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    Interesting comment of yours a while back re Gip and consumers being able to get a better deal for tantalum.

    I notice in Cabots 4th Qtr Operating Report in regard to supermetals that they are going to market prices for intermediate products to be more competitive as they have lost market share as of late.

    I wonder where the best place to cut costs might be?

    Cabot Announces Fourth Quarter Operating Results
    EPS $0.23 versus $0.40 and FISCAL YEAR EPS $1.82 versus $1.14
    BOSTON, MA (October 27, 2004) - Cabot Corporation (CBT/NYSE) today announced earnings of $15 million ($0.23 per diluted common share) for the fourth quarter ended September 30, 2004, compared with $28 million ($0.40 per diluted common share) for the year ago quarter. These results include $11 million ($0.16 per diluted common share) of after tax charges from certain items and discontinued operations in the fourth quarter ended September 30, 2004, compared with $2 million ($0.02 per diluted common share) of after tax income from certain items and discontinued operations for the same quarter of fiscal year 2003. For the fiscal year ended September 30, 2004, the Company earned $124 million ($1.82 per diluted common share) compared with $80 million ($1.14 per diluted common share) for the prior year. The full year results included $14 million ($0.20 per diluted common share) of after tax charges for certain items and discontinued operations, compared with $47 million ($0.67 per diluted common share) of after tax charges from certain items and discontinued operations for the prior year. Included in the fourth quarter and fiscal year 2004 certain items is a previously announced impairment charge of approximately $12 million related to the Company's investment in Sons of Gwalia. Additionally, the Company recorded a tax charge of $4 million due to the uncertain realization of a tax asset. This asset and the related impairment charge of $21 million for Sons of Gwalia were previously recorded in the third quarter of fiscal year 2003. With the charge taken in the current quarter, the Company has now completely written off its investment in Sons of Gwalia. Further details concerning charges from certain items and discontinued operations, which are not included in the business segment results discussed later in this release, are included in Exhibit I to this press release.

    Kennett F. Burnes, Cabot's Chairman and CEO, said, "We are pleased to report strong earnings for the Company for fiscal year 2004 across all businesses. These results were driven by the success of numerous initiatives in both our core and developing businesses as well as continued cost improvements and an improved economic environment."

    Burnes continued, "The Chemical Business rebounded from a difficult fiscal year 2003. Improved market conditions, new contracts with existing customers and cost improvements led to improved earnings in carbon black and fumed metal oxides. The Supermetals Business was successful in recovering from the expiration of the intermediate product portion of a customer contract at the end of fiscal year 2003 and also succeeded in extending contracts with two large customers. The Specialty Fluids Business performed very well due to an increase in the number and size of jobs completed during the year. We also achieved our targeted cost savings across the Company resulting from our "excellence" program which we began implementing last year to improve our overall operating performance."

    Fourth Quarter Comparisons

    Chemical Business - For the quarter ended September 30, 2004, the Chemical Business segment had 9% volume growth and reported a 55% increase in year over year segment profit, from $11 million in the fourth quarter of fiscal year 2003 to $17 million in the fourth quarter of fiscal year 2004. Within the Chemical Business segment, carbon black's profit was equal to the fourth quarter last year. Volumes increased by 9% and costs were slightly down. However, this was offset by the earnings impact of inventory changes between periods. While the fiscal year 2003 quarterly results included costs related to decreases in inventory levels, a greater inventory decline and the related earnings impact occurred in the current quarter. Sequentially, profit declined by $28 million due primarily to a combination of seasonal business factors, including lower volumes and the cost of planned maintenance shutdowns. The decline was also caused by reduced margins resulting from increased raw material prices as well as the impact of changes in inventory, as noted above.

    In the fourth quarter, profits in Cabot's fumed metal oxides business were $6 million higher than the same quarter last year due mainly to volume growth and improved product mix. Sequentially, although volumes remained strong, profits were $2 million lower primarily due to planned maintenance costs and the timing of other operating costs.

    During the fourth quarter, the inkjet colorants business continued to deliver strong growth in the OEM and after-market segments. Sales volumes for this business were 56% higher in the fourth quarter of fiscal 2004 than in the same quarter last year, and 10% higher sequentially. Profits improved significantly compared to the fourth quarter of fiscal 2003.

    Supermetals Business - In the fourth quarter of fiscal 2004, the Cabot Supermetals Business earned $22 million of segment profit, which represents a $5 million decrease in segment profit compared to the same period of 2003. This decrease reflects lower sales of intermediate products offset in part by higher volumes in other product areas. In addition, the business sold a greater proportion of its capacitor products at market prices rather than at fixed contract prices during the quarter. Both operating and administrative costs improved compared with the same period last year. Sequentially, segment profit was $4 million higher than the third quarter of 2004 mainly due to higher volumes and lower operating costs offset partly by a shift in mix toward greater market price sales.

    Specialty Fluids Business - In the fourth quarter of fiscal 2004, Cabot Specialty Fluids completed nine jobs, most of which were begun in the third quarter. Segment profit was $4 million more than in the fourth quarter of 2003 due to the increased activity. Sequentially, segment profit was $5 million more than the prior quarter, reflecting the completion of a greater number of jobs in the current quarter.

    Fiscal Year Comparisons

    For the fiscal year ended September 30, 2004, Cabot reported revenues of $1.934 billion compared to $1.795 billion for 2003. The year over year revenue increase was primarily due to higher volumes in the Chemical Business and favorable translation of foreign revenues, offset partially by lower sales of intermediate products in Supermetals as well as unfavorable mix in Chemicals and greater non-contracted volumes in the Supermetals Businesses.

    In fiscal 2004, Cabot earned $124 million of net income as compared to $80 million in 2003. The Chemical Business reported a $44 million increase in segment profit, driven primarily by higher volumes and lower operating costs offset partly by regional and product mix which resulted in lower average pricing. In addition, while fiscal year 2003 results benefited from the cost impact of increased inventories during the year, this benefit reversed in fiscal year 2004 as inventories declined. The Supermetals Business profit decreased by $31 million due to the absence of intermediate product sales partially offset by higher sales of other products and lower operating costs. The Specialty Fluids Business reported segment profit of $6 million, compared to a loss of $2 million in the prior year, due to an increase in both the number and size of wells using cesium formate during the year.

    Outlook

    With respect to the future, Burnes said, "We view these results as another solid step in our efforts to improve our operating performance and we are encouraged by the outlook for fiscal year 2005. In carbon black, we anticipate continued strong volumes and we are working to manage our margins in the face of high raw material costs. We are also executing our strategy of geographic migration as many of our customers move their manufacturing to emerging, lower cost regions. In fumed metal oxides, we expect continued strong demand, with our plants running at near capacity levels, and are pursuing our market development and capacity expansion plans in China. In Supermetals we are working to improve our cost competitiveness as sales transition from fixed contract prices to market based prices. Concerning our new businesses, in inkjet we continue to be very excited about the strength of our chemically treated pigment technology and its ability to enhance the quality and capability of inkjet printing. This technology will require our continued investment in research and development as well as manufacturing capability. In Specialty Fluids we are focusing our efforts on being the drilling fluid of choice in North Sea high pressure, high temperature wells and expanding our presence in other geographic areas, including the Gulf of Mexico and Saudi Arabia. We continue to invest cash and intellectual resources to develop our aerogels business and new business opportunities applying the SMP technology platforms and core competencies. We are monitoring these activities closely and are pleased with our continued progress in developing a robust new product pipeline. Given all of this, I am very optimistic about the long-term prospects for the Company
 
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