|
|
|
|
|
(Mark One)
|
|
|
|
|
|
þ
|
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.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions except per share data - unaudited)
|
2014
|
|
|
2013
|
|
||
Sales
|
$
|
1,391
|
|
|
$
|
1,432
|
|
Cost of sales
|
982
|
|
|
1,048
|
|
||
Gross profit
|
409
|
|
|
384
|
|
||
|
|
|
|
||||
Selling, general and administrative expense
|
226
|
|
|
235
|
|
||
Research and development expense
|
25
|
|
|
27
|
|
||
Equity and other income
|
11
|
|
|
21
|
|
||
Operating income
|
169
|
|
|
143
|
|
||
|
|
|
|
||||
Net interest and other financing expense
|
41
|
|
|
42
|
|
||
Net gain (loss) on divestitures
|
(85
|
)
|
|
5
|
|
||
Income from continuing operations before income taxes
|
43
|
|
|
106
|
|
||
Income tax expense - Note I
|
3
|
|
|
18
|
|
||
Income from continuing operations
|
40
|
|
|
88
|
|
||
Income (loss) from discontinued operations (net of tax) - Note C
|
(8
|
)
|
|
22
|
|
||
Net income
|
$
|
32
|
|
|
$
|
110
|
|
|
|
|
|
||||
PER SHARE DATA
|
|
|
|
||||
Basic earnings per share - Note L
|
|
|
|
|
|
||
Income from continuing operations
|
$
|
0.58
|
|
|
$
|
1.14
|
|
Income (loss) from discontinued operations
|
(0.11
|
)
|
|
0.28
|
|
||
Net income
|
$
|
0.47
|
|
|
$
|
1.42
|
|
|
|
|
|
||||
Diluted earnings per share - Note L
|
|
|
|
|
|
||
Income from continuing operations
|
$
|
0.57
|
|
|
$
|
1.12
|
|
Income (loss) from discontinued operations
|
(0.11
|
)
|
|
0.28
|
|
||
Net income
|
$
|
0.46
|
|
|
$
|
1.40
|
|
|
|
|
|
||||
DIVIDENDS PAID PER COMMON SHARE
|
$
|
0.34
|
|
|
$
|
0.34
|
|
|
|
|
|
||||
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
||||
Net income
|
$
|
32
|
|
|
$
|
110
|
|
Other comprehensive income (loss), net of tax - Note M
|
|
|
|
||||
Unrealized translation gain (loss)
|
(127
|
)
|
|
39
|
|
||
Pension and postretirement obligation adjustment
|
(5
|
)
|
|
(4
|
)
|
||
Other comprehensive income (loss)
|
(132
|
)
|
|
35
|
|
||
Comprehensive income (loss)
|
$
|
(100
|
)
|
|
$
|
145
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|
September 30
|
|
||
(In millions - unaudited)
|
2014
|
|
|
2014
|
|
||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,256
|
|
|
$
|
1,393
|
|
Accounts receivable
(a)
|
1,032
|
|
|
1,202
|
|
||
Inventories - Note F
|
746
|
|
|
765
|
|
||
Deferred income taxes
|
118
|
|
|
118
|
|
||
Other assets
|
89
|
|
|
83
|
|
||
Total current assets
|
3,241
|
|
|
3,561
|
|
||
Noncurrent assets
|
|
|
|
|
|
||
Property, plant and equipment
|
|
|
|
||||
Cost
|
4,118
|
|
|
4,275
|
|
||
Accumulated depreciation
|
1,865
|
|
|
1,861
|
|
||
Net property, plant and equipment
|
2,253
|
|
|
2,414
|
|
||
Goodwill - Note G
|
2,586
|
|
|
2,643
|
|
||
Intangibles - Note G
|
1,254
|
|
|
1,309
|
|
||
Asbestos insurance receivable - Note K
|
423
|
|
|
433
|
|
||
Equity and other unconsolidated investments
|
81
|
|
|
81
|
|
||
Other assets
|
511
|
|
|
510
|
|
||
Total noncurrent assets
|
7,108
|
|
|
7,390
|
|
||
Total assets
|
$
|
10,349
|
|
|
$
|
10,951
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Short-term debt - Note H
|
$
|
323
|
|
|
$
|
329
|
|
Current portion of long-term debt - Note H
|
9
|
|
|
9
|
|
||
Trade and other payables
|
529
|
|
|
674
|
|
||
Accrued expenses and other liabilities
|
513
|
|
|
675
|
|
||
Total current liabilities
|
1,374
|
|
|
1,687
|
|
||
Noncurrent liabilities
|
|
|
|
|
|
||
Long-term debt - Note H
|
2,943
|
|
|
2,942
|
|
||
Employee benefit obligations - Note J
|
1,449
|
|
|
1,468
|
|
||
Asbestos litigation reserve - Note K
|
690
|
|
|
701
|
|
||
Deferred income taxes
|
95
|
|
|
110
|
|
||
Other liabilities
|
473
|
|
|
460
|
|
||
Total noncurrent liabilities
|
5,650
|
|
|
5,681
|
|
||
Commitments and contingencies - Note K
|
|
|
|
|
|
||
Stockholders’ equity
|
3,325
|
|
|
3,583
|
|
||
|
|
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
10,349
|
|
|
$
|
10,951
|
|
|
|
|
|
(a)
|
Accounts receivable includes an allowance for doubtful accounts of
$12 million
and
$13 million
at
December 31, 2014
and
September 30, 2014
, respectively.
|
|
|
|
|
|
|
|
|
|
(In millions - unaudited)
|
Common
stock
|
|
|
Paid-in
capital
|
|
|
Retained
earnings
|
|
|
Accumulated
other
comprehensive
income (loss)
|
|
(a)
|
Total
|
|
|||||
BALANCE AT SEPTEMBER 30, 2014
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3,475
|
|
|
$
|
107
|
|
|
$
|
3,583
|
|
Total comprehensive income (loss)
|
|
|
|
|
|
32
|
|
|
(132
|
)
|
|
(100
|
)
|
||||||
Regular dividends, $.34 per common share
|
|
|
|
|
|
|
(24
|
)
|
|
|
|
|
(24
|
)
|
|||||
Common shares issued under stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
incentive and other plans
(b)
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
||||||
Repurchase of common shares
(c)
|
|
|
|
|
|
(127
|
)
|
|
|
|
(127
|
)
|
|||||||
BALANCE AT DECEMBER 31, 2014
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3,349
|
|
|
$
|
(25
|
)
|
|
$
|
3,325
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
At
December 31, 2014
and
September 30, 2014
, the after-tax accumulated other comprehensive loss of
$25 million
and gain of
$107 million
, respectively, was comprised of unrecognized prior service credits as a result of certain employee benefit plan amendments of
$54 million
and
$59 million
, respectively, and net unrealized translation loss of
$79 million
and gain of
$48 million
, respectively.
|
(b)
|
Common shares issued were
196,739
for the
three
months ended
December 31, 2014
and includes the impact of the modification of certain performance shares. See Note N of the Notes to Condensed Consolidated Financial Statements for further information.
|
(c)
|
Common shares repurchased were
1,227,440
for the
three
months ended
December 31, 2014
. See Note M of the Notes to Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions - unaudited)
|
2014
|
|
|
2013
|
|
||
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES FROM
|
|
|
|
||||
CONTINUING OPERATIONS
|
|
|
|
||||
Net income
|
$
|
32
|
|
|
$
|
110
|
|
Loss (income) from discontinued operations (net of tax)
|
8
|
|
|
(22
|
)
|
||
Adjustments to reconcile income from continuing operations to
|
|
|
|
|
|
||
cash flows from operating activities
|
|
|
|
|
|
||
Depreciation and amortization
|
85
|
|
|
88
|
|
||
Debt issuance cost amortization
|
4
|
|
|
3
|
|
||
Deferred income taxes
|
(10
|
)
|
|
(3
|
)
|
||
Equity income from affiliates
|
(4
|
)
|
|
(6
|
)
|
||
Distributions from equity affiliates
|
3
|
|
|
6
|
|
||
Stock based compensation expense
|
7
|
|
|
8
|
|
||
Net loss (gain) on divestitures
|
85
|
|
|
(5
|
)
|
||
Change in operating assets and liabilities
(a)
|
(160
|
)
|
|
(161
|
)
|
||
Total cash flows provided by operating activities from continuing operations
|
50
|
|
|
18
|
|
||
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES FROM
|
|
|
|
|
|
||
CONTINUING OPERATIONS
|
|
|
|
|
|
||
Additions to property, plant and equipment
|
(43
|
)
|
|
(45
|
)
|
||
Proceeds from disposal of property, plant and equipment
|
1
|
|
|
1
|
|
||
Proceeds from sale of operations or equity investments
|
106
|
|
|
4
|
|
||
Total cash flows provided (used) by investing activities from continuing operations
|
64
|
|
|
(40
|
)
|
||
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES FROM
|
|
|
|
|
|
||
CONTINUING OPERATIONS
|
|
|
|
|
|
||
Repayment of long-term debt
|
—
|
|
|
(12
|
)
|
||
Proceeds (repayment) from short-term debt
|
(6
|
)
|
|
6
|
|
||
Repurchase of common stock
|
(127
|
)
|
|
—
|
|
||
Cash dividends paid
|
(24
|
)
|
|
(26
|
)
|
||
Excess tax benefits related to share-based payments
|
2
|
|
|
3
|
|
||
Total cash flows used by financing activities from continuing operations
|
(155
|
)
|
|
(29
|
)
|
||
CASH USED BY CONTINUING OPERATIONS
|
(41
|
)
|
|
(51
|
)
|
||
Cash provided (used) by discontinued operations
|
|
|
|
|
|
||
Operating cash flows
|
(84
|
)
|
|
7
|
|
||
Investing cash flows
|
(2
|
)
|
|
(6
|
)
|
||
Total cash provided (used) by discontinued operations
|
(86
|
)
|
|
1
|
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
(10
|
)
|
|
(1
|
)
|
||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(137
|
)
|
|
(51
|
)
|
||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
1,393
|
|
|
346
|
|
||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
1,256
|
|
|
$
|
295
|
|
|
|
|
|
(a)
|
Excludes changes resulting from operations acquired or sold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Income (loss) from discontinued operations (net of tax)
|
|
|
|
||||
Asbestos-related litigation
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Water Technologies
(a)
|
(3
|
)
|
|
23
|
|
||
Loss on disposal of discontinued operations (net of tax)
|
|
|
|
|
|
||
Water Technologies
|
(4
|
)
|
|
—
|
|
||
Total income (loss) from discontinued operations (net of tax)
|
$
|
(8
|
)
|
|
$
|
22
|
|
|
|
|
|
(a)
|
For the three months ended
December 31, 2013
, pretax operating income recorded for Water Technologies was
$36 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility
|
|
|
|
|||||
(In millions)
|
Severance
|
|
|
costs
|
|
|
Total
|
|
|||
Balance as of September 30, 2014
|
$
|
56
|
|
|
$
|
9
|
|
|
$
|
65
|
|
Utilization (cash paid or otherwise settled)
|
(15
|
)
|
|
(1
|
)
|
|
(16
|
)
|
|||
Balance at December 31, 2014
|
$
|
41
|
|
|
$
|
8
|
|
|
$
|
49
|
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2013
|
$
|
17
|
|
|
$
|
8
|
|
|
$
|
25
|
|
Reserve adjustments
|
1
|
|
|
—
|
|
|
1
|
|
|||
Utilization (cash paid or otherwise settled)
|
(4
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|||
Balance at December 31, 2013
|
$
|
14
|
|
|
$
|
7
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Carrying
value
|
|
|
Total
fair
value
|
|
|
Quoted prices
in active
markets for
identical
assets
Level 1
|
|
|
Significant
other
observable
inputs
Level 2
|
|
|
Significant
unobservable
inputs
Level 3
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,256
|
|
|
$
|
1,256
|
|
|
$
|
1,256
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred compensation investments
(a)
|
186
|
|
|
186
|
|
|
44
|
|
|
142
|
|
|
—
|
|
|||||
Investments of captive insurance company
(a)
|
3
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|||||
Foreign currency derivatives
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||||
Total assets at fair value
|
$
|
1,448
|
|
|
$
|
1,448
|
|
|
$
|
1,303
|
|
|
$
|
145
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivatives
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.
|
(In millions)
|
Carrying
value
|
|
|
Total
fair
value
|
|
|
Quoted prices
in active
markets for
identical
assets
Level 1
|
|
|
Significant
other
observable
inputs
Level 2
|
|
|
Significant
unobservable
inputs
Level 3
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
1,393
|
|
|
$
|
1,393
|
|
|
$
|
1,393
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred compensation investments
(a)
|
184
|
|
|
184
|
|
|
45
|
|
|
139
|
|
|
—
|
|
|||||
Investments of captive insurance company
(a)
|
3
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|||||
Foreign currency derivatives
|
11
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|||||
Total assets at fair value
|
$
|
1,591
|
|
|
$
|
1,591
|
|
|
$
|
1,441
|
|
|
$
|
150
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency derivatives
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Foreign currency derivative gain (loss)
|
$
|
(4
|
)
|
|
$
|
3
|
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
2014
|
|
|
2014
|
|
||
Foreign currency derivative assets
|
$
|
1
|
|
|
$
|
2
|
|
Notional contract values
|
59
|
|
|
88
|
|
||
|
|
|
|
||||
Foreign currency derivative liabilities
|
$
|
4
|
|
|
$
|
4
|
|
Notional contract values
|
335
|
|
|
281
|
|
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
Consolidated balance sheet caption
|
2014
|
|
|
2014
|
|
||
Net investment hedge assets
|
Accounts receivable
|
$
|
2
|
|
|
$
|
9
|
|
Net investment hedge liabilities
|
Accrued expenses and other liabilities
|
2
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
||
|
December 31
|
|
|
|
(In millions)
|
2014
|
|
|
|
Change in unrealized gain in AOCI
|
$
|
—
|
|
(a)
|
Tax impact of change in unrealized gain in AOCI
|
(1
|
)
|
|
|
|
|
|
(a)
|
Denotes a value that nets to less than $1 million.
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
2014
|
|
|
2014
|
|
||
Finished products
|
$
|
539
|
|
|
$
|
557
|
|
Raw materials, supplies and work in process
|
259
|
|
|
239
|
|
||
LIFO reserve
|
(52
|
)
|
|
(31
|
)
|
||
|
$
|
746
|
|
|
$
|
765
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
|
Performance
|
|
|
|
|
|
|
|||||
(In millions)
|
Ingredients
|
|
|
Materials
|
|
(a)
|
Valvoline
|
|
|
Total
|
|
||||
Balance at September 30, 2014
|
$
|
2,129
|
|
|
$
|
346
|
|
|
$
|
168
|
|
|
$
|
2,643
|
|
Divestiture
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Currency translation adjustment
|
(41
|
)
|
|
(6
|
)
|
|
—
|
|
|
(47
|
)
|
||||
Balance at December 31, 2014
|
$
|
2,088
|
|
|
$
|
330
|
|
|
$
|
168
|
|
|
$
|
2,586
|
|
|
|
|
|
|
|
|
|
(a)
|
As of
December 31, 2014
, goodwill consisted of
$172 million
for the Intermediates/Solvents reporting unit and
$158 million
for the Composites reporting unit.
|
|
December 31, 2014
|
||||||||||
|
Gross
|
|
|
|
|
Net
|
|
||||
|
carrying
|
|
|
Accumulated
|
|
|
carrying
|
|
|||
(In millions)
|
amount
|
|
|
amortization
|
|
|
amount
|
|
|||
Definite-lived intangible assets
|
|
|
|
|
|
||||||
Trademarks and trade names
(a)
|
$
|
66
|
|
|
$
|
(45
|
)
|
|
$
|
21
|
|
Intellectual property
(a)
|
809
|
|
|
(233
|
)
|
|
576
|
|
|||
Customer relationships
|
461
|
|
|
(126
|
)
|
|
335
|
|
|||
Total definite-lived intangible assets
|
1,336
|
|
|
(404
|
)
|
|
932
|
|
|||
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
||||||
IPR&D
|
19
|
|
|
—
|
|
|
19
|
|
|||
Trademarks and trade names
|
303
|
|
|
—
|
|
|
303
|
|
|||
Total intangible assets
|
$
|
1,658
|
|
|
$
|
(404
|
)
|
|
$
|
1,254
|
|
|
|
|
|
|
|
(a)
|
Elastomers had a gross carrying amount for trademarks/trade names and intellectual property of
$6 million
and
$18 million
, respectively, with
$5 million
of accumulated amortization for each caption.
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
||||||||||
|
Gross
|
|
|
|
|
Net
|
|
||||
|
carrying
|
|
|
Accumulated
|
|
|
carrying
|
|
|||
(In millions)
|
amount
|
|
|
amortization
|
|
|
amount
|
|
|||
Definite-lived intangible assets
|
|
|
|
|
|
||||||
Trademarks and trade names
|
$
|
72
|
|
|
$
|
(49
|
)
|
|
$
|
23
|
|
Intellectual property
|
827
|
|
|
(226
|
)
|
|
601
|
|
|||
Customer relationships
|
481
|
|
|
(118
|
)
|
|
363
|
|
|||
Total definite-lived intangible assets
|
1,380
|
|
|
(393
|
)
|
|
987
|
|
|||
|
|
|
|
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
||||||
IPR&D
|
19
|
|
|
—
|
|
|
19
|
|
|||
Trademarks and trade names
|
303
|
|
|
—
|
|
|
303
|
|
|||
Total intangible assets
|
$
|
1,702
|
|
|
$
|
(393
|
)
|
|
$
|
1,309
|
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
2014
|
|
|
2014
|
|
||
4.750% notes, due 2022
|
$
|
1,120
|
|
|
$
|
1,120
|
|
3.875% notes, due 2018
|
700
|
|
|
700
|
|
||
3.000% notes, due 2016
|
600
|
|
|
600
|
|
||
6.875% notes, due 2043
|
376
|
|
|
376
|
|
||
Accounts receivable securitization
(a)
|
220
|
|
|
255
|
|
||
6.50% junior subordinated notes, due 2029
|
134
|
|
|
134
|
|
||
Revolving credit facility
|
80
|
|
|
45
|
|
||
Other international loans, interest at a weighted-
|
|
|
|
|
|
||
average rate of 7.0% at December 31, 2014 (6.0% to 10.2%)
|
23
|
|
|
29
|
|
||
Medium-term notes, due 2015-2019, interest at a weighted-
|
|
|
|
|
|
||
average rate of 8.7% at December 31, 2014 (8.4% to 9.4%)
|
14
|
|
|
14
|
|
||
Other
|
8
|
|
|
7
|
|
||
Total debt
|
3,275
|
|
|
3,280
|
|
||
Short-term debt
|
(323
|
)
|
|
(329
|
)
|
||
Current portion of long-term debt
|
(9
|
)
|
|
(9
|
)
|
||
Long-term debt (less current portion)
|
$
|
2,943
|
|
|
$
|
2,942
|
|
|
|
|
|
(a)
|
During the three months ended
December 31, 2014
, the potential funding for qualified receivables was reduced from
$275 million
to
$250 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
Balance at October 1, 2014
|
$
|
155
|
|
Increases related to positions taken on items from prior years
|
1
|
|
|
Decreases related to positions taken on items from prior years
|
(1
|
)
|
|
Increases related to positions taken in the current year
|
7
|
|
|
Balance at December 31, 2014
|
$
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other postretirement
|
||||||||||
|
Pension benefits
|
|
benefits
|
||||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Three months ended December 31
|
|
|
|
|
|
|
|
||||||||
Service cost
(a)
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
44
|
|
|
49
|
|
|
2
|
|
|
2
|
|
||||
Expected return on plan assets
|
(54
|
)
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
|
|
(a)
|
Service cost and net pension benefit costs of $0 denote values less than $1 million.
|
|
Three months ended
|
|
|
|
|
|
|
|||||||
|
December 31
|
|
Years ended September 30
|
|||||||||||
(In thousands)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Open claims - beginning of period
|
65
|
|
|
65
|
|
|
65
|
|
|
66
|
|
|
72
|
|
New claims filed
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Claims settled
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Claims dismissed
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|
(7
|
)
|
Open claims - end of period
|
66
|
|
|
66
|
|
|
65
|
|
|
65
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
||||||||||||
|
December 31
|
|
Years ended September 30
|
||||||||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||
Asbestos reserve - beginning of period
|
$
|
438
|
|
|
$
|
463
|
|
|
$
|
463
|
|
|
$
|
522
|
|
|
$
|
543
|
|
Reserve adjustment
|
—
|
|
|
—
|
|
|
4
|
|
|
(28
|
)
|
|
11
|
|
|||||
Amounts paid
|
(7
|
)
|
|
(8
|
)
|
|
(29
|
)
|
|
(31
|
)
|
|
(32
|
)
|
|||||
Asbestos reserve - end of period
|
$
|
431
|
|
|
$
|
455
|
|
|
$
|
438
|
|
|
$
|
463
|
|
|
$
|
522
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
||||||||||||
|
December 31
|
|
Years ended September 30
|
||||||||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||
Insurance receivable - beginning of period
|
$
|
402
|
|
|
$
|
408
|
|
|
$
|
408
|
|
|
$
|
423
|
|
|
$
|
431
|
|
Receivable adjustment
|
—
|
|
|
—
|
|
|
22
|
|
|
(3
|
)
|
|
19
|
|
|||||
Amounts collected
|
(10
|
)
|
|
(3
|
)
|
|
(28
|
)
|
|
(12
|
)
|
|
(27
|
)
|
|||||
Insurance receivable - end of period
|
$
|
392
|
|
|
$
|
405
|
|
|
$
|
402
|
|
|
$
|
408
|
|
|
$
|
423
|
|
|
Three months ended
|
|
|
|
|
|
|
|||||||
|
December 31
|
|
Years ended September 30
|
|||||||||||
(In thousands)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Open claims - beginning of period
|
21
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
21
|
|
New claims filed
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Claims dismissed
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
Open claims - end of period
|
21
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
||||||||||||
|
December 31
|
|
Years ended September 30
|
||||||||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||
Asbestos reserve - beginning of period
|
$
|
329
|
|
|
$
|
342
|
|
|
$
|
342
|
|
|
$
|
320
|
|
|
$
|
311
|
|
Reserve adjustment
|
—
|
|
|
—
|
|
|
10
|
|
|
46
|
|
|
30
|
|
|||||
Amounts paid
|
(5
|
)
|
|
(5
|
)
|
|
(23
|
)
|
|
(24
|
)
|
|
(21
|
)
|
|||||
Asbestos reserve - end of period
|
$
|
324
|
|
|
$
|
337
|
|
|
$
|
329
|
|
|
$
|
342
|
|
|
$
|
320
|
|
|
Three months ended
|
|
|
|
|
|
|
||||||||||||
|
December 31
|
|
Years ended September 30
|
||||||||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||
Insurance receivable - beginning of period
|
$
|
77
|
|
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
56
|
|
|
$
|
48
|
|
Receivable adjustment
|
—
|
|
|
—
|
|
|
3
|
|
|
19
|
|
|
9
|
|
|||||
Amounts collected
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Insurance receivable - end of period
|
$
|
77
|
|
|
$
|
75
|
|
|
$
|
77
|
|
|
$
|
75
|
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Reserve - beginning of period
|
$
|
197
|
|
|
$
|
211
|
|
Disbursements, net of cost recoveries
|
(8
|
)
|
|
(8
|
)
|
||
Revised obligation estimates and accretion
|
6
|
|
|
5
|
|
||
Reserve - end of period
|
$
|
195
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Environmental expense
|
$
|
5
|
|
|
$
|
4
|
|
Accretion
|
1
|
|
|
1
|
|
||
Legal expense
|
1
|
|
|
—
|
|
||
Total expense
|
7
|
|
|
5
|
|
||
|
|
|
|
||||
Insurance receivable
|
—
|
|
|
(1
|
)
|
||
Total expense, net of receivable activity
(a)
|
$
|
7
|
|
|
$
|
4
|
|
|
|
|
|
(a)
|
Net expense of
$1 million
for the three months ended
December 31, 2013
relates to divested businesses which qualified for treatment as discontinued operations and for which certain environmental liabilities were retained by Ashland. These amounts are classified within the income from discontinued operations caption of the Statements of Consolidated Comprehensive Income.
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions except per share data)
|
2014
|
|
|
2013
|
|
||
Numerator
|
|
|
|
||||
Numerator for basic and diluted EPS – Income
|
|
|
|
||||
from continuing operations
|
$
|
40
|
|
|
$
|
88
|
|
Denominator
|
|
|
|
|
|
||
Denominator for basic EPS – Weighted-average
|
|
|
|
|
|
||
common shares outstanding
|
69
|
|
|
77
|
|
||
Share-based awards convertible to common shares
|
1
|
|
|
1
|
|
||
Denominator for diluted EPS – Adjusted weighted-
|
|
|
|
|
|
||
average shares and assumed conversions
|
70
|
|
|
78
|
|
||
|
|
|
|
||||
EPS from continuing operations
|
|
|
|
|
|
||
Basic
|
$
|
0.58
|
|
|
$
|
1.14
|
|
Diluted
|
0.57
|
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
||||||||||||||||||||
|
|
|
Tax
|
|
|
|
|
|
|
Tax
|
|
|
|
||||||||||
|
Before
|
|
|
(expense)
|
|
|
Net of
|
|
|
Before
|
|
|
(expense)
|
|
|
Net of
|
|
||||||
(In millions)
|
tax
|
|
|
benefit
|
|
|
tax
|
|
|
tax
|
|
|
benefit
|
|
|
tax
|
|
||||||
Three months ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrealized translation gain (loss)
|
$
|
(126
|
)
|
|
$
|
(1
|
)
|
|
$
|
(127
|
)
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
39
|
|
Pension and postretirement obligation adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of unrecognized prior service
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
credits included in net income
(a)
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
(6
|
)
|
|
2
|
|
|
(4
|
)
|
||||||
Total other comprehensive income (loss)
|
$
|
(131
|
)
|
|
$
|
(1
|
)
|
|
$
|
(132
|
)
|
|
$
|
33
|
|
|
$
|
2
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amortization of unrecognized prior service credits are included in the calculation of net periodic benefit costs (income) for pension and other postretirement plans. For specific financial statement captions impacted by the amortization see the table below.
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cost of sales
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Selling, general and administrative expense
|
(3
|
)
|
|
(3
|
)
|
||
Discontinued operations
|
—
|
|
|
(1
|
)
|
||
Total amortization of unrecognized prior service credits
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions - unaudited)
|
2014
|
|
|
2013
|
|
||
SALES
|
|
|
|
||||
Specialty Ingredients
|
$
|
561
|
|
|
$
|
581
|
|
Performance Materials
|
338
|
|
|
365
|
|
||
Valvoline
|
492
|
|
|
486
|
|
||
|
$
|
1,391
|
|
|
$
|
1,432
|
|
OPERATING INCOME
|
|
|
|
|
|
||
Specialty Ingredients
|
$
|
60
|
|
|
$
|
51
|
|
Performance Materials
|
25
|
|
|
14
|
|
||
Valvoline
|
83
|
|
|
75
|
|
||
Unallocated and other
(a)
|
1
|
|
|
3
|
|
||
|
$
|
169
|
|
|
$
|
143
|
|
|
|
|
|
(a)
|
As a result of the sale of Water Technologies, Unallocated and other is impacted by certain items related to discontinued operations accounting. For the three months ended
December 31, 2013
, Unallocated and other includes
$9 million
of costs previously charged to the Water Technologies business for primarily indirect corporate cost allocations that U.S. GAAP provisions require to be included within continuing operations. Additionally, a portion of the components of pension and other postretirement benefit costs other than service costs (i.e. interest cost, expected return on assets, and amortization of prior service credit) related to Water Technologies has been reclassified from the Unallocated and other segment to the discontinued operations caption of the Statements of Consolidated Comprehensive Income. Pension and other postretirement benefit income for the three months ended
December 31, 2013
of
$2 million
was classified within discontinued operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||
|
December 31
|
||||
Sales by Reportable Segment
|
2014
|
|
|
2013
|
|
Specialty Ingredients
|
41
|
%
|
|
41
|
%
|
Performance Materials
|
24
|
%
|
|
25
|
%
|
Valvoline
|
35
|
%
|
|
34
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Net income
|
$
|
32
|
|
|
$
|
110
|
|
Income tax expense
|
3
|
|
|
18
|
|
||
Net interest and other financing expense
|
41
|
|
|
42
|
|
||
Depreciation and amortization
|
85
|
|
|
88
|
|
||
EBITDA
|
161
|
|
|
258
|
|
||
Loss (income) from discontinued operations (net of tax)
|
8
|
|
|
(22
|
)
|
||
Net loss on divestiture
|
85
|
|
|
—
|
|
||
Stock incentive award modification
|
7
|
|
|
—
|
|
||
Restructuring
|
1
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
262
|
|
|
$
|
236
|
|
|
|
|
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Sales
|
$
|
1,391
|
|
|
$
|
1,432
|
|
|
$
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Cost of sales
|
$
|
982
|
|
|
$
|
1,048
|
|
|
$
|
(66
|
)
|
Gross profit as a percent of sales
|
29.4
|
%
|
|
26.8
|
%
|
|
|
|
|
Three months ended
|
|
||
(In millions)
|
December 31, 2014
|
|
||
Changes in:
|
|
|
||
Production costs
|
|
$
|
(28
|
)
|
Volumes and product mix
|
|
(1
|
)
|
|
Divestitures
|
|
(16
|
)
|
|
Currency exchange
|
|
(21
|
)
|
|
Change in cost of sales
|
|
$
|
(66
|
)
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Selling, general and administrative expense
|
$
|
226
|
|
|
$
|
235
|
|
|
$
|
(9
|
)
|
As a percent of sales
|
16.2
|
%
|
|
16.4
|
%
|
|
|
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Research and development expense
|
$
|
25
|
|
|
$
|
27
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Equity and other income
|
|
|
|
|
|
|
|
|
|||
Equity income
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
(3
|
)
|
Other income
|
8
|
|
|
15
|
|
|
(7
|
)
|
|||
|
$
|
11
|
|
|
$
|
21
|
|
|
$
|
(10
|
)
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Net interest and other financing expense (income)
|
|
|
|
|
|
||||||
Interest expense
|
$
|
41
|
|
|
$
|
41
|
|
|
$
|
—
|
|
Interest income
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Other financing costs
|
2
|
|
|
2
|
|
|
—
|
|
|||
|
$
|
41
|
|
|
$
|
42
|
|
|
$
|
(1
|
)
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Net gain (loss) on divestitures
|
|
|
|
|
|
||||||
Elastomers
|
$
|
(85
|
)
|
|
$
|
—
|
|
|
$
|
(85
|
)
|
MAP Transaction adjustments
|
—
|
|
|
5
|
|
|
(5
|
)
|
|||
|
$
|
(85
|
)
|
|
$
|
5
|
|
|
$
|
(90
|
)
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Income tax expense
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
(15
|
)
|
Effective tax rate
|
7.0
|
%
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31
|
||||||||||
(In millions)
|
2014
|
|
|
2013
|
|
|
Change
|
|
|||
Income (loss) from discontinued operations (net of tax)
|
|
|
|
|
|
||||||
Asbestos-related litigation
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Water Technologies
|
(7
|
)
|
|
23
|
|
|
(30
|
)
|
|||
|
$
|
(8
|
)
|
|
$
|
22
|
|
|
$
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Sales
|
|
|
|
||||
Specialty Ingredients
|
$
|
561
|
|
|
$
|
581
|
|
Performance Materials
|
338
|
|
|
365
|
|
||
Valvoline
|
492
|
|
|
486
|
|
||
|
$
|
1,391
|
|
|
$
|
1,432
|
|
Operating income
|
|
|
|
|
|
||
Specialty Ingredients
|
$
|
60
|
|
|
$
|
51
|
|
Performance Materials
|
25
|
|
|
14
|
|
||
Valvoline
|
83
|
|
|
75
|
|
||
Unallocated and other
|
1
|
|
|
3
|
|
||
|
$
|
169
|
|
|
$
|
143
|
|
Depreciation and amortization
|
|
|
|
|
|
||
Specialty Ingredients
|
$
|
59
|
|
|
$
|
60
|
|
Performance Materials
|
17
|
|
|
19
|
|
||
Valvoline
|
9
|
|
|
8
|
|
||
Unallocated and other
|
—
|
|
|
1
|
|
||
|
$
|
85
|
|
|
$
|
88
|
|
Operating information
|
|
|
|
|
|
||
Specialty Ingredients
|
|
|
|
|
|
||
Sales per shipping day
|
$
|
9.1
|
|
|
$
|
9.4
|
|
Metric tons sold (thousands)
|
79.9
|
|
|
81.7
|
|
||
Gross profit as a percent of sales
(a)
|
32.7
|
%
|
|
30.9
|
%
|
||
Performance Materials
|
|
|
|
|
|||
Sales per shipping day
|
$
|
5.4
|
|
|
$
|
5.9
|
|
Metric tons sold (thousands)
|
129.5
|
|
|
137.9
|
|
||
Gross profit as a percent of sales
(a)
|
17.3
|
%
|
|
13.4
|
%
|
||
Valvoline
|
|
|
|
|
|
||
Lubricant sales gallons
|
38.9
|
|
|
38.6
|
|
||
Premium lubricants (percent of U.S. branded volumes)
|
38.4
|
%
|
|
35.8
|
%
|
||
Gross profit as a percent of sales
(a)
|
33.3
|
%
|
|
31.2
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Operating income
|
$
|
60
|
|
|
$
|
51
|
|
Depreciation and amortization
|
59
|
|
|
60
|
|
||
EBITDA
|
$
|
119
|
|
|
$
|
111
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Operating income
|
$
|
25
|
|
|
$
|
14
|
|
Depreciation and amortization
|
17
|
|
|
19
|
|
||
EBITDA
|
$
|
42
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Operating income
|
$
|
83
|
|
|
$
|
75
|
|
Depreciation and amortization
|
9
|
|
|
8
|
|
||
EBITDA
|
$
|
92
|
|
|
$
|
83
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Pension and other postretirement net periodic income
|
|
|
|
||||
(excluding service cost)
|
$
|
13
|
|
|
$
|
12
|
|
Restructuring activities (includes severance, integration
|
|
|
|
|
|
||
and stranded divestiture costs)
|
(1
|
)
|
|
(10
|
)
|
||
Environmental expense for divested businesses
|
(6
|
)
|
|
(4
|
)
|
||
Other income (expense)
|
(5
|
)
|
|
5
|
|
||
Total unallocated income
|
$
|
1
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash provided (used) by:
|
|
|
|
||||
Operating activities from continuing operations
|
$
|
50
|
|
|
$
|
18
|
|
Investing activities from continuing operations
|
64
|
|
|
(40
|
)
|
||
Financing activities from continuing operations
|
(155
|
)
|
|
(29
|
)
|
||
Discontinued operations
|
(86
|
)
|
|
1
|
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
(10
|
)
|
|
(1
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(137
|
)
|
|
$
|
(51
|
)
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash flows provided (used) by operating activities from continuing operations
|
|
|
|
||||
Net income
|
$
|
32
|
|
|
$
|
110
|
|
Loss (income) from discontinued operations (net of tax)
|
8
|
|
|
(22
|
)
|
||
Adjustments to reconcile income from continuing operations to
|
|
|
|
|
|
||
cash flows from operating activities
|
|
|
|
|
|
||
Depreciation and amortization
|
85
|
|
|
88
|
|
||
Debt issuance cost amortization
|
4
|
|
|
3
|
|
||
Deferred income taxes
|
(10
|
)
|
|
(3
|
)
|
||
Equity income from affiliates
|
(4
|
)
|
|
(6
|
)
|
||
Distributions from equity affiliates
|
3
|
|
|
6
|
|
||
Stock based compensation expense
|
7
|
|
|
8
|
|
||
Net loss (gain) on divestitures
|
85
|
|
|
(5
|
)
|
||
Change in operating assets and liabilities
(a)
|
(160
|
)
|
|
(161
|
)
|
||
Total cash flows provided by operating activities from continuing operations
|
$
|
50
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash flows provided (used) by investing activities from continuing operations
|
|
|
|
||||
Additions to property, plant and equipment
|
$
|
(43
|
)
|
|
$
|
(45
|
)
|
Proceeds from disposal of property, plant and equipment
|
1
|
|
|
1
|
|
||
Proceeds from sale of operations or equity investments
|
106
|
|
|
4
|
|
||
Total cash flows provided (used) by investing activities from continuing operations
|
$
|
64
|
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash flows provided (used) by financing activities from continuing operations
|
|
|
|
||||
Repayment of long-term debt
|
$
|
—
|
|
|
$
|
(12
|
)
|
Proceeds (repayment) from short-term debt
|
(6
|
)
|
|
6
|
|
||
Repurchase of common stock
|
(127
|
)
|
|
—
|
|
||
Cash dividends paid
|
(24
|
)
|
|
(26
|
)
|
||
Excess tax benefits related to share-based payments
|
2
|
|
|
3
|
|
||
Total cash flows used by financing activities from continuing operations
|
$
|
(155
|
)
|
|
$
|
(29
|
)
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash provided (used) by discontinued operations
|
|
|
|
||||
Operating cash flows
|
$
|
(84
|
)
|
|
$
|
7
|
|
Investing cash flows
|
(2
|
)
|
|
(6
|
)
|
||
Total cash flows provided (used) by discontinued operations
|
$
|
(86
|
)
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31
|
||||||
(In millions)
|
2014
|
|
|
2013
|
|
||
Cash flows provided by operating activities from continuing operations
|
$
|
50
|
|
|
$
|
18
|
|
Adjustments:
|
|
|
|
|
|
||
Additions to property, plant and equipment
|
(43
|
)
|
|
(45
|
)
|
||
Free cash flows
|
$
|
7
|
|
|
$
|
(27
|
)
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
2014
|
|
|
2014
|
|
||
Cash and cash equivalents
|
$
|
1,256
|
|
|
$
|
1,393
|
|
|
|
|
|
||||
Unused borrowing capacity
|
|
|
|
|
|
||
Revolving credit facility
|
$
|
1,047
|
|
|
$
|
1,084
|
|
Accounts receivable securitization facility
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31
|
|
|
September 30
|
|
||
(In millions)
|
2014
|
|
|
2014
|
|
||
Short-term debt
|
$
|
323
|
|
|
$
|
329
|
|
Long-term debt (including current portion)
|
2,952
|
|
|
2,951
|
|
||
Total debt
|
$
|
3,275
|
|
|
$
|
3,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer Purchases of Equity Securities
(1)
|
|||||||||||||||
Q1 Fiscal Periods
|
Total Number of Shares Purchased
|
Average Price Paid Per Share, including commission
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(1)
|
||||||||||
October 1, 2014 to October 31, 2014:
|
|
|
|
|
|
|
|
|
|||||||
Open Market Purchases
|
931,832
|
|
|
|
$
|
101.53
|
|
931,832
|
|
|
$
|
301
|
|
|
|
November 1, 2014 to November 30, 2014:
|
|
|
|
|
|
|
|
|
|||||||
Open Market Purchases
|
295,608
|
|
|
|
$
|
108.11
|
|
295,608
|
|
|
$
|
270
|
|
|
|
Employee Tax Withholdings
|
16,323
|
|
(2
|
)
|
|
$
|
112.84
|
|
—
|
|
|
|
|
||
December 1, 2014 to December 31, 2014
|
—
|
|
|
|
$
|
—
|
|
—
|
|
|
|
|
|||
Total
|
1,243,763
|
|
|
|
|
1,227,440
|
|
|
$
|
270
|
|
|
|
Ashland Inc.
|
|
(Registrant)
|
January 28, 2015
|
/s/ J. Kevin Willis
|
|
J. Kevin Willis
|
|
Senior Vice President and Chief Financial Officer
(on behalf of the Registrant and as principal
financial officer)
|
Exhibit No.
|
|
Description
|
10.1
|
|
Letter Agreement between Ashland and William A. Wulfsohn, dated November 12, 2014 (filed as Exhibit 10.1 to Ashland’s Form 8-K filed on November 17, 2014 (SEC File No. 001-32532) and incorporated herein by reference).
|
|
|
|
10.2
|
|
Form of Inducement Restricted Stock Award Agreement, between William A. Wulfsohn and Ashland (filed as Exhibit 4.3 to Ashland’s Form S-8 filed on December 18, 2014 (SEC File No. 333-201053) and incorporated herein by reference).
|
|
|
|
10.3*
|
|
Form of Chief Executive Officer Change in Control Agreement.
|
|
|
|
10.4*
|
|
Receivables Assignment Agreement, dated as of November 25, 2014, among Ashland Inc., as originator and master servicer, CVG Capital III LLC, Ashland Specialty Ingredients G.P., the Investors, Letter of Credit Issuers, Managing Agent and Administrators party thereto, and the Bank of Nova Scotia, as Agent for the Investors.
|
|
|
|
10.5*
|
|
Sixth Amendment to Transfer and Administration Agreement, dated as of November 25, 2014, among Ashland Inc., CVG Capital III LLC, the Originators, the Investors, Letter of Credit Issuers, Managing Agents and Administrators party thereto, and the Bank of Nova Scotia, as Agent for the Investors.
|
|
|
|
12*
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
31.1*
|
|
Certificate of William A. Wulfsohn, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certificate of J. Kevin Willis, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32*
|
|
Certificate of William A. Wulfsohn, Chief Executive Officer of Ashland, and J. Kevin Willis, 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.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Eric N. Boni
|
|
Name:
|
Eric N. Boni
|
|
Title:
|
Vice President and Treasurer
|
|
ASHLAND SPECIALTY INGREDIENTS G.P.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Lynn P. Freeman
|
|
Name:
|
Lynn P. Freeman
|
|
Title:
|
Vice President/Assistant Secretary and
|
|
|
Treasurer
|
|
CVG CAPITAL III LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Brett Radulovich
|
|
Name:
|
Brett Radulovich
|
|
Title:
|
President
|
|
LIBERTY STREET FUNDING LLC, as a Conduit Investor and Uncommitted Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ John L. Fridlington
|
|
Name:
|
John L. Fridlington
|
|
Title:
|
Vice President
|
|
GOTHAM FUNDING CORPORATION, as a Conduit Investor and Uncommitted Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ David V. DeAngelis
|
|
Name:
|
David V. DeAngelis
|
|
Title:
|
Vice President
|
|
THE BANK OF NOVA SCOTIA, as Agent, a Letter of Credit Issuer, a Committed Investor, a Managing Agent and an Administrator
|
|
|
|
|
|
|
|
|
By:
|
/s/ Darren Ward
|
|
Name:
|
Darren Ward
|
|
Title:
|
Director
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Managing Agent and Administrator
for the BTMU Investor Group
|
|
|
|
|
|
|
|
|
By:
|
/s/ Eric Williams
|
|
Name:
|
Eric Williams
|
|
Title:
|
Managing Director
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Letter of Credit Issuer and Committed Investor for the BTMU Investor Group
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Campbell
|
|
Name:
|
Mark Campbell
|
|
Title:
|
Authorized Signatory
|
|
PNC BANK, NATIONAL ASSOCIATION,
as a Letter of Credit Issuer, Managing Agent, and a Committed Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robyn Reeher
|
|
Name:
|
Robyn Reeher
|
|
Title:
|
Vice President
|
|
SUNTRUST BANK, as a Letter of Credit Issuer, a Committed Investor and a Managing Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael Peden
|
|
Name:
|
Michael Peden
|
|
Title:
|
Vice President
|
Obligor’s Public Unsecured Debt Rating
(S&P/Moody’s)
|
Concentration Limit
|
AA-/Aa3 or better
|
20.0%
|
A/A2 or better (but below AA-/Aa3)
|
20.0%
|
BBB+/Baa1 or better (but below A/A2)
|
10.0%
|
BBB-/Baa3 or better (but below BBB+/Baa1)
|
6.7%
|
Below BBB-/Baa3 or unrated
|
4.0%
|
|
ASHLAND, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Eric N. Boni
|
|
Name:
|
Eric N. Boni
|
|
Title:
|
Vice President and Treasurer
|
|
ASHLAND SPECIALTY INGREDIENTS G.P.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Lynn P. Freeman
|
|
Name:
|
Lynn P. Freeman
|
|
Title:
|
Vice President/Assistant Secretary and
|
|
|
Treasurer
|
|
CVG CAPITAL III LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Brett Radulovich
|
|
Name:
|
Brett Radulovich
|
|
Title:
|
President
|
|
LIBERTY STREET FUNDING LLC, as a Conduit Investor and Uncommitted Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ John L. Fridlington
|
|
Name:
|
John L. Fridlington
|
|
Title:
|
Vice President
|
|
GOTHAM FUNDING CORPORATION, as a Conduit Investor and Uncommitted Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ David V. DeAngelis
|
|
Name:
|
David V. DeAngelis
|
|
Title:
|
Vice President
|
|
THE BANK OF NOVA SCOTIA, as Agent, a Letter of Credit Issuer, a Committed Investor, a Managing Agent and an Administrator
|
|
|
|
|
|
|
|
|
By:
|
/s/ Darren Ward
|
|
Name:
|
Darren Ward
|
|
Title:
|
Director
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Managing Agent and Administrator
for the BTMU Investor Group
|
|
|
|
|
|
|
|
|
By:
|
/s/ Eric Williams
|
|
Name:
|
Eric Williams
|
|
Title:
|
Managing Director
|
|
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Letter of Credit Issuer and Committed Investor for the BTMU Investor Group
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Campbell
|
|
Name:
|
Mark Campbell
|
|
Title:
|
Authorized Signatory
|
|
PNC BANK, NATIONAL ASSOCIATION,
as a Letter of Credit Issuer, a Managing Agent, and a Committed Investor
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robyn Reeher
|
|
Name:
|
Robyn Reeher
|
|
Title:
|
Vice President
|
|
SUNTRUST BANK, as a Letter of Credit Issuer, a Committed Investor and a Managing Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ David Hufnagel
|
|
Name:
|
David Hufnagel
|
|
Title:
|
Vice President
|
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/ William A. Wulfsohn
|
|
William A. Wulfsohn
|
|
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/ J. Kevin Willis
|
|
J. Kevin Willis
|
|
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/ William A. Wulfsohn
|
|
|
William A. Wulfsohn
|
|
|
Chief Executive Officer
|
|
|
January 28, 2015
|
|
|
|
|
|
|
|
|
/s/ J. Kevin Willis
|
|
|
J. Kevin Willis
|
|
|
Chief Financial Officer
|
|
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January 28, 2015
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