Ashland Inc. Reports Preliminary Net Income of 65 Cents Per Share for Fiscal Second Quarter
(Logo: http://www.newscom.com/cgi-bin/prnh/20040113/ASHLANDLOGO)
Key items affecting the
Adjusted Pro Forma Results(3)
- pro forma sales and operating revenue declined 24 percent from
$2,617 million to $1,990 million ; - adjusted pro forma operating income increased 25 percent from
$107 million to $134 million ; and - adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) increased 16 percent from
$191 million to $221 million .
Performance Summary
Commenting on Ashland’s adjusted pro forma second-quarter results, Chairman and Chief Executive Officer
“Our businesses successfully managed pricing in concert with significantly declining raw materials costs and also idled capacity, enabling
“Consumer Markets achieved record quarterly earnings, while Ashland Distribution significantly improved EBITDA. EBITDA declines in our specialty chemicals businesses were generally in line with lower volume and continued to reflect the global economic downturn, particularly in the construction and transportation markets.”
Reinforcing the company’s near-term priority, O’Brien said, “Our primary objective as an organization is to generate cash and pay down debt. In the March quarter, we generated
Debt Covenant Status
Commenting on the status of Ashland’s debt covenants, O’Brien said, “We continue to be significantly favorable to our financial covenant requirements and expanded the cushions during the quarter. Our consolidated debt-to-EBITDA ratio was 2.8 times at
Business Performance
In order to aid understanding of Ashland’s ongoing business performance, the results of Ashland’s business segments are presented on an adjusted pro forma basis as described under the heading “Adjusted Pro Forma Results” and reconciled to GAAP in footnote 3 of this news release.
Ashland Aqualon Functional Ingredients recorded sales and operating revenue of
Ashland Hercules Water Technologies’ sales and operating revenue declined 17 percent to
Ashland Performance Materials’ sales and operating revenue of
Ashland Consumer Markets’ sales and operating revenue was
Ashland Distribution’s sales and operating revenue for the
For the
Outlook
Commenting on Ashland’s outlook, O’Brien said, “Our focus continues to be on generating cash and paying down debt. It appears that demand could remain flat for the remainder of the year due to global macroeconomic dynamics. We expect to navigate this economic downturn and create value for our stakeholders by effectively managing our pricing, aggressively reducing our costs, and applying the cash we generate to reducing debt. We continue to resize our businesses to match current economic conditions and to better position the company for improved profitability and growth when the economy turns.”
Conference Call Webcast
Today at
Ashland Inc. (NYSE: ASH) provides specialty chemical products, services and solutions for many of the world’s most essential needs and industries. Serving customers in more than 100 countries, it operates through five commercial units: Ashland Aqualon Functional Ingredients, Ashland Hercules Water Technologies, Ashland Performance Materials, Ashland Consumer Markets (Valvoline) and Ashland Distribution. To learn more about
(1) Preliminary Results
Financial results are preliminary until Ashland’s quarterly report on Form 10-Q is filed with the U.S. Securities and Exchange Commission.
(2) Regulation G – Unadjusted EBITDA
The information presented in this news release regarding unadjusted earnings before interest, taxes, depreciation, and amortization (unadjusted EBITDA) does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the company and its operating segments. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the table provided below.
(in millions) Q2 2009 Q2 2008
------- -------
Operating income $112 $52
Add:
Depreciation and amortization 93 37
------ ------
Unadjusted EBITDA $205 $89
====== ======
(3) Regulation G – Adjusted Pro Forma Results
The information presented in this news release regarding adjusted pro forma results does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the company and its segments. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables provided below.
The unaudited adjusted pro forma results are presented for informational purposes only and do not reflect future events that may occur or any operating efficiencies or inefficiencies that may result from the acquisition of Hercules Incorporated. Certain significant and identifiable cost allocation, reporting and accounting policy differences have been reflected in these adjusted pro forma results. However, these adjusted pro forma results do not purport to identify all these differences. Therefore, the unaudited adjusted pro forma results are not necessarily indicative of results that would have been achieved had the businesses been combined during the period presented or the results that
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND AQUALON Ashland Eliminate Adjusted
FUNCTIONAL INGREDIENTS GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-------------------------------------------------------------------
Sales and operating revenue $ 223 $ 223
Cost of sales and operating expenses 173 $ (16) 157
Gross profit as a percent of sales 22.4% 29.6%
Selling, general and administrative
expenses 52 (1) 51
Equity and other income (1) (1)
Operating income (3) 17 14
Operating income as a percent of
sales -1.3% 6.3%
Depreciation and amortization 33 33
-------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 30 $ 17 $ 47
===================================================================
EBITDA as a percent of sales 13.5% 21.1%
-------------------------------------------------------------------
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND HERCULES Ashland Eliminate Adjusted
WATER TECHNOLOGIES GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-----------------------------------------------------------------------
Sales and operating revenue $ 433 $ 433
Cost of sales and operating expenses 292 292
Gross profit as a percent of sales 32.6% 32.6%
Selling, general and administrative
expenses 129 129
Equity and other income 1 1
Operating income 13 13
Operating income as a percent of
sales 3.0% 3.0%
Depreciation and amortization 25 25
-----------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 38 $ 38
=======================================================================
EBITDA as a percent of sales 8.8% 8.8%
-----------------------------------------------------------------------
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND PERFORMANCE Ashland Eliminate Adjusted
MATERIALS GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-------------------------------------------------------------------
Sales and operating revenue $ 259 $ 259
Cost of sales and operating expenses 209 $ (4) 205
Gross profit as a percent of sales 19.5% 20.8%
Selling, general and administrative
expenses 47 (1) 46
Equity and other income 2 2
Operating income 5 5 10
Operating income as a percent of
sales 1.9% 3.9%
Depreciation and amortization 15 (2) 13
-------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 20 $ 3 $ 23
===================================================================
EBITDA as a percent of sales 7.7% 8.9%
-------------------------------------------------------------------
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND CONSUMER Ashland Eliminate Adjusted
MARKETS (Valvoline) GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-----------------------------------------------------------------------
Sales and operating revenue $ 407 $ 407
Cost of sales and operating expenses 276 276
Gross profit as a percent of sales 32.2% 32.2%
Selling, general and administrative
expenses 68 68
Equity and other income 3 3
Operating income 66 66
Operating income as a percent of
sales 16.2% 16.2%
Depreciation and amortization 9 9
-----------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 75 $ 75
=======================================================================
EBITDA as a percent of sales 18.4% 18.4%
-----------------------------------------------------------------------
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary Ashland Eliminate Adjusted
ASHLAND DISTRIBUTION GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-----------------------------------------------------------------------
Sales and operating revenue $ 698 $ 698
Cost of sales and operating expenses 609 609
Gross profit as a percent of sales 12.8% 12.8%
Selling, general and administrative
expenses 59 59
Equity and other income 1 1
Operating income 31 31
Operating income as a percent of
sales 4.4% 4.4%
Depreciation and amortization 7 7
-----------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 38 $ 38
=======================================================================
EBITDA as a percent of sales 5.4% 5.4%
-----------------------------------------------------------------------
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
INTERSEGMENT SALES/ UNALLOCATED Ashland Eliminate Adjusted
AND OTHER GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
-------------------------------------------------------------------
Sales and operating revenue $ (30) $ (30)
Cost of sales and operating expenses (28) $ (2) (30)
Selling, general and administrative
expenses (3) 2 (1)
Equity and other income (1) (1)
Operating income - - -
Depreciation and amortization 4 (4) -
-------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 4 $ (4) $ -
===================================================================
RECONCILIATION OF 2009 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary Ashland Eliminate Adjusted
ASHLAND INC. GAAP Key Items Pro Forma
Three Months Ended March 31, 2009 Results (Table 5) Results
--------------------------------------------------------------------
Sales and operating revenue $ 1,990 $ 1,990
Cost of sales and operating expenses 1,531 $(22) 1,509
Gross profit as a percent of sales 23.1% 24.2%
Selling, general and administrative
expenses 352 - 352
Equity and other income 5 5
Operating income 112 22 134
Operating income as a percent of
sales 5.6% 6.7%
Depreciation and amortization 93 (6) 87
--------------------------------------------------------------------
Earnings before interest, taxes,
depreciation and amortization $ 205 $ 16 $ 221
====================================================================
EBITDA as a percent of sales 10.3% 11.1%
--------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND AQUALON Pro Forma Adjustments
FUNCTIONAL ----------------------------------
INGREDIENTS Additional
Ashland Hercules Purchase Adjusted
Three Months Ended GAAP Ongoing Accounting Conforming Pro Forma
March 31, 2008 Results Results (a) D&A Adjustments Results
-------------------------------------------------------------------------
Sales and operating
revenue $ - $ 255 $ 255
Cost of sales and
operating expenses 167 $ 8 175
Gross profit as a
percent of sales 34.5% 31.4%
Selling, general
and administrative
expenses 40 10 $ 4 54
Equity and other
income - - -
Operating income 48 (18) (4) 26
Operating income as a
percent of sales 18.8% 10.2%
Depreciation and
amortization 13 18 - 31
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ - $ 61 $ - $ (4) $ 57
=========================================================================
EBITDA as a percent of
sales 23.9% 22.4%
-------------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND HERCULES Pro Forma Adjustments
WATER TECHNOLOGIES ----------------------------------
Additional
Ashland Hercules Purchase Adjusted
Three Months Ended GAAP Ongoing Accounting Conforming Pro Forma
March 31, 2008 Results Results (a) D&A Adjustments Results
-------------------------------------------------------------------------
Sales and operating
revenue $ 217 $ 303 $ 520
Cost of sales and
operating expenses 136 208 $ 2 346
Gross profit as a
percent of sales 37.3% 31.4% 33.5%
Selling, general
and administrative
expenses 83 65 3 $ 5 156
Equity and other
income - - 1 1
Operating income (2) 30 (5) (4) 19
Operating income as
a percent of sales -0.9% 9.9% 3.7%
Depreciation and
amortization 7 11 5 1 24
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 5 $ 41 $ - $ (3) $ 43
=========================================================================
EBITDA as a percent
of sales 2.3% 13.5% 8.3%
-------------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND PERFORMANCE Pro Forma Adjustments
MATERIALS ----------------------------------
Additional
Ashland Hercules Purchase Adjusted
Three Months Ended GAAP Ongoing Accounting Conforming Pro Forma
March 31, 2008 Results Results (a) D&A Adjustments Results
-------------------------------------------------------------------------
Sales and operating
revenue $ 398 $ 398
Cost of sales and
operating expenses 326 326
Gross profit as a
percent
of sales 18.1% 18.1%
Selling, general
and administrative
expenses 58 58
Equity and other
income 6 6
Operating income 20 20
Operating income as
a percent of sales 5.0% 5.0%
Depreciation and
amortization 10 $ 1 11
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 30 $ 1 $ 31
=========================================================================
EBITDA as a percent
of sales 7.5% 7.8%
-------------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
ASHLAND CONSUMER Pro Forma Adjustments
MARKETS (Valvoline) ----------------------------------
Additional
Ashland Hercules Purchase Adjusted
Three Months Ended GAAP Ongoing Accounting Conforming Pro Forma
March 31, 2008 Results Results (a) D&A Adjustments Results
-------------------------------------------------------------------------
Sales and operating
revenue $ 401 $ 401
Cost of sales and
operating expenses 303 303
Gross profit as a
percent of sales 24.4% 24.4%
Selling, general
and
administrative
expenses 77 77
Equity and other
income 3 3
Operating income 24 24
Operating income
as a percent of
sales 6.0% 6.0%
Depreciation and
amortization 8 $ 2 10
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 32 $ 2 $ 34
=========================================================================
EBITDA as a percent
of sales 8.0% 8.5%
-------------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary Pro Forma Adjustments
ASHLAND DISTRIBUTION ----------------------------------
Additional
Ashland Hercules Purchase Adjusted
Three Months Ended GAAP Ongoing Accounting Conforming Pro Forma
March 31, 2008 Results Results (a) D&A Adjustments Results
-------------------------------------------------------------------------
Sales and operating
revenue $1,082 $1,082
Cost of sales and
operating expenses 999 999
Gross profit as a
percent of sales 7.7% 7.7%
Selling, general and
administrative
expenses 71 71
Equity and other
income 1 1
Operating income 13 13
Operating income
as a percent
of sales 1.2% 1.2%
Depreciation
and amortization 6 $ 2 8
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 19 $ 2 $ 21
=========================================================================
EBITDA as a
percent of sales 1.8% 1.9%
-------------------------------------------------------------------------
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary
INTERSEGMENT SALES/ Pro Forma Adjustments
UNALLOCATED AND OTHER ----------------------------------
Additional Conforming
Ashland Hercules Purchase Adjustments Adjusted
Three Months Ended GAAP Ongoing Accounting and Key Pro Forma
March 31, 2008 Results Results (a) D&A Items Results
-------------------------------------------------------------------------
Sales and operating
revenue $ (39) $ (39)
Cost of sales and
operating expenses (39) (39)
Selling, general
and administrative
expenses 3 $ 4 $ (14) (7)
Equity and other
income - (6) 4 (2)
Operating income (3) (10) 18 5
Depreciation and
amortization 6 - (6) -
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 3 $ (10) $ 12 $ 5
=========================================================================
RECONCILIATION OF 2008 FISCAL SECOND QUARTER ADJUSTED PRO FORMA RESULTS
-----------------------------------------------------------------------
($ millions, except percentages)
Preliminary Pro Forma Adjustments
ASHLAND INC. ----------------------------------
Additional Conforming
Ashland Hercules Purchase Adjustments Adjusted
Three Months Ended GAAP Ongoing Accounting and Key Pro Forma
March 31, 2008 Results Results (a) D&A Items (b) Results
-------------------------------------------------------------------------
Sales and operating
revenue $2,059 $ 558 $2,617
Cost of sales and
operating expenses 1,725 375 $ 10 2,110
Gross profit as a
percent of sales 16.2% 32.8% 19.4%
Selling, general and
administrative
expenses 292 109 13 $ (5) 409
Equity and other
income 10 (6) - 5 9
Operating income 52 68 (23) 10 107
Operating income
as a percent
of sales 2.5% 12.2% 4.1%
Depreciation
and amortization 37 24 23 - 84
-------------------------------------------------------------------------
Earnings before
interest, taxes,
depreciation and
amortization $ 89 $ 92 $ - $ 10 $ 191
=========================================================================
EBITDA as a
percent of sales 4.3% 16.5% 7.3%
-------------------------------------------------------------------------
(a) Certain nonrecurring, noncash or key items have been removed.
(b) Includes the $5 million charge related to the Cargill joint venture
(see Table 5), as well as other conforming adjustments related to
Hercules that are consistent with Ashland's historical reporting
treatment.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon a number of assumptions, including those mentioned within this news release. Performance estimates are also based upon internal forecasts and analyses of current and future market conditions and trends; management plans and strategies; operating efficiencies and economic conditions, such as prices, supply and demand, and cost of raw materials; legal proceedings and claims (including environmental and asbestos matters); and weather. These risks and uncertainties may cause actual operating results to differ materially from those stated, projected or implied. Other risks and uncertainties include the possibility that the benefits anticipated from
Ashland Inc. and Consolidated Subsidiaries Table 1
STATEMENTS OF CONSOLIDATED INCOME
(In millions except per share data -
preliminary and unaudited)
Three months ended Six months ended
March 31 March 31
------------------- ----------------
2009 2008 2009 2008
------ ------ ------ ------
SALES AND OPERATING REVENUES $1,990 $2,059 $3,956 $3,964
COSTS AND EXPENSES
Cost of sales and operating
expenses 1,531 1,725 3,172 3,314
Selling, general and
administrative expenses (a) 352 292 696 573
------ ------ ------ ------
1,883 2,017 3,868 3,887
EQUITY AND OTHER INCOME 5 10 17 21
------ ------ ------ ------
OPERATING INCOME 112 52 105 98
(Loss) gain on the MAP
Transaction (b) (1) 22 - 22
Net interest and other financing
(expense) income (54) 8 (82) 21
Other expenses (c) - - (86) -
------ ------ ------ ------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES 57 82 (63) 141
Income tax expense 9 10 8 31
------ ------ ------ ------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 48 72 (71) 110
Loss from discontinued operations
(net of income taxes) - - - (5)
------ ------ ------ ------
NET INCOME (LOSS) $ 48 $ 72 $ (71) $ 105
====== ====== ====== ======
DILUTED EARNINGS PER SHARE
Income (loss) from
continuing operations $ .65 $ 1.13 $(1.00) $ 1.74
Loss from discontinued operations - - - (.09)
------ ------ ------ ------
Net income (loss) $ .65 $ 1.13 $(1.00) $ 1.65
====== ====== ====== ======
AVERAGE COMMON SHARES AND
ASSUMED CONVERSIONS 74 63 71 63
SALES AND OPERATING REVENUES
Functional Ingredients $ 223 $ - $ 342 $ -
Water Technologies 433 217 751 423
Performance Materials 259 398 583 769
Consumer Markets 407 401 795 781
Distribution 698 1,082 1,551 2,072
Intersegment sales (30) (39) (66) (81)
------ ------ ------ ------
$1,990 $2,059 $3,956 $3,964
====== ====== ====== ======
OPERATING INCOME
Functional Ingredients $ (3) $ - $ (10) $ -
Water Technologies 13 (2) 7 3
Performance Materials 5 20 11 31
Consumer Markets 66 24 85 44
Distribution 31 13 40 19
Unallocated and other - (3) (28) 1
------ ------ ------ ------
$ 112 $ 52 $ 105 $ 98
====== ====== ====== ======
(a) The six months ended March 31, 2009 includes a $10 million charge
related to the original valuation of the ongoing research and
development projects at Hercules Incorporated (Hercules) as of the
merger date. In accordance with applicable GAAP and SEC accounting
regulations, these purchased in-process research and development
costs should be expensed as recognized. The three and six months
ended March 31, 2009 include $5 million and $31 million,
respectively, for severance charges for the ongoing integration and
reorganization from the Hercules acquisition and other cost reduction
programs. In addition, a charge of $16 million and $37 million for
the three and six months ended March 31, 2009 was recorded for a
one-time fair value assessment of Hercules inventory as of the date
of the transaction.
(b) "MAP Transaction" refers to the June 30, 2005 transfer of Ashland's
38% interest in Marathon Ashland Petroleum LLC (MAP) and two other
businesses to Marathon Oil Corporation.
(c) The six months ended March 31, 2009 includes a $54 million loss on
currency swaps related to the Hercules acquisition and a $32 million
realized loss on auction rate securities, of which $4 million relates
to securities sold.
Ashland Inc. and Consolidated Subsidiaries Table 2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions - preliminary and unaudited)
March 31
--------
2009 2008
------ ------
ASSETS
Current assets
Cash and cash equivalents $ 203 $ 847
Available-for-sale securities - 74
Accounts receivable 1,400 1,498
Inventories 628 545
Deferred income taxes 93 68
Other current assets 100 83
------ ------
2,424 3,115
Investments and other noncurrent assets
Auction rate securities 214 254
Goodwill 2,088 279
Intangibles 1,293 106
Asbestos insurance receivable
(noncurrent portion) 440 443
Deferred income taxes - 145
Other noncurrent assets 590 421
------ ------
4,625 1,648
Property, plant and equipment
Cost 3,462 2,178
Accumulated depreciation and
amortization (1,274) (1,163)
------ ------
2,188 1,015
------ ------
$9,237 $5,778
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt $ 84 $ -
Current portion of long-term debt 94 3
Trade payables 752 861
Accrued expenses and other liabilities 459 272
------ ------
1,389 1,136
Noncurrent liabilities
Long-term debt (noncurrent portion) 2,084 64
Employee benefit obligations 667 259
Asbestos litigation reserve (noncurrent portion) 796 539
Deferred income taxes 218 -
Other noncurrent liabilities 540 484
------ ------
4,305 1,346
Stockholders' equity 3,543 3,296
------ ------
$9,237 $5,778
====== ======
Ashland Inc. and Consolidated Subsidiaries Table 3
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions - preliminary and unaudited)
Six months ended
March 31
--------
2009 2008
------ ------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES FROM
CONTINUING OPERATIONS
Net (loss) income $ (71) $ 105
Loss from discontinued operations (net
of income taxes) - 5
Adjustments to reconcile income from
continuing operations to
cash flows from operating activities
Depreciation and amortization 156 71
Purchased in-process research and
development amortization 10 -
Debt issuance cost amortization 16 -
Deferred income taxes 2 13
Equity income from affiliates (7) (11)
Distributions from equity affiliates 4 5
Gain from the sale of property
and equipment - (1)
Stock based compensation expense 3 5
Gain on the MAP Transaction - (22)
Inventory fair value adjustment 37 -
Loss on currency swaps related to
Hercules acquisition 54 -
Loss on auction rate securities 32 -
Change in operating assets and
liabilities (a) 58 52
------ ------
294 222
CASH FLOWS USED BY INVESTING ACTIVITIES FROM
CONTINUING OPERATIONS
Additions to property, plant and equipment (80) (85)
Proceeds from the disposal of property,
plant and equipment 4 8
Purchase of operations - net of cash acquired (2,078) (4)
Proceeds from sale of operations 7 26
Settlement of currency swaps related to
Hercules acquisition (95) -
Purchases of available-for-sale
securities - (435)
Proceeds from sales and maturities of
available-for-sale securities 29 255
------ ------
(2,213) (235)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
FROM CONTINUING OPERATIONS
Proceeds from issuance of long-term debt 2,000 -
Repayment of long-term debt (632) (3)
Proceeds from/repayments of issuance
of short-term debt 43 -
Debt issuance costs (137) -
Premium on long-term debt repayment (13) -
Cash dividends paid (11) (35)
Proceeds from the exercise of stock options - 2
Excess tax benefits related to share-
based payments - 1
------ ------
1,250 (35)
------ ------
CASH USED BY CONTINUING OPERATIONS (669) (48)
Cash provided (used) by discontinued operations
Operating cash flows 3 (5)
Effect of currency exchange rate
changes on cash and cash equivalents (17) 3
------ ------
DECREASE IN CASH AND CASH EQUIVALENTS (683) (50)
Cash and cash equivalents - beginning of year 886 897
------ ------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 203 $ 847
====== ======
DEPRECIATION AND AMORTIZATION
Functional Ingredients $ 50 $ -
Water Technologies 41 13
Performance Materials 27 21
Consumer Markets 18 18
Distribution 15 14
Unallocated and other 5 5
------ ------
$ 156 $ 71
====== ======
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Functional Ingredients $ 27 $ -
Water Technologies 9 9
Performance Materials 18 30
Consumer Markets 15 12
Distribution 1 15
Unallocated and other 10 19
------ ------
$ 80 $ 85
====== ======
(a) Excludes changes resulting from operations acquired or sold.
Ashland Inc. and Consolidated Subsidiaries Table 4
INFORMATION BY INDUSTRY SEGMENT
(In millions - preliminary and unaudited)
Three months Six months
ended ended
March 31 March 31
----------- -----------
2009 2008 2009 2008
------ ------ ------ ------
FUNCTIONAL INGREDIENTS (a) (b)
Sales per shipping day $ 3.5 $ - $ 3.7 $ -
Pounds sold per shipping day 1.6 - 1.6 -
Gross profit as a percent of sales 22.4% - 20.0% -
WATER TECHNOLOGIES (a) (b)
Sales per shipping day $ 6.9 $ 3.5 $ 6.0 $ 3.4
Gross profit as a percent of sales 32.6% 37.3% 31.6% 38.3%
PERFORMANCE MATERIALS (a)
Sales per shipping day $ 4.1 $ 6.3 $ 4.7 $ 6.2
Pounds sold per shipping day 3.7 4.8 4.0 4.7
Gross profit as a percent of sales 19.5% 18.1% 17.5% 18.1%
CONSUMER MARKETS (a)
Lubricant sales (gallons) 37.7 42.1 70.7 81.9
Premium lubricants (percent of
U.S. branded volumes) 29.1% 25.7% 28.2% 24.4%
Gross profit as a percent
of sales 32.2% 24.4% 27.1% 24.6%
DISTRIBUTION (a)
Sales per shipping day $11.1 $17.2 $12.4 $16.6
Pounds sold per shipping day 14.3 18.9 14.9 18.8
Gross profit as a percent
of sales (c) 12.8% 7.7% 10.5% 7.6%
(a) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses.
(b) Industry segment results from November 14, 2008 forward include
operations acquired from Hercules Incorporated.
(c) Distribution's gross profit as a percentage of sales for the three
and six months ended March 31, 2009 and 2008 include a LIFO quantity
credit of $11 million and $4 million, respectively.
Ashland Inc. and Consolidated Subsidiaries Table 5
COMPONENTS OF OPERATING INCOME
(In millions - preliminary and unaudited)
Three Months Ended March 31, 2009
Consumer
Functional Water Performance Markets
Ingredients Technologies Materials (Valvoline)
----------- ------------ --------- -----------
OPERATING
INCOME
Severance $(1) $ - $(3) $ -
Inventory fair
value adjustment (16) - - -
Asset impairments
and accelerated
depreciation - - (2) -
Currency gain
on intracompany
loan - - - -
All other
operating income 14 13 10 66
------ ------ ------ ------
$(3) $13 $ 5 $66
====== ====== ====== ======
Unallocated
Distribution & Other Total
------------ ----------- -------
OPERATING INCOME
Severance $ - $(1) $ (5)
Inventory fair
value adjustment - - (16)
Asset impairments
and accelerated
depreciation - (4) (6)
Currency gain
on intracompany
loan - 5 5
All other
operating income 31 - 134
------ ------ ------
$31 $ - $112
====== ====== ======
Three Months Ended March 31, 2008
Consumer
Functional Water Markets
Ingredients Technologies Materials (Valvoline)
----------- ------------ --------- -----------
OPERATING INCOME
Joint venture
impairment $ - $ - $ - $ -
All other
operating income - (2) 20 24
------ ------ ------ ------
$ - $(2) $20 $24
====== ====== ====== ======
Unallocated
Distribution & Other Total
------------ ----------- -------
OPERATING INCOME
Joint venture
impairment $ - $(5) $(5)
All other
operating income 13 2 57
------ ------ ------
$13 $(3) $52
====== ====== ======
SOURCE Ashland Inc.