x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Large Accelerated Filer þ | Accelerated Filer o |
Non-Accelerated Filer o | Smaller Reporting Company o |
(Do not check if a smaller reporting company.) |
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
|
||||||||||||||||
STATEMENTS OF CONSOLIDATED INCOME
|
||||||||||||||||
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions except per share data - unaudited)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
SALES
|
$ | 1,557 | $ | 1,423 | $ | 2,989 | $ | 2,748 | ||||||||
COSTS AND EXPENSES
|
||||||||||||||||
Cost of sales
|
1,135 | 992 | 2,174 | 1,899 | ||||||||||||
Selling, general and administrative expense
|
292 | 293 | 577 | 577 | ||||||||||||
Research and development expense
|
22 | 20 | 43 | 40 | ||||||||||||
1,449 | 1,305 | 2,794 | 2,516 | |||||||||||||
EQUITY AND OTHER INCOME
|
14 | 14 | 26 | 27 | ||||||||||||
OPERATING INCOME
|
122 | 132 | 221 | 259 | ||||||||||||
Net interest and other financing expense
(a)
|
(39 | ) | (103 | ) | (66 | ) | (145 | ) | ||||||||
Net gain (loss) on acquisitions and divestitures
|
- | (5 | ) | 21 | (5 | ) | ||||||||||
Other income
|
- | - | - | 1 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS
|
||||||||||||||||
BEFORE INCOME TAXES
|
83 | 24 | 176 | 110 | ||||||||||||
Income tax benefit (expense) - Note K
|
13 | (18 | ) | (18 | ) | (40 | ) | |||||||||
INCOME FROM CONTINUING OPERATIONS
|
96 | 6 | 158 | 70 | ||||||||||||
Income from discontinued operations (net of income taxes) - Note E (b) | 257 | 16 | 282 | 38 | ||||||||||||
NET INCOME
|
$ | 353 | $ | 22 | $ | 440 | $ | 108 | ||||||||
BASIC EARNINGS PER SHARE
- Note N
|
||||||||||||||||
Income from continuing operations
|
$ | 1.22 | $ | .07 | $ | 2.01 | $ | .90 | ||||||||
Income from discontinued operations
|
3.25 | .21 | 3.57 | .50 | ||||||||||||
Net income
|
$ | 4.47 | $ | .28 | $ | 5.58 | $ | 1.40 | ||||||||
DILUTED EARNINGS PER SHARE
- Note N
|
||||||||||||||||
Income from continuing operations
|
$ | 1.20 | $ | .07 | $ | 1.97 | $ | .88 | ||||||||
Income from discontinued operations
|
3.19 | .20 | 3.50 | .49 | ||||||||||||
Net income
|
$ | 4.39 | $ | .27 | $ | 5.47 | $ | 1.37 | ||||||||
DIVIDENDS PAID PER COMMON SHARE
|
$ | .15 | $ | .075 | $ | .30 | $ | .15 | ||||||||
(a)
|
The three and six months ended March 31, 2011 and 2010 include a $12 million and $66 million charge, respectively, related to the significant extinguishment of debt completed during these periods.
|
(b)
|
Includes income of $23 million and $46 million for the three and six months ended March 31, 2011, respectively, and $14 million and $25 million for the three and six months ended March 31, 2010, respectively, related to the direct results of the Distribution business. Due to its sale, the direct results of this business have been presented as discontinued operations for each period presented in accordance with U.S. GAAP. In addition, the three and six months ended March 31, 2011 include an after-tax gain of $231 million related to Ashland's sale of its Distribution business.
|
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
March 31
|
September 30
|
|||||||
(In millions - unaudited)
|
2011
|
2010
|
||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 1,129 | $ | 417 | ||||
Accounts receivable
(a)
|
1,142 | 1,115 | ||||||
Inventories - Note H
|
534 | 447 | ||||||
Deferred income taxes
|
112 | 112 | ||||||
Other assets
|
57 | 49 | ||||||
Held for sale - Note D
(b)
|
- | 693 | ||||||
2,974 | 2,833 | |||||||
NONCURRENT ASSETS
|
||||||||
Auction rate securities - Note G
|
22 | 22 | ||||||
Goodwill - Note I
|
2,142 | 2,148 | ||||||
Intangibles - Note I
|
1,088 | 1,111 | ||||||
Asbestos insurance receivable (noncurrent portion) - Note M
|
440 | 459 | ||||||
Deferred income taxes
|
336 | 336 | ||||||
Other assets
|
640 | 514 | ||||||
Held for sale - Note D
(b)
|
2 | 270 | ||||||
4,670 | 4,860 | |||||||
PROPERTY, PLANT AND EQUIPMENT
|
||||||||
Cost
|
3,079 | 3,096 | ||||||
Accumulated depreciation and amortization
|
(1,311 | ) | (1,258 | ) | ||||
1,768 | 1,838 | |||||||
TOTAL ASSETS
|
$ | 9,412 | $ | 9,531 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Short-term debt - Note J
|
$ | 42 | $ | 71 | ||||
Current portion of long-term debt - Note J
|
19 | 45 | ||||||
Trade and other payables
|
708 | 727 | ||||||
Accrued expenses and other liabilities
|
541 | 523 | ||||||
Held for sale - Note D
(b)
|
- | 321 | ||||||
1,310 | 1,687 | |||||||
NONCURRENT LIABILITIES
|
||||||||
Long-term debt (noncurrent portion) - Note J
|
846 | 1,108 | ||||||
Employee benefit obligations - Note L
|
1,191 | 1,372 | ||||||
Asbestos litigation reserve (noncurrent portion) - Note M
|
813 | 841 | ||||||
Deferred income taxes
|
173 | 145 | ||||||
Other liabilities
|
582 | 575 | ||||||
3,605 | 4,041 | |||||||
STOCKHOLDERS’ EQUITY
|
4,497 | 3,803 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 9,412 | $ | 9,531 | ||||
(a)
|
Accounts receivable includes an allowance for doubtful accounts of $20 million and $21 million at March 31, 2011 and September 30, 2010, respectively.
|
(b)
|
September 30, 2010 primarily relates to assets and liabilities of the Distribution business that qualified for held for sale classification in accordance with U.S. GAAP.
|
|
|||||||||||||||||||||
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
|
|||||||||||||||||||||
STATEMENTS OF CONSOLIDATED STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||||
Accumulated
|
|||||||||||||||||||||
other
|
|||||||||||||||||||||
Common
|
Paid-in
|
Retained
|
comprehensive
|
||||||||||||||||||
(In millions - unaudited)
|
stock
|
capital
|
earnings
|
loss
|
(a)
|
Total
|
|||||||||||||||
BALANCE AT SEPTEMBER 30, 2010
|
$ | 1 | $ | 665 | $ | 3,482 | $ | (345 | ) | $ | 3,803 | ||||||||||
Total comprehensive income
(b)
|
440 | 254 | 694 | ||||||||||||||||||
Dividend on common stock, $.30 per share
|
(24 | ) | (24 | ) | |||||||||||||||||
Common shares issued under stock
|
|||||||||||||||||||||
incentive and other plans
(c)
|
24 | 24 | |||||||||||||||||||
BALANCE AT MARCH 31, 2011
|
$ | 1 | $ | 689 | $ | 3,898 | $ | (91 | ) | $ | 4,497 | ||||||||||
(a)
|
At March 31, 2011, the after-tax accumulated other comprehensive loss of $91 million was comprised of pension and postretirement obligations of $480 million and net unrealized translation gains of $389 million.
|
(b)
|
Reconciliations of net income to total comprehensive income (loss) follow.
|
Three months ended | Six months ended | |||||||||||||||
March 31 | March 31 | |||||||||||||||
(In millions)
|
2011 | 2010 |
2011
|
2010
|
||||||||||||
Net income
|
$ | 353 | $ | 22 | $ | 440 | $ | 108 | ||||||||
Pension and postretirement obligation adjustments, net of tax
|
140 | 10 | 140 | 10 | ||||||||||||
Unrealized translation gain (loss), net of tax
|
132 | (104 | ) | 114 | (123 | ) | ||||||||||
Total comprehensive income (loss) | $ | 625 | $ | (72 | ) | $ | 694 | $ | (5 | ) | ||||||
(c)
|
Common shares issued were 327,905 for the six months ended March 31, 2011.
|
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
|
||||||||
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
|
||||||||
Six months ended
|
||||||||
March 31
|
||||||||
(In millions - unaudited)
|
2011
|
2010
|
||||||
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES FROM
|
||||||||
CONTINUING OPERATIONS
|
||||||||
Net income
|
$ | 440 | $ | 108 | ||||
Income from discontinued operations (net of income taxes)
|
(282 | ) | (38 | ) | ||||
Adjustments to reconcile income from continuing operations to
|
||||||||
cash flows from operating activities
|
||||||||
Depreciation and amortization
|
143 | 141 | ||||||
Debt issuance cost amortization
|
19 | 74 | ||||||
Deferred income taxes
|
(34 | ) | 54 | |||||
Equity income from affiliates
|
(7 | ) | (12 | ) | ||||
Distributions from equity affiliates
|
3 | 6 | ||||||
Gain from sale of property and equipment
|
(2 | ) | (3 | ) | ||||
Stock based compensation expense
|
9 | 7 | ||||||
Stock contributions to qualified savings plans
|
13 | 13 | ||||||
Net (gain) loss on acquisitions and divestitures
|
(21 | ) | 5 | |||||
Loss on early retirement of debt
|
- | 4 | ||||||
Gain on auction rate securities
|
- | (1 | ) | |||||
Change in operating assets and liabilities
(a)
|
(204 | ) | (110 | ) | ||||
77 | 248 | |||||||
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES FROM
|
||||||||
CONTINUING OPERATIONS
|
||||||||
Additions to property, plant and equipment
|
(52 | ) | (59 | ) | ||||
Proceeds from disposal of property, plant and equipment
|
4 | 11 | ||||||
Purchase of operations - net of cash acquired
|
(5 | ) | - | |||||
Proceeds from sale of operations or equity investments
|
40 | 60 | ||||||
Proceeds from sales and maturities of available-for-sale securities
|
- | 85 | ||||||
(13 | ) | 97 | ||||||
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES FROM
|
||||||||
CONTINUING OPERATIONS
|
||||||||
Proceeds from issuance of long-term debt
|
11 | 300 | ||||||
Repayment of long-term debt
|
(299 | ) | (773 | ) | ||||
(Repayment of)/proceeds from short-term debt
|
(29 | ) | 317 | |||||
Debt issuance costs
|
- | (12 | ) | |||||
Cash dividends paid
|
(24 | ) | (12 | ) | ||||
Proceeds from exercise of stock options
|
2 | 4 | ||||||
Excess tax benefits related to share-based payments
|
1 | 1 | ||||||
(338 | ) | (175 | ) | |||||
CASH (USED) PROVIDED BY CONTINUING OPERATIONS
|
(274 | ) | 170 | |||||
Cash (used) provided by discontinued operations
|
||||||||
Operating cash flows
|
5 | (17 | ) | |||||
Investing cash flows
(b)
|
979 | (4 | ) | |||||
Effect of currency exchange rate changes on cash and cash equivalents
|
2 | (2 | ) | |||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
712 | 147 | ||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
417 | 352 | ||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$ | 1,129 | $ | 499 | ||||
(a)
|
Excludes changes resulting from operations acquired or sold.
|
(b)
|
Includes proceeds from the divestiture of the Distribution business on March 31, 2011.
|
September 30
|
||||
(In millions - unaudited)
|
2010
|
|||
Accounts receivable
|
$ | 494 | ||
Inventories
|
197 | |||
Other current assets
|
2 | |||
Current assets held for sale
|
$ | 693 | ||
Property, plant and equipment, net
|
$ | 179 | ||
Goodwill and intangible assets
|
82 | |||
Noncurrent assets held for sale
|
$ | 261 | ||
Trade payables
|
$ | 315 | ||
Accrued expenses and other liabilities
|
6 | |||
Current liabilities held for sale
|
$ | 321 |
Assets
|
||||
(In millions)
|
(liabilities)
|
|||
Cash
|
$ | 9 | ||
Accounts receivable
|
52 | |||
Inventories
|
21 | |||
Property, plant and equipment
|
34 | |||
Goodwill
|
52 | |||
Trade and other payables
|
(24 | ) | ||
Other noncurrent assets (liabilities) - net
|
11 | |||
$ | 155 |
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Income from discontinued operations (net of tax)
|
||||||||||||||||
Distribution
(a)
|
$ | 23 | $ | 14 | $ | 46 | $ | 25 | ||||||||
Asbestos-related litigation reserves and receivables
|
- | - | 1 | 9 | ||||||||||||
Gain on disposal of discontinued operations (net of tax)
|
||||||||||||||||
Distribution
(b)
|
231 | - | 231 | - | ||||||||||||
APAC
|
3 | - | 4 | 2 | ||||||||||||
Electronic Chemicals
|
- | 2 | - | 2 | ||||||||||||
Total income from discontinued operations (net of tax)
|
$ | 257 | $ | 16 | $ | 282 | $ | 38 | ||||||||
(a)
|
For the three and six month periods ended March 31, the pretax income reported for Distribution was $28 million and $54 million for 2011 and $19 million and $38 million for 2010, respectively.
|
(b)
|
For the three and six months ended March 31, 2011, the pretax gain reported for Distribution was $314 million.
|
(In millions)
|
Severance
|
|||
Balance as of September 30, 2009
|
$ | 38 | ||
Restructuring reserve
|
3 | |||
Utilization (cash paid or otherwise settled)
|
(23 | ) | ||
Balance at March 31, 2010
|
$ | 18 | ||
Balance as of September 30, 2010
|
$ | 26 | ||
Utilization (cash paid or otherwise settled)
|
(8 | ) | ||
Balance at March 31, 2011
|
$ | 18 |
Quoted prices
|
||||||||||||||||||||
in active
|
Significant
|
|||||||||||||||||||
markets for
|
other
|
Significant
|
||||||||||||||||||
Total
|
identical
|
observable
|
unobservable
|
|||||||||||||||||
Carrying
|
fair
|
assets
|
inputs
|
inputs
|
||||||||||||||||
(In millions)
|
value
|
value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Cash equivalents
|
$ | 1,129 | $ | 1,129 | $ | 1,129 | $ | - | $ | - | ||||||||||
Auction rate securities
|
22 | 22 | - | - | 22 | |||||||||||||||
Deferred compensation investments
(a)
|
176 | 176 | 62 | 114 | - | |||||||||||||||
Investments of captive insurance company
(a)
|
2 | 2 | 2 | - | - | |||||||||||||||
Total assets at fair value
|
$ | 1,329 | $ | 1,329 | $ | 1,193 | $ | 114 | $ | 22 | ||||||||||
Quoted prices
|
||||||||||||||||||||
in active
|
Significant
|
|||||||||||||||||||
markets for
|
other
|
Significant
|
||||||||||||||||||
Total
|
identical
|
observable
|
unobservable
|
|||||||||||||||||
Carrying
|
fair
|
assets
|
inputs
|
inputs
|
||||||||||||||||
(In millions)
|
value
|
value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Cash equivalents
|
$ | 417 | $ | 417 | $ | 417 | $ | - | $ | - | ||||||||||
Auction rate securities
|
22 | 22 | - | - | 22 | |||||||||||||||
Deferred compensation investments
(a)
|
169 | 169 | 62 | 107 | - | |||||||||||||||
Investments of captive insurance company
(a)
|
2 | 2 | 2 | - | - | |||||||||||||||
Total assets at fair value
|
$ | 610 | $ | 610 | $ | 481 | $ | 107 | $ | 22 | ||||||||||
(a) Included in other noncurrent assets in the Condensed Consolidated Balance Sheet. |
(In millions)
|
Level 3
|
|||
Balance as of October 1, 2010
|
$ | 22 | ||
Sales of auction rate securities
|
- | |||
Balance as of March 31, 2011
|
$ | 22 | ||
Balance as of October 1, 2009
|
$ | 170 | ||
Sales of auction rate securities
|
(85 | ) | ||
Realized gain recognized in the Consolidated Statement of Income
|
1 | |||
Balance as of March 31, 2010
|
$ | 86 |
March 31
|
September 30
|
|||||||
(In millions)
|
2011
|
2010
|
||||||
Finished products
|
$ | 395 | $ | 326 | ||||
Raw materials, supplies and work in process
|
195 | 175 | ||||||
LIFO carrying values
|
(56 | ) | (54 | ) | ||||
$ | 534 | $ | 447 |
Functional
|
Water
|
Performance
|
Consumer
|
||||||||||||||||||
(In millions)
|
Ingredients
|
Technologies
|
Materials
|
(a)
|
Markets
|
Total
|
|||||||||||||||
Balance at September 30, 2010
|
$ | 1,080 | $ | 620 | $ | 333 | $ | 115 | $ | 2,148 | |||||||||||
Divestitures
|
- | - | (52 | ) | - | (52 | ) | ||||||||||||||
Currency translation adjustment
|
18 | 22 | 6 | - | 46 | ||||||||||||||||
Balance at March 31, 2011
|
$ | 1,098 | $ | 642 | $ | 287 | $ | 115 | $ | 2,142 | |||||||||||
(a)
|
Within the Performance Materials reportable segment as of September 30, 2010, because further discrete financial information is provided and management regularly reviews this information, this reportable segment was further broken down into the Castings Solutions and Composite Polymers/Specialty Polymers and Adhesives reporting units. Goodwill consisted of $52 million and $281 million, respectively, for the Castings Solutions and Composite Polymers/Specialty Polymers and Adhesives reporting units as of September 30, 2010. The reduction of $52 million of goodwill is related to the contribution of Ashland’s Castings Solutions business to the expanded global joint venture with
Süd-Chemie
.
|
March 31, 2011
|
||||||||||||
Gross
|
Net
|
|||||||||||
carrying
|
Accumulated
|
carrying
|
||||||||||
(In millions)
|
amount
|
amortization
|
amount
|
|||||||||
Trademarks and trade names
|
$ | 353 | $ | (29 | ) | $ | 324 | |||||
Intellectual property
|
331 | (73 | ) | 258 | ||||||||
Customer relationships
|
595 | (96 | ) | 499 | ||||||||
Other intangibles
|
35 | (28 | ) | 7 | ||||||||
Total intangible assets
|
$ | 1,314 | $ | (226 | ) | $ | 1,088 | |||||
September 30, 2010
|
||||||||||||
Gross
|
Net
|
|||||||||||
carrying
|
Accumulated
|
carrying
|
||||||||||
(In millions)
|
amount
|
amortization
|
amount
|
|||||||||
Trademarks and trade names
|
$ | 353 | $ | (27 | ) | $ | 326 | |||||
Intellectual property
|
331 | (63 | ) | 268 | ||||||||
Customer relationships
|
583 | (78 | ) | 505 | ||||||||
Other intangibles
|
39 | (27 | ) | 12 | ||||||||
Total intangible assets
|
$ | 1,306 | $ | (195 | ) | $ | 1,111 |
March 31
|
September 30
|
|||||||
(In millions)
|
2011
|
2010
|
||||||
Term Loan A, due 2014
(a)
|
$ | - | $ | 293 | ||||
6.60% notes, due 2027
|
12 | 12 | ||||||
Accounts receivable securitization
|
- | 40 | ||||||
9.125% notes, due 2017
|
631 | 630 | ||||||
Medium-term notes, due 2013-2019, interest at a weighted-
|
||||||||
average rate of 8.4% at March 31, 2011 (7.7% to 9.4%)
|
21 | 21 | ||||||
8.80% debentures, due 2012
|
20 | 20 | ||||||
6.50% junior subordinated notes, due 2029
|
127 | 126 | ||||||
Hercules Tianpu - term notes, due through 2011
|
7 | 14 | ||||||
Hercules Nanjing - term notes, due 2013
|
46 | 34 | ||||||
Other international loans, interest at a weighted-average
|
||||||||
rate of 5.7% at March 31, 2011 (1.6% to 11.3%)
|
41 | 30 | ||||||
Other
|
2 | 4 | ||||||
Total debt
|
907 | 1,224 | ||||||
Short-term debt
|
(42 | ) | (71 | ) | ||||
Current portion of long-term debt
|
(19 | ) | (45 | ) | ||||
Long-term debt (less current portion)
|
$ | 846 | $ | 1,108 | ||||
(a)
|
Senior credit facilities.
|
(In millions)
|
||||
Balance at October 1, 2010
|
$ | 116 | ||
Increases related to positions taken on items from prior years
|
9 | |||
Decreases related to positions taken on items from prior years
|
(2 | ) | ||
Increases related to positions taken in the current year
|
13 | |||
Lapse of statute of limitations
|
(7 | ) | ||
Balance at March 31, 2011
|
$ | 129 |
Other postretirement
|
||||||||||||||||
Pension benefits
|
benefits
|
|||||||||||||||
(In millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Three months ended March 31
|
||||||||||||||||
Service cost
|
$ | 12 | $ | 13 | $ | 1 | $ | 2 | ||||||||
Interest cost
|
48 | 50 | 4 | 4 | ||||||||||||
Curtailment
|
- | - | (4 | ) | - | |||||||||||
Expected return on plan assets
|
(56 | ) | (53 | ) | - | - | ||||||||||
Amortization of prior service credit
|
- | - | (1 | ) | (1 | ) | ||||||||||
Amortization of net actuarial loss
|
19 | 12 | - | - | ||||||||||||
$ | 23 | $ | 22 | $ | - | $ | 5 | |||||||||
Six months ended March 31
|
||||||||||||||||
Service cost
|
$ | 25 | $ | 26 | $ | 2 | $ | 3 | ||||||||
Interest cost
|
98 | 101 | 8 | 9 | ||||||||||||
Curtailment
|
- | - | (4 | ) | - | |||||||||||
Expected return on plan assets
|
(113 | ) | (107 | ) | - | - | ||||||||||
Amortization of prior service credit
|
(1 | ) | - | (2 | ) | (2 | ) | |||||||||
Amortization of net actuarial loss
|
38 | 25 | - | - | ||||||||||||
$ | 47 | $ | 45 | $ | 4 | $ | 10 |
Six months ended
|
||||||||||||||||||||
March 31
|
Years ended September 30
|
|||||||||||||||||||
(In thousands)
|
2011
|
2010
|
2010
|
2009
|
2008
|
|||||||||||||||
Open claims - beginning of period
|
83
|
100
|
100
|
115
|
134
|
|||||||||||||||
New claims filed
|
1
|
1
|
2
|
2
|
4
|
|||||||||||||||
Claims settled
|
(1
|
) |
(1
|
) |
(1
|
) |
(1
|
) |
(2
|
) | ||||||||||
Claims dismissed
|
(7
|
) |
(11
|
) |
(18
|
) |
(16
|
) |
(21
|
) | ||||||||||
Open claims - end of period
|
76
|
89
|
83
|
100
|
115
|
Six months ended
|
||||||||||||||||||||
March 31
|
Years ended September 30
|
|||||||||||||||||||
(In millions)
|
2011
|
2010
|
2010
|
2009
|
2008
|
|||||||||||||||
Asbestos reserve - beginning of period
|
$ | 537 | $ | 543 | $ | 543 | $ | 572 | $ | 610 | ||||||||||
Reserve adjustment
|
- | - | 28 | 5 | 2 | |||||||||||||||
Amounts paid
|
(20 | ) | (18 | ) | (34 | ) | (34 | ) | (40 | ) | ||||||||||
Asbestos reserve - end of period
|
$ | 517 | $ | 525 | $ | 537 | $ | 543 | $ | 572 |
Six months ended
|
Years ended
|
|||||||||||||||
March 31
|
September 30
|
|||||||||||||||
(In thousands)
|
2011
|
2010
|
2010
|
2009
(a)
|
||||||||||||
Open claims - beginning of period
|
20
|
21
|
21
|
27
|
||||||||||||
New claims filed
|
2
|
-
|
-
|
1
|
||||||||||||
Claims dismissed/settled
|
-
|
(1
|
) |
(1
|
) |
(7
|
) | |||||||||
Open claims - end of period
|
22
|
20
|
20
|
21
|
||||||||||||
Six months ended
|
Years ended
|
|||||||||||||||
March 31
|
September 30
|
|||||||||||||||
(In millions)
|
2011
|
2010
|
2010
|
2009
(a)
|
||||||||||||
Asbestos reserve - beginning of period
|
$ | 375 | $ | 484 | $ | 484 | $ | 233 | ||||||||
Reserve adjustments
(b)
|
- | (35 | ) | (93 | ) | 261 | ||||||||||
Amounts paid
|
(8 | ) | (4 | ) | (16 | ) | (10 | ) | ||||||||
Asbestos reserve - end of period
|
$ | 367 | $ | 445 | $ | 375 | $ | 484 | ||||||||
(a)
|
Beginning of period represents acquisition date of November 13, 2008.
|
(b)
|
Includes purchase accounting adjustments recorded during 2010 and 2009 as part of purchase price allocations for the Hercules acquisition.
|
Six months ended
|
||||||||
March 31
|
||||||||
(In millions)
|
2011
|
2010
|
||||||
Reserve - beginning of period
|
$ | 207 | $ | 221 | ||||
Inherited Hercules obligations
|
- | 6 | ||||||
Disbursements, net of cost recoveries
|
(17 | ) | (18 | ) | ||||
Expense and accretion
|
9 | 9 | ||||||
Foreign currency translation
|
- | (1 | ) | |||||
Reserve - end of period
|
$ | 199 | $ | 217 | ||||
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Environmental expense
|
$ | 4 | $ | 5 | $ | 7 | $ | 7 | ||||||||
Accretion
|
1 | 1 | 2 | 2 | ||||||||||||
Legal expense
|
1 | - | 2 | 1 | ||||||||||||
Total expense
|
6 | 6 | 11 | 10 | ||||||||||||
Insurance receivable
|
(1 | ) | (3 | ) | (1 | ) | (4 | ) | ||||||||
Total expense, net of receivable activity
|
$ | 5 | $ | 3 | $ | 10 | $ | 6 | ||||||||
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions except per share data)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Numerator
|
||||||||||||||||
Numerator for basic and diluted EPS – Income
|
||||||||||||||||
from continuing operations
|
$ | 96 | $ | 6 | $ | 158 | $ | 70 | ||||||||
Denominator
|
||||||||||||||||
Denominator for basic EPS – Weighted-average
|
||||||||||||||||
common shares outstanding
|
79 | 78 | 79 | 77 | ||||||||||||
Share based awards convertible to common shares
|
1 | 2 | 1 | 2 | ||||||||||||
Denominator for diluted EPS – Adjusted weighted-
|
||||||||||||||||
average shares and assumed conversions
|
80 | 80 | 80 | 79 | ||||||||||||
EPS from continuing operations
|
||||||||||||||||
Basic
|
$ | 1.22 | $ | .07 | $ | 2.01 | $ | .90 | ||||||||
Diluted
|
$ | 1.20 | $ | .07 | $ | 1.97 | $ | .88 |
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions - unaudited)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
SALES
|
||||||||||||||||
Functional Ingredients
|
$ | 270 | $ | 240 | $ | 486 | $ | 450 | ||||||||
Water Technologies
|
471 | 449 | 921 | 892 | ||||||||||||
Performance Materials
(a)
|
325 | 304 | 650 | 576 | ||||||||||||
Consumer Markets
|
491 | 430 | 932 | 830 | ||||||||||||
$ | 1,557 | $ | 1,423 | $ | 2,989 | $ | 2,748 | |||||||||
OPERATING INCOME (LOSS)
|
||||||||||||||||
Functional Ingredients
|
$ | 41 | $ | 34 | $ | 59 | $ | 61 | ||||||||
Water Technologies
|
27 | 31 | 50 | 70 | ||||||||||||
Performance Materials
|
3 | 6 | 9 | 14 | ||||||||||||
Consumer Markets
|
62 | 69 | 127 | 136 | ||||||||||||
Unallocated and other
|
(11 | ) | (8 | ) | (24 | ) | (22 | ) | ||||||||
$ | 122 | $ | 132 | $ | 221 | $ | 259 | |||||||||
(a)
|
The six months ended March 31, 2011
includes
only two months of sales related to the Castings Solutions business, as Ashland contributed this business to its new global joint venture with Süd-Chemie on November 30, 2010.
|
Three months ended | Six months ended | ||||||||||
March 31 | March 31 | ||||||||||
Sales by Geography
|
2011 | 2010 |
2011
|
2010
|
|||||||
North America
|
56 | % | 56 | % |
55
|
% |
55
|
% | |||
Europe
|
26 | % | 26 | % |
25
|
% |
26
|
% | |||
Asia Pacific
|
12 | % | 12 | % |
13
|
% |
13
|
% | |||
Latin America & other
|
6 | % | 6 | % |
7
|
% |
6
|
% | |||
100 | % | 100 | % |
100
|
% |
100
|
% | ||||
Three months ended
|
Six months ended | ||||||||||
March 31
|
March 31 | ||||||||||
Sales by Business Segment
|
2011
|
2010
|
2011
|
2010
|
|||||||
Functional Ingredients
|
17
|
% |
17
|
% |
16
|
% |
16
|
% | |||
Water Technologies
|
30
|
% |
32
|
% |
31
|
% |
33
|
% | |||
Performance Materials
|
21
|
% |
21
|
% |
22
|
% |
21
|
% | |||
Consumer Markets
|
32
|
% |
30
|
% |
31
|
% |
30
|
% | |||
100
|
% |
100
|
% |
100
|
% |
100
|
% |
Three months ended
|
||||||||
March 31
|
||||||||
(In millions)
|
2011
|
2010
|
||||||
Operating income
|
$ | 122 | $ | 132 | ||||
Depreciation and amortization
|
70 | 67 | ||||||
Adjusted EBITDA
|
$ | 192 | $ | 199 |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Sales
|
$ | 1,557 | $ | 1,423 | $ | 134 | $ | 2,989 | $ | 2,748 | $ | 241 |
Three months
|
Six months
|
|||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||
Cost of sales
|
$ | 1,135 | $ | 992 | $ | 143 | $ | 2,174 | $ | 1,899 | $ | 275 | ||||||||||
Gross profit as a percent of sales | 27.1 | % | 30.3 | % | 27.3 | % | 30.9 | % |
Three months
|
Six months
|
|||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||
Selling, general and administrative expense
|
$ | 292 | $ | 293 | $ | (1 | ) | $ | 577 | $ | 577 | $ | - | |||||||||
As a percent of sales | 18.8 | % | 20.6 | % | 19.3 | % | 21.0 | % |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Research and development expense
|
$ | 22 | $ | 20 | $ | 2 | $ | 43 | $ | 40 | $ | 3 |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Equity and other income
|
||||||||||||||||||||||||
Equity income
|
$ | 4 | $ | 6 | $ | (2 | ) | $ | 7 | $ | 12 | $ | (5 | ) | ||||||||||
Other income
|
10 | 8 | 2 | 19 | 15 | 4 | ||||||||||||||||||
$ | 14 | $ | 14 | $ | - | $ | 26 | $ | 27 | $ | (1 | ) |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Net interest and other financing expense
|
||||||||||||||||||||||||
Interest expense
|
$ | (40 | ) | $ | (100 | ) | $ | 60 | $ | (69 | ) | $ | (142 | ) | $ | 73 | ||||||||
Interest income
|
3 | 3 | - | 6 | 5 | 1 | ||||||||||||||||||
Other financing costs
|
(2 | ) | (6 | ) | 4 | (3 | ) | (8 | ) | 5 | ||||||||||||||
$ | (39 | ) | $ | (103 | ) | $ | 64 | $ | (66 | ) | $ | (145 | ) | $ | 79 |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Net gain (loss) on acquisitions and divestitures
|
$ | - | $ | (5 | ) | $ | 5 | $ | 21 | $ | (5 | ) | $ | 26 |
Three months
|
Six months
|
||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
|||||||||||||||||
Income tax benefit (expense)
|
$ | 13 | $ | (18 | ) | $ | 31 | $ | (18 | ) | $ | (40 | ) | $ | 22 | ||||||||
Effective tax rate | (15.7 | )% | 75.0 | % | 10.2 | % | 36.4 | % |
Three months
|
Six months
|
|||||||||||||||||||||||
(In millions)
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Income from discontinued operations
|
||||||||||||||||||||||||
(net of tax)
|
||||||||||||||||||||||||
Distribution
|
$ | 23 | $ | 14 | $ | 9 | $ | 46 | $ | 25 | $ | 21 | ||||||||||||
Asbestos-related litigation reserves
|
||||||||||||||||||||||||
and expenses
|
- | - | - | 1 | 9 | (8 | ) | |||||||||||||||||
Gain on disposal of discontinued
|
||||||||||||||||||||||||
operations (net of tax)
|
||||||||||||||||||||||||
Distribution
|
231 | - | 231 | 231 | - | 231 | ||||||||||||||||||
APAC
|
3 | - | 3 | 4 | 2 | 2 | ||||||||||||||||||
Electronic Chemicals
|
- | 2 | (2 | ) | - | 2 | (2 | ) | ||||||||||||||||
Total income from discontinued
|
||||||||||||||||||||||||
operations (net of tax)
|
$ | 257 | $ | 16 | $ | 241 | $ | 282 | $ | 38 | $ | 244 |
Three months ended
|
Six months ended
|
|||||||||||||||
March 31
|
March 31
|
|||||||||||||||
(In millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Sales
|
||||||||||||||||
Functional Ingredients
|
$ | 270 | $ | 240 | $ | 486 | $ | 450 | ||||||||
Water Technologies
|
471 | 449 | 921 | 892 | ||||||||||||
Performance Materials
|
325 | 304 | 650 | 576 | ||||||||||||
Consumer Markets
|
491 | 430 | 932 | 830 | ||||||||||||
$ | 1,557 | $ | 1,423 | $ | 2,989 | $ | 2,748 | |||||||||
Operating income (loss)
|
||||||||||||||||
Functional Ingredients
|
$ | 41 | $ | 34 | $ | 59 | $ | 61 | ||||||||
Water Technologies
|
27 | 31 | 50 | 70 | ||||||||||||
Performance Materials
|
3 | 6 | 9 | 14 | ||||||||||||
Consumer Markets
|
62 | 69 | 127 | 136 | ||||||||||||
Unallocated and other
|
(11 | ) | (8 | ) | (24 | ) | (22 | ) | ||||||||
$ | 122 | $ | 132 | $ | 221 | $ | 259 | |||||||||
Depreciation and amortization
|
||||||||||||||||
Functional Ingredients
|
$ | 23 | $ | 24 | $ | 47 | $ | 51 | ||||||||
Water Technologies
|
20 | 21 | 41 | 46 | ||||||||||||
Performance Materials
|
17 | 12 | 35 | 24 | ||||||||||||
Consumer Markets
|
9 | 9 | 18 | 18 | ||||||||||||
Unallocated and other
|
1 | 1 | 2 | 2 | ||||||||||||
$ | 70 | $ | 67 | $ | 143 | $ | 141 |
Operating information
|
||||||||||||||||
Functional Ingredients
(a)
|
||||||||||||||||
Sales per shipping day
|
$ | 4.3 | $ | 3.8 | $ | 3.9 | $ | 3.6 | ||||||||
Metric tons sold (thousands)
|
42.8 | 41.9 | 81.3 | 79.3 | ||||||||||||
Gross profit as a percent of sales
|
33.7 | % | 34.9 | % | 32.6 | % | 34.3 | % | ||||||||
Water Technologies (a) | ||||||||||||||||
Sales per shipping day
|
$ | 7.5 | $ | 7.1 | $ | 7.4 | $ | 7.1 | ||||||||
Gross profit as a percent of sales
|
31.3 | % | 34.5 | % | 31.5 | % | 35.5 | % | ||||||||
Performance Materials (a) | ||||||||||||||||
Sales per shipping day
|
$ | 5.2 | $ | 4.8 | $ | 5.2 | $ | 4.6 | ||||||||
Pounds sold per shipping day
|
4.4 | 4.4 | 4.4 | 4.2 |
Gross profit as a percent of sales | 12.0 | % | 16.5 | % | 13.3 | % | 17.4 | % | ||||||||
Consumer Markets (a) | ||||||||||||||||
Lubricant sales gallons | 44.8 | 43.7 | 85.3 | 83.9 | ||||||||||||
Premium lubricants (percent of U.S. branded volumes) | 32.5 | % | 29.6 | % | 31.4 | % | 29.0 | % | ||||||||
Gross profit as a percent of sales | 29.3 | % | 33.0 | % | 30.0 | % | 33.4 | % | ||||||||
Six months ended
|
||||||||
March 31
|
||||||||
(In millions)
|
2011
|
2010
|
||||||
Operating income
|
$ | 9 | $ | 14 | ||||
Depreciation and amortization
(a)
|
35 | 24 | ||||||
EBITDA
|
44 | 38 | ||||||
Casting Solutions
joint
venture costs
|
2 | - | ||||||
Adjusted EBITDA
|
$ | 46 | $ | 38 | ||||
(a) Includes $13 million of accelerated depreciation during the six months ended March 31, 2011. |
(In millions)
|
2011
|
2010
|
||||||
Cash provided (used) by:
|
||||||||
Operating activities from continuing operations
|
$ | 77 | $ | 248 | ||||
Investing activities from continuing operations
|
(13 | ) | 97 | |||||
Financing activities from continuing operations
|
(338 | ) | (175 | ) | ||||
Discontinued operations
|
984 | (21 | ) | |||||
Effect of currency exchange rate changes on cash and cash equivalents
|
2 | (2 | ) | |||||
Net increase in cash and cash equivalents
|
$ | 712 | $ | 147 |
Six months ended
|
||||||||
March 31
|
||||||||
(In millions)
|
2011
|
2010
|
||||||
Cash flows provided by operating activities from continuing operations
|
$ | 77 | $ | 248 | ||||
Less:
|
||||||||
Additions to property, plant and equipment
|
(52 | ) | (59 | ) | ||||
Cash dividends paid
|
(24 | ) | (12 | ) | ||||
Free cash flows
|
$ | 1 | $ | 177 |
March 31
|
September 30
|
|||||||
(In millions)
|
2011
|
2010
|
||||||
Cash and investment securities
|
||||||||
Cash and cash equivalents
(a)
|
$ | 1,129 | $ | 417 | ||||
Auction rate securities
|
$ | 22 | $ | 22 | ||||
Unused borrowing capacity
|
||||||||
Revolving credit facility
|
$ | 448 | $ | 428 | ||||
Accounts receivable securitization facility
(b)
|
$ | - | $ | 310 | ||||
(a)
|
Includes net proceeds from the Distribution sale on March 31, 2011.
|
(b)
|
Ashland terminated the accounts receivables securitization facility in March 2011.
|
March 31
|
September 30
|
|||||||
(In millions)
|
2011
|
2010
|
||||||
Short-term debt
|
$ | 42 | $ | 71 | ||||
Long-term debt (including current portion)
|
865 | 1,153 | ||||||
Total debt
|
$ | 907 | $ | 1,224 |
(a)
|
As of the end of the period covered by this quarterly report, Ashland, under the supervision and with the participation of its management, including Ashland’s Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of Ashland’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective.
|
(b)
|
During the six months ended March 31, 2011, there were no significant changes in Ashland’s internal control over financial reporting, or in other factors, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, Ashland’s internal control over financial reporting.
|
(a)
|
Exhibits
|
||
10.1 |
2011 Ashland Inc. Incentive Plan (filed as Exhibit 10.1 to Ashland's Form 8-K filed on February 1, 2011, and incorporated herein by reference).
|
||
10.2 | Amendment Agreement dated March 31, 2011, by and between Ashland and Nexeo Solutions, LLC, formerly known as TPG Accolade, LLC (filed as Exhibit 10.1 to Ashland's Form 8-K filed on April 5, 2011, and incorporated herein by reference). | ||
10.3 | Ashland Supplemental Defined Contribution Plan for Certain Employees. | ||
10.4 | Form of Stock Appreciation Rights Award Agreement. | ||
10.5 | Form of Performance Unit (LTIP) Award Agreement. | ||
10.6 | Form of Restricted Stock Award Agreement. | ||
12 |
Computation of Ratio of Earnings to Fixed Charges.
|
||
31.1 | Certificate of James J. O’Brien, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certificate of Lamar M. Chambers, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | Certificate of James J. O’Brien, Chief Executive Officer of Ashland, and Lamar M. Chambers, Chief Financial Officer of Ashland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance Document. | ||
101.SCH* | XBRL Taxonomy Extension Schema Document. | ||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |
Ashland Inc. | ||||
(Registrant) | ||||
May 4, 2011
|
/s/ Lamar M. Chambers
|
|||
|
Lamar M. Chambers
|
|||
|
Senior Vice President and Chief Financial Officer
(on behalf of the Registrant and as principal
financial officer)
|
Exhibit
No.
|
Description | ||
10.1
|
2011 Ashland Inc. Incentive Plan (filed as Exhibit 10.1 to Ashland's Form 8-K filed on February 1, 2011, and incorporated herein by reference).
|
||
10.2 | Amendment Agreement dated March 31, 2011, by and between Ashland and Nexeo Solutions, LLC, formerly known as TPG Accolade, LLC (filed as Exhibit 10.1 to Ashland's Form 8-K filed on April 5, 2011, and incorporated herein by reference). | ||
10.3 | Ashland Supplemental Defined Contribution Plan for Certain Employees. | ||
10.4 | Form of Stock Appreciation Rights Award Agreement. | ||
10.5 | Form of Performance Unit (LTIP) Award Agreement. | ||
10.6 | Form of Restricted Stock Award Agreement. | ||
12 |
Computation of Ratio of Earnings to Fixed Charges.
|
||
31.1 | Certificate of James J. O’Brien, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certificate of Lamar M. Chambers, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | Certificate of James J. O’Brien, Chief Executive Officer of Ashland, and Lamar M. Chambers, Chief Financial Officer of Ashland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS** | XBRL Instance Document. | ||
101.SCH** | XBRL Taxonomy Extension Schema Document. | ||
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document. | |
ARTICLE 1. PURPOSE AND EFFECTIVE DATE | 1 | ||
1.1
|
Purpose
|
1
|
|
1.2
|
Effective Date
.
|
1
|
|
ARTICLE 2. DEFINITIONS | 2 | ||
2.1
|
Account
.
|
2
|
|
2.2
|
Ashland
.
|
2
|
|
2.3
|
Beneficiary
.
|
2
|
|
2.4
|
Board
.
|
2
|
|
2.5
|
Change in Control
.
|
2
|
|
2.6
|
Code
|
3
|
|
2.7
|
Committee
.
|
3
|
|
2.8
|
Compensation
.
|
3
|
|
2.9
|
Disabled or Disability
|
3
|
|
2.10
|
Effective Date
.
|
3
|
|
2.11
|
Effective Retirement Date
:
|
3
|
|
2.12
|
Eligible Employee
.
|
4
|
|
2.13
|
Employer
.
|
4
|
|
2.14
|
ERISA
.
|
4
|
|
2.15
|
Identification Date
.
|
4
|
|
2.16
|
Incentive Compensation Plan
.
|
4
|
|
2.17
|
Key Employee
.
|
5
|
|
2.18
|
Participant
.
|
5
|
|
2.19
|
Performance-Based Compensation
|
5
|
|
2.20
|
Plan
|
5
|
|
2.21
|
Plan Year
.
|
5
|
|
2.22
|
Related Employer
.
|
5
|
|
2.23
|
Separation from Service
.
|
5
|
|
2.24
|
Unforeseeable Emergency
.
|
5
|
|
2.25
|
Valuation Date
.
|
5
|
|
ARTICLE 3. PARTICIPATION | |||
3.1
|
Participation
|
6
|
|
3.2
|
Termination of Participation
|
6
|
|
ARTICLE 4. PARTICIPANT CONTRIBUTIONS | |||
4.1
|
Deferral Agreement
|
7
|
|
4.2
|
Amount of Deferral
|
7
|
|
4.3
|
Timing of Election to Defer
|
7
|
|
4.4
|
Payment Schedule and Form of Payment
|
8
|
|
4.5
|
Time of Distribution or Transfer
|
8
|
|
4.6
|
Death Before Payment
|
8
|
|
4.7
|
Distribution Exceptions
|
8
|
|
ARTICLE 5. EMPLOYER CONTRIBUTIONS | |||
5.1
|
Matching Contributions
|
10
|
|
5.2
|
Other Employer Contributions
|
10
|
|
ARTICLE 6. ACCOUNTS AND CREDITS/OTHER ADJUSTMENTS | |||
6.1
|
Contribution Credits to Account
|
11
|
|
6.2
|
Interest Earnings Credits to Account
|
11
|
|
6.3
|
Adjustment of Accounts
|
11
|
|
ARTICLE 7. RIGHTS TO BENEFITS | |||
7.1
|
Vesting
|
12
|
|
7.2
|
Amount of Benefits
|
12
|
|
ARTICLE 8. DISTRIBUTION OF BENEFITS | |||
8.1
|
Method and Timing of Distributions
|
13
|
|
8.2
|
Unforeseeable Emergency
|
13
|
|
8.3
|
Key Employees
|
13
|
|
8.4
|
Permissible Delays in Payment
|
14
|
|
ARTICLE 9. AMENDMENT AND TERMINATION | |||
9.1
|
Amendment by Employer
|
17
|
|
9.2
|
Retroactive Amendments
|
17
|
|
9.3
|
Plan Termination
|
17
|
|
9.4
|
Distribution Upon Termination of the Plan.
.
|
18
|
|
ARTICLE 10. THE TRUST | |||
10.1
|
Establishment of Trust
:.
|
19
|
|
10.2
|
Grantor Trust
:.
|
19
|
|
ARTICLE 11. PLAN ADMINISTRATION | |||
11.1
|
Powers and Responsibilities of the Employer
|
20
|
|
11.2
|
Powers and Responsibilities of the Committee.
|
20
|
|
11.3
|
Claims and Review Procedures
|
21
|
|
11.4
|
Plan Administrative Costs
|
21
|
|
ARTICLE 12. MISCELLANEOUS | |||
12.1
|
Unsecured General Creditor of the Employer
|
22
|
|
12.2
|
Employer's Liability
|
22
|
|
12.3
|
Limitation of Rights
|
22
|
|
12.4
|
Anti-Assignment
|
22
|
|
12.5
|
Facility of Payment
|
23
|
|
12.6
|
Notices
|
23
|
|
12.7
|
Tax Withholding
|
23
|
12.8
|
Indemnification
|
23
|
|
12.9
|
Permitted Acceleration of Payment
|
24
|
|
12.10
|
No Guarantee or Employment or Participation
|
24
|
|
12.11
|
Unclaimed Benefit
|
25
|
|
12.12
|
Governing Law
|
25
|
|
12.13
|
Erroneous Payment
|
25
|
|
|
(a)
|
In General
. The Effective Retirement Date of an Employee that is a Participant under this Plan is whichever of the following applies, so long as the Participant has at least Periods of Service of five years.
|
|
(1)
|
The Effective Retirement Date is the first day of the month following the date a Participant incurs a Separation from Service -
|
|
(i)
|
on or after the date the sum of the Participant’s Age and Periods of Service is 80; or
|
|
(ii)
|
on or after the date the Participant attains Age 55.
|
|
(2)
|
The Effective Retirement Date of a Participant that incurs a Termination of Employment before the dates specified in (1) above
|
|
is the first day of the month following the date the Participant attains Age 55.
|
|
(b)
|
Change in Control
. The Effective Retirement Date in the event of a Change in Control of a Participant considered to be a Level I or II Participant who has a Change in Control Agreement shall be the first day of the month following (i) such Participant’s termination for reasons other than “Cause” or (ii) such Participant’s resignation for “Good Reason” (as they are defined in the applicable Change in Control Agreement). The Effective Retirement Date in the event of a Change in Control of a Participant considered to be a Level III, IV or V Participant, or who is considered to be a Level I or II Participant and who does not have a Change in Control Agreement, shall be the first day of the month following such Participant’s termination for reasons other than “Cause”. For Participant’s who do not have a Change in Control Agreement with Ashland, “Cause” shall have the meaning given to that word in Section 3.02. In the event a Change in Control, all Participants shall be completely vested in their Plan benefits, regardless of the number of their years of Continuous Service. For purposes of this Section a Level I, II, III, IV or V Participant shall be determined in accordance with the salary pay band grades on the records of the Company or any succeeding equivalent compensation grade designation.
|
Period of Service | Percentage of Compensation | |
1-10 Years | 1.5% | |
11-20 Years | 3.0% | |
21 or more Years | 4.5% |
|
(a)
|
Payments Subject to Code Section 162(m)
. The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would not be permitted due to the application of Code Section 162(m); provided, however, that (i) the deduction limitation of Code Section 162(m) shall be applied to all payments to similarly situated Participants on a reasonably consistent basis; (ii) the payment must be made either during the Participant's first taxable year in which the Employer reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Code Section162(m) or during the period beginning with the date of the Participant's Separation from Service (or, if the Participant is a Key Employee, beginning with the date that is six months after Separation from Service) and ending on the later of the last day of the Employer's taxable year in which the Participant incurs a Separation from Service for the 15
th
day of the third month following the Participant's Separation from Service (or, if the Participant is a Key Employee, the 15
th
day of the third month following the date that is six months after Separation from Service); (iii) where any payment to a particular Participant is delayed because of Code Section 162(m), the delay in payment will be treated as a subsequent deferral election, subject to the rules set forth in Section 7.2, unless all scheduled payments to such Participant that could be delayed are also delayed; and (iv) no election may be provided to a Participant with respect to the timing of payment hereunder.
|
(b)
|
Payments that would violate Federal Securities Laws or Other Applicable Law
. The Employer may also delay payment if it reasonably anticipates that the marking of the payment will violate Federal securities laws or other applicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation.
|
|
(c)
|
Other Events and Conditions
. The Employer also reserves the right to delay payment upon such other events and conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
|
|
(a)
|
To make and enforce such rules and regulations as it deems, in its sole discretion, necessary or proper for the efficient administration of the Plan;
|
|
(b)
|
To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, in its sole discretion, subject to review by the Committee.
|
|
(c)
|
To administer the claims and review procedures specified in Section 10.3;
|
|
(d)
|
To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan in its discretion;
|
|
(e)
|
To determine the person or persons to whom such benefits will be paid in its discretion;
|
|
(f)
|
To authorize the payment of benefits;
|
|
(g)
|
To comply with any applicable reporting and disclosure requirements of Part 1 of Subtitle B of Title 1 of ERISA;
|
|
(h)
|
To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;
|
|
(i)
|
To allocate and delegate its responsibilities in its discretion, including the formation of any administrative sub-committee to administer the Plan.
|
|
(a)
|
If it is sent to the Employer or Company, it will be at the address specified by the Employer; or
|
|
(b)
|
If it is sent to a Participant or Beneficiary, it will be at the last address filed with the Employer by the Participant (or Beneficiary).
|
Name of Participant: | [ Name ] |
Name of Plan: | 2011 Ashland Inc. Incentive Plan |
Number of SARs:
|
[ xxxx ] |
Grant Price Per SAR: | $xx.xx |
Date of SAR Grant: | __________ _____, 20 _____ |
Vesting Schedule: |
50% on 1st Anniversary of Grant Date
Additional 25% on 2nd Anniversary of Grant Date
Remaining 25% on 3rd Anniversary of Grant Date
|
Expiration Date: | __________ _____, 20 _____ |
Name of Participant: | [ Name ] |
Name of Plan: | 2011 Ashland Inc. Incentive Plan |
Number of Performance Units: | [ x,xxx ] |
Three-Year Performance Period: | __________ through __________ |
Date of Award: | __________ _____, 20 _____ |
ASHLAND INC.
|
||||
|
By:
|
|||
|
|
|||
|
Susan B. Esler
Vice President, Human Resources
|
Name of Participant: | [ Name ] |
Name of Plan: | 2011 Ashland Inc. Incentive Plan |
Number of Shares of Ashland Inc.
Common Stock:
|
[ xxxx ] |
Par Value Per Share: | $0.01 |
Vesting Dates: |
[33.3% or _____ on ___________ _____, 20_____]
[33.3% or _____ on ___________ _____, 20_____]
[33.3% or _____ on ___________ _____, 20_____]
|
Date of Award: | ___________ _____, 20_____ |
|
“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeitures) contained in the Plan and the Agreement entered into between the registered owner and Ashland Inc.”
|
ASHLAND INC.
|
||||
|
By:
|
|||
|
|
|||
|
Susan B. Esler
Vice President, Human Resources
|
Dated: ______________, _____ |
_________________________________
Shareholder signature
(Note:
please sign in the presence of a
representative of an institution who
is a member of a Medallion
Signature Guarantee Program*)
|
EXHIBIT 12
|
||||||||
ASHLAND INC.
|
||||||||
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
|
||||||||
(In millions)
|
||||||||
Six months ended
|
||||||||
March 31
|
||||||||
2011
|
2010
|
|||||||
EARNINGS
|
||||||||
Income from continuing operations
|
$ | 158 | $ | 70 | ||||
Income tax expense
|
18 | 40 | ||||||
Interest expense
|
50 | 68 | ||||||
Interest portion of rental expense
|
11 | 10 | ||||||
Amortization of deferred debt expense
|
19 | 74 | ||||||
Distributions less than earnings of
|
||||||||
unconsolidated affiliates
|
(4 | ) | (6 | ) | ||||
$ | 252 | $ | 256 | |||||
FIXED CHARGES
|
||||||||
Interest expense
|
$ | 50 | $ | 68 | ||||
Interest portion of rental expense
|
11 | 10 | ||||||
Amortization of deferred debt expense
|
19 | 74 | ||||||
Capitalized interest
|
- | 2 | ||||||
$ | 80 | $ | 154 | |||||
RATIO OF EARNINGS TO FIXED CHARGES
|
3.15 | 1.66 |
1.
|
I have reviewed this quarterly report on Form 10-Q of Ashland Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ James J. O’Brien
|
|
James J. O’Brien
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Ashland Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Lamar M. Chambers
|
|
Lamar M. Chambers
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James J. O'Brien
|
|
James J. O'Brien
|
|
Chief Executive Officer
|
|
May 4, 2011 | |
/s/ Lamar M. Chambers | |
Lamar M. Chambers | |
Chief Financial Officer | |
May 4, 2011 | |