Cabot Corporation Announces Cost Reduction Initiatives
Cabot Corporation announced it is undertaking a number of cost reduction initiatives that could result in a charge to earnings of approximately $15 million pre-tax, approximately $8 million of which is expected to be recorded in the fourth quarter of fiscal 2006 and the remainder in fiscal 2007. Most of the charge will be for one-time employment termination benefits. The Company estimates that it will incur a total cash outlay related to these initiatives of approximately $15 million, with a cash payback period of roughly one and one half years. The foregoing is the Company's best estimate of the charge to be recorded, and is subject to final determination of the accounting impact of these actions.
These initiatives, some of which are subject to certain local procedures, include streamlining the Company's sales, manufacturing, technical service and certain functional groups by eliminating approximately 130 positions. Subject to completion of the necessary local legal requirements, implementation will begin immediately and conclude during the course of fiscal year 2007. The result of these initiatives shall be the consolidation of certain activities and a more streamlined, simpler organization, which shall assist Cabot in managing costs and create opportunities for future efficiencies.
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