  |  | March 31, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
|  | (Dollars in millions) |  |  |  |  |  |  |  |  |
Cost of sales |  | $ | (6 | ) |  | $ | 1 |  |  | $ | 31 |  |  | $ | 3 |
Selling and administrative expenses |  |  | 1 |  |  |  | 4 |  |  |  | 8 |  |  |  | 9 |
Research and technical expenses |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | — |
Total |  | $ | (5 | ) |  | $ | 5 |  |  | $ | 43 |  |  | $ | 12 |
Details of all restructuring activities and the related reserves during the three months ended March 31, 2016 are as follows:
|  | Severance and Employee Benefits |  |  | Environmental Remediation |  |  | Asset Sales |  |  | Asset Impairment and Accelerated Depreciation |  |  | Other |  |  | Total |
|  | (Dollars in millions) |
Reserve at December 31, 2015 |  | $ | 19 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 22 |
Charges (credit) |  |  | 1 |  |  |  | — |  |  |  | (8 | ) |  |  | 1 |  |  |  | 1 |  |  |  | (5 | )
Costs charged against assets |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (1 | ) |  |  | — |  |  |  | (2 | )
Cash (paid) received |  |  | (9 | ) |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | (2 | ) |  |  | (2 | )
Reserve at March 31, 2016 |  | $ | 11 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13 |
Details of all restructuring activities and the related reserves during the six months ended March 31, 2016 are as follows:
|  | Severance and Employee Benefits |  |  | Environmental Remediation |  |  | Asset Sales |  |  | Asset Impairment and Accelerated Depreciation |  |  | Other |  |  | Total |
|  | (Dollars in millions) |
Reserve at September 30, 2015 |  | $ | 5 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | 9 |
Charges (credit) |  |  | 26 |  |  |  | — |  |  |  | (9 | ) |  |  | 23 |  |  |  | 3 |  |  |  | 43 |
Costs charged against assets |  |  | — |  |  |  | — |  |  |  | (7 | ) |  |  | (23 | ) |  |  | — |  |  |  | (30 | )
Cash (paid) received |  |  | (20 | ) |  |  | — |  |  |  | 16 |  |  |  | — |  |  |  | (5 | ) |  |  | (9 | )
Reserve at March 31, 2016 |  | $ | 11 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13 |
2016 Plan On October 20, 2015, in response to challenging macroeconomic conditions, the Company announced its intention to restructure its operations subject to local consultation requirements and processes in certain locations. Cabot’s plan has resulted in a reduction of approximately 300 positions across the Company’s global locations. These actions are intended to result in a more competitive cost structure. The Company has recorded pre-tax charges of approximately $26 million in the first six months of fiscal 2016 and $2 million for the three months ended March 31, 2016 related to this plan. The Company expects to record an additional $2 million through the rest of fiscal 2016 and less than $1 million thereafter related to these actions. The charges recorded and anticipated are comprised of severance, employee benefits and other transition costs. Cumulative net cash outlays related to these actions are expected to be approximately $29 million, comprised of severance, employee benefits and other transition costs. Through March 31, 2016, the Company has made $18 million in cash payments related to this plan and expects to make $9 million in cash payments through the remainder of fiscal 2016 and $2 million thereafter. As of March 31, 2016, Cabot has $8 million of accrued restructuring costs in the Consolidated Balance Sheet related to these actions, which is mainly comprised of accrued severance charges. Additionally, on November 11, 2015, Cabot announced that it had committed to closing its carbon black manufacturing facility in Merak, Indonesia. The decision to close this plant and to consolidate production in Asia using the Company’s Cilegon, Indonesia and other Asian and global carbon black production sites to meet regional demand was driven by the financial performance at the Merak facility in the past several years. Manufacturing operations ceased at the end of January 2016 and approximately 50 employees were affected. The Company has recorded pre-tax charges of approximately $25 million in the first six months of fiscal 2016 related to this closure, comprised of $23 million of asset impairments and accelerated depreciation and $2 million of severance and employee benefits and has recorded approximately $1 million in the three months ended March 31, 2016 comprised mainly of accelerated depreciation. The asset impairment charges reflect the write-down of the long-lived assets group that is no longer in use to its fair value. Future anticipated site closure costs for the Merak facility, anticipated to be recorded through the remainder of fiscal 2016, are $5 million for site remediation and other miscellaneous costs. Net cash outlays related to this closure are expected to be approximately $8 million, comprised of $5 million site remediation costs, $2 million severance payments, and $1 million for other charges. Through March 31, 2016 the Company has made $2 million in cash payments related to this plan, mainly for severance and other miscellaneous charges and expects to pay $6 million through the remainder of fiscal 2016 mainly for site remediation costs of $5 million plus severance and other charges totaling $1 million. As of March 31, 2016, Cabot has $1 million of accrued severance costs in the Consolidated Balance Sheet related to the Merak facility closure. Details of the 2016 restructuring activities, including the Merak facility closure, during the three and six months ended March 31, 2016 are as follows:
|  | Severance and Employee Benefits |  |  | Asset Impairment and Accelerated Depreciation |  |  | Other |  |  | Total |
|  | (Dollars in millions) |
Reserve at September 30, 2015 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Charges |  |  | 25 |  |  |  | 22 |  |  |  | 1 |  |  |  | 48 |
Costs charged against liabilities / (assets) |  |  | 1 |  |  |  | (22 | ) |  |  | — |  |  |  | (21 | )
Cash paid |  |  | (10 | ) |  |  | — |  |  |  | (1 | ) |  |  | (11 | )
Reserve at December 31, 2015 |  | $ | 16 |  |  | $ | — |  |  | $ | — |  |  | $ | 16 |
Charges |  |  | — |  |  |  | 1 |  |  |  | 2 |  |  |  | 3 |
Costs charged against assets / liabilities |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Cash paid |  |  | (7 | ) |  |  | — |  |  |  | (2 | ) |  |  | (9 | )
Reserve at March 31, 2016 |  | $ | 9 |  |  | $ | — |  |  | $ | — |  |  | $ | 9 |
Business Service Center Transition In January 2014, the Company announced its intention to open a new Europe, Middle East and Africa (“EMEA”) business service center in Riga, Latvia, and to close its Leuven, Belgium site, subject to the Belgian information and consultation process, which was successfully completed in June 2014. These actions were developed following an extensive evaluation of the Company’s business service capabilities in the EMEA region and a determination that the future EMEA business service center will enable the Company to provide the highest quality of service at the most competitive cost. The actions related to the transition of the business service center have been completed and have resulted in total charges of approximately $24 million, comprised of $16 million of severance charges and $8 million of other transition costs including training costs and redundant salaries. There were no charges related to this plan recorded in the first six months of fiscal 2016 and $5 million was recorded related to this plan in the first six months of fiscal 2015 comprised of severance charges of $1 million and $4 million of other transition costs including training costs and redundant salaries. Through March 31, 2016, the Company has made $20 million in cash payments related to this plan, comprised of $13 million of severance payments and $7 million of other transition related costs, and expects to make cash payments of approximately $1 million, comprised mainly of severance, in the remainder of fiscal 2016. The difference between the initial accrual and subsequent cash payments was due to changes in foreign exchange rates. As of March 31, 2016, Cabot has $1 million of accrued severance charges in the Consolidated Balance Sheet. Closure of Port Dickson, Malaysia Manufacturing Facility On April 26, 2013, the Company announced that the Board of its carbon black joint venture, Cabot Malaysia Sdn. Bhd. (“CMSB”), decided to cease production at its Port Dickson, Malaysia facility. The facility ceased production in June 2013. The Company holds a 50.1 percent equity share in CMSB. The decision, which affected approximately 90 carbon black employees, was driven by the facility’s manufacturing inefficiencies and raw materials costs. Through March 31, 2016, the Company recorded cumulative net pre-tax restructuring charges related to this plan of $19 million, comprised mainly of accelerated depreciation and asset write-offs of $16 million, severance charges of $2 million, site demolition, clearing and environmental remediation charges of $2 million, and other closure related charges of $1 million, partially offset by the gain from the sale of land of $2 million in the first quarter of fiscal 2016. CMSB’s net income or loss is attributable to Cabot Corporation and to the noncontrolling interest in the joint venture. The Company has recorded a net pre-tax gain of approximately $1 million and a net pre-tax charge of less than $1 million in the six months ended March 31, 2016 and 2015, respectively, and a net pre-tax charge of less than $1 million in both of the three months ended March 31, 2016 and 2015. The portion of the charges that are allocable to the noncontrolling interest in CMSB (49.9%) are recorded within Net income attributable to noncontrolling interests, net of tax, in the Consolidated Statements of Operations. The majority of actions related to closure of the plant were completed in fiscal 2014. Cumulative net cash received related to this plan is $3 million, comprised of $7 million received from the sale of land, partially offset by approximately $2 million paid for severance, $1 million paid for site demolition, clearing and environmental remediation, and $1 million paid for other closure related charges. CMSB expects to make cash payments of less than $1 million during the remainder of fiscal 2016 mainly for site demolition, clearing and environmental remediation costs. As of March 31, 2016, Cabot has less than $1 million of accrued restructuring costs in the Consolidated Balance Sheets related to this closure, which is mainly for accrued environmental charges. Other Activities The Company has recorded other pre-tax restructuring charges of approximately $1 million and $4 million during the first six months of fiscal 2016 and 2015, respectively, and a benefit of less than $1 million and charges of $3 million during the first three months of fiscal 2016 and 2015, respectively. Fiscal 2016 activity is comprised mainly of accelerated depreciation and severance adjustments whereas fiscal 2015 charges are comprised of severance costs. Future charges related to these actions are anticipated to be less than $1 million in the remainder of fiscal 2016 and thereafter. As of March 31, 2016, Cabot has approximately $1 million of accrued severance and other closure related costs in the Consolidated Balance Sheets related to these activities which are expected to be paid through early fiscal 2017. Previous Actions and Sites Pending Sale Beginning in fiscal 2009, the Company entered into several different restructuring plans which have been substantially completed, pending the sale of former manufacturing site in Thane, India. The Company has incurred total cumulative pre-tax charges of approximately $158 million related to these plans through March 31, 2016, comprised of $67 million for severance charges, $66 million for accelerated depreciation and asset impairments, $10 million for environmental, demolition and site clearing costs, and $23 million of other closure related charges, partially offset by gains on asset sales of $8 million. In the three months ended March 31, 2016 the Company recorded a net benefit of $7 million driven by the gain on the sale of land rights in Hong Kong. Pre-tax restructuring charges were less than $1 million in the three months ended March 31, 2015 related to these actions. The net pre-tax restructuring gain related to these plans was $7 million for the six months ended March 31, 2016 whereas charges of $2 million were recorded during the six months ended March 31, 2015. Since fiscal 2009, Cabot has made net cash payments of $78 million related to these plans comprised of $63 million for severance payments, $10 million for environmental, demolition and site clearing costs, and $24 million for other closure related charges, partially offset by cash proceeds from asset sales of $19 million. The Company expects to pay approximately $2 million for environmental and other closure related costs in the remainder of fiscal 2016 and thereafter. As of March 31, 2016, Cabot has $2 million of accrued environmental and other closure related costs in the Consolidated Balance Sheets related to these activities.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 + Details
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