===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
Commission file number 1-2918
ASHLAND INC.
(a Kentucky corporation)
I.R.S. No. 61-0122250
50 E. RiverCenter Boulevard
P. O. Box 391
Covington, Kentucky 41012-0391
Telephone Number: (859) 815-3333
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ____
At July 31, 2000, there were 69,933,622 shares of
Registrant's Common Stock outstanding. One Right to purchase
one-thousandth of a share of Series A Participating Cumulative
Preferred Stock accompanies each outstanding share of Registrant's
Common Stock.
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
----------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
----------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
----------------------- -----------------------
(In millions except per share data) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales and operating revenues $ 2,103 $ 1,796 $ 5,821 $ 4,945
Equity income 197 107 285 208
Other income 17 15 53 54
---------- ---------- ---------- ---------
2,317 1,918 6,159 5,207
COSTS AND EXPENSES
Cost of sales and operating expenses 1,716 1,407 4,712 3,884
Selling, general and administrative expenses 274 264 804 781
Depreciation, depletion and amortization 59 50 175 153
---------- ---------- ---------- ---------
2,049 1,721 5,691 4,818
---------- ---------- ---------- ---------
OPERATING INCOME 268 197 468 389
Net interest and other financial costs (50) (36) (138) (103)
---------- ---------- ---------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 218 161 330 286
Income taxes (89) (62) (135) (110)
---------- ---------- ---------- ---------
INCOME FROM CONTINUING OPERATIONS 129 99 195 176
Income (loss) from discontinued operations (net of income taxes) - 1 (215) -
Costs of spin-off of discontinued operations (net of income taxes) - - (3) -
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 129 100 (23) 176
Extraordinary loss on early retirement of debt (net of income taxes) - - (3) -
---------- ---------- ---------- ---------
NET INCOME (LOSS) $ 129 $ 100 $ (26) $ 176
========== ========== ========== =========
BASIC EARNINGS (LOSS) PER SHARE - Note A
Income from continuing operations $ 1.83 $ 1.35 $ 2.74 $ 2.36
Income (loss) from discontinued operations - .01 (3.02) .01
Costs of spin-off of discontinued operations - - (.04) -
Extraordinary loss on early retirement of debt - - (.04) -
---------- ---------- ---------- ---------
Net income (loss) $ 1.83 $ 1.36 $ (.36) $ 2.37
========== ========== ========== =========
DILUTED EARNINGS (LOSS) PER SHARE - Note A
Income from continuing operations $ 1.83 $ 1.34 $ 2.73 $ 2.34
Income (loss) from discontinued operations - .01 (3.01) .01
Costs of spin-off of discontinued operations - - (.04) -
Extraordinary loss on early retirement of debt - - (.04) -
---------- ---------- ---------- ---------
Net income (loss) $ 1.83 $ 1.35 $ (.36) $ 2.35
========== ========== ========== =========
DIVIDENDS PAID PER COMMON SHARE $ .275 $ .275 $ .825 $ .825
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------------------------------
June 30 September 30 June 30
(In millions) 2000 1999 1999
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 29 $ 110 $ 81
Accounts receivable 1,239 1,242 1,152
Allowance for doubtful accounts (28) (23) (23)
Inventories - Note A 549 464 491
Deferred income taxes 113 107 118
Other current assets 205 159 138
---------- ---------- ---------
2,107 2,059 1,957
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) 2,321 2,172 2,098
Cost in excess of net assets of companies acquired 500 220 215
Investment in Arch Coal - discontinued operations 35 417 422
Other noncurrent assets 353 264 335
---------- ---------- ---------
3,209 3,073 3,070
PROPERTY, PLANT AND EQUIPMENT
Cost 2,910 2,649 2,594
Accumulated depreciation, depletion and amortization (1,445) (1,357) (1,340)
---------- ---------- ---------
1,465 1,292 1,254
---------- ---------- ---------
$ 6,781 $ 6,424 $ 6,281
========== ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $ 527 $ 219 $ 357
Trade and other payables 1,267 1,135 1,108
Income taxes 51 42 50
---------- ---------- ---------
1,845 1,396 1,515
NONCURRENT LIABILITIES
Long-term debt (less current portion) 1,898 1,627 1,627
Employee benefit obligations 400 418 416
Deferred income taxes 196 226 129
Reserves of captive insurance companies 190 175 183
Other long-term liabilities and deferred credits 344 382 306
Commitments and contingencies - Note D
---------- ---------- ---------
3,028 2,828 2,661
COMMON STOCKHOLDERS' EQUITY 1,908 2,200 2,105
---------- ---------- ---------
$ 6,781 $ 6,424 $ 6,281
========== ========== =========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------------------
Accumulated
other
Common Paid-in Retained comprehensive
(In millions) stock capital earnings loss Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 1, 1998 $ 76 $ 602 $ 1,501 $ (42) $ 2,137
Total comprehensive income (1) 176 (16) 160
Cash dividends (61) (61)
Issued common stock under
Stock incentive plans 6 6
Acquisitions of other companies 1 47 48
Repurchase of common stock (4) (181) (185)
--------- --------- ---------- ---------------- --------
BALANCE AT JUNE 30, 1999 $ 73 $ 474 $ 1,616 $ (58) $ 2,105
========= ========= ========== ================ ========
BALANCE AT OCTOBER 1, 1999 $ 72 $ 464 $ 1,710 $ (46) $ 2,200
Total comprehensive income (loss) (1) (26) (16) (42)
Dividends
Cash (58) (58)
Spin-off of Arch Coal shares (123) (123)
Issued common stock under
Stock incentive plans 1 1
Acquisitions of other companies 1 1
Repurchase of common stock (2) (69) (71)
--------- --------- ---------- ---------------- --------
BALANCE AT JUNE 30, 2000 $ 70 $ 397 $ 1,503 $ (62) $ 1,908
========= ========= ========== ================ ========
-----------------------------------------------------------------------------------------------------------------------------------
(1) Reconciliations of net income (loss) to total comprehensive income (loss) follow.
</TABLE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30 June 30
--------------------------- ---------------------------
(In millions) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 129 $ 100 $ (26) $ 176
Unrealized translation adjustments (9) (3) (23) (14)
Related tax benefit 1 1 7 3
Unrealized losses on securities - (3) - (6)
Related tax benefit - 1 - 2
Gains on securities included in net income - - - (2)
Related tax expense - - - 1
----------- ----------- ----------- -----------
Total comprehensive income (loss) $ 121 $ 96 $ (42) $ 160
=========== =========== =========== ===========
-----------------------------------------------------------------------------------------------------------------------
At June 30, 2000, the accumulated other comprehensive loss was
comprised of net unrealized translation losses of $52 million and a
minimum pension liability of $10 million.
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------------------------------------------------------------------------------------------
Nine months ended
June 30
--------------------------------
(In millions) 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM CONTINUING OPERATIONS
Income from continuing operations $ 195 $ 176
Expense (income) not affecting cash
Depreciation, depletion and amortization 175 153
Deferred income taxes 65 24
Equity income from affiliates (285) (208)
Distributions from equity affiliates 142 210
Change in operating assets and liabilities (1) (97) (224)
----------- -----------
195 131
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt 737 150
Proceeds from issuance of common stock 1 4
Repayment of long-term debt (407) (50)
Repurchase of common stock (71) (185)
Increase in short-term debt 244 236
Dividends paid (2) (58) (61)
----------- -----------
446 94
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (161) (158)
Purchase of operations - net of cash acquired (3) (579) (40)
Other - net 19 20
----------- -----------
(721) (178)
----------- -----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS (80) 47
Cash provided (used) by discontinued operations (1) -
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (81) 47
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 110 34
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 29 $ 81
=========== ===========
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes changes resulting from operations acquired or sold.
(2) The 2000 amount excludes the dividend of Arch Coal shares to Ashland
shareholders which resulted in a $123 million charge to retained
earnings.
(3) Amounts exclude acquisitions through the issuance of common stock of
$1 million in 2000 and $48 million in 1999.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL REPORTING
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial reporting and
Securities and Exchange Commission regulations. Although such
statements are subject to any year-end audit adjustments which may
be necessary, in the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. These financial statements
should be read in conjunction with Ashland's Annual Report on Form
10-K for the fiscal year ended September 30, 1999. Results of
operations for the periods ended June 30, 2000, are not
necessarily indicative of results to be expected for the year
ending September 30, 2000.
<TABLE>
<CAPTION>
INVENTORIES
--------------------------------------------------------------------------------------------------------------------
June 30 September 30 June 30
(In millions) 2000 1999 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chemicals and plastics $ 407 $ 358 $ 376
Construction materials 86 55 55
Petroleum products 65 45 53
Other products 55 55 51
Supplies 6 5 8
Excess of replacement costs over LIFO carrying values (70) (54) (52)
-------- ------- -------
$ 549 $ 464 $ 491
======== ======= =======
</TABLE>
EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings per share (EPS) from continuing operations.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
----------------------- -----------------------
(In millions except per share data) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NUMERATOR
Numerator for basic and diluted EPS - Income from
continuing operations $ 129 $ 99 $ 195 $ 176
========== ========== =========== ==========
DENOMINATOR
Denominator for basic EPS - Weighted average
common shares outstanding 71 73 71 74
Common shares issuable upon exercise of stock options - 1 - 1
---------- ---------- ----------- ----------
Denominator for diluted EPS - Adjusted weighted
average shares and assumed conversions 71 74 71 75
========== ========== =========== ==========
BASIC EPS FROM CONTINUING OPERATIONS $ 1.83 $ 1.35 $ 2.74 $ 2.36
DILUTED EPS FROM CONTINUING OPERATIONS $ 1.83 $ 1.34 $ 2.73 $ 2.34
</TABLE>
6
<PAGE>
-----------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
NOTE B - UNUSUAL ITEMS
DISCONTINUED OPERATIONS
On March 16, 2000, Ashland's Board of Directors approved a
spin-off of 17.4 million shares of its Arch Coal Common Stock to
Ashland's shareholders of record on March 24, 2000, in the form of
a taxable dividend. The spin-off resulted in a charge to retained
earnings of $123 million, with no gain or loss recorded. However,
Ashland accrued $5 million of costs related to the spin-off and an
offsetting tax benefit of $2 million. Ashland intends, subject to
then-existing market conditions but before March 16, 2001, to
dispose of its remaining 4.7 million Arch shares in a transaction
or transactions that qualify as a sale for federal income tax
purposes. On August 3, 2000, Ashland exercised its demand
registration rights requesting Arch to effect the registration of
these shares for sale in a secondary offering under the Securities
Act of 1933, as amended. Results from the Arch Coal segment are
shown as discontinued operations with prior periods restated.
Components of amounts reflected in the income statements are
presented in the following table. Results for the nine months
ended June 30, 2000, include a net loss of $203 million related to
asset impairment and restructuring costs, largely due to the
write-down of assets at Arch's Dal-Tex and Hobet 21 mining
operations and certain coal reserves in central Appalachia.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
-------------------------- ---------------------------
(In millions) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues - Equity income (loss) $ - $ 1 $ (246) $ -
Costs and expenses - SG&A expenses - - (1) (1)
----------- ----------- ------------ -----------
Operating income (loss) - 1 (247) (1)
Income tax benefit - - 32 1
----------- ----------- ------------ -----------
Income (loss) from discontinued operations $ - $ 1 $ (215) $ -
=========== =========== ============ ===========
</TABLE>
EXTRAORDINARY LOSS
During the nine months ended June 30, 2000, Ashland refunded $36
million of pollution control revenue bonds and repaid $332 million
of the $600 million floating-rate bank credit agreement used to
fund the acquisition of the U.S. construction operations of
Superfos a/s. The redemption premium on the bonds and write-off of
unamortized deferred debt issuance expenses resulted in pretax
charges totaling $4 million which, net of income tax benefits of
$1 million, resulted in an extraordinary loss on early retirement
of debt of $3 million.
OTHER
Marathon Ashland Petroleum LLC (MAP) maintains an inventory
valuation reserve to reduce the LIFO cost of its inventories to
their net realizable values. Adjustments in that reserve are
recognized quarterly based on changes in petroleum product prices,
creating non-cash charges or credits to Ashland's earnings. No
adjustments to the reserve were required during the nine months
ended June 30, 2000.
7
<PAGE>
-----------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
NOTE B - UNUSUAL ITEMS (continued)
The following tables show the effects of these unusual items on
Ashland's operating income, net income and diluted earnings per
share for the periods ended June 30, 2000, and 1999.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
-------------------------- ---------------------------
(In millions except per share data) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating income before unusual items $ 268 $ 173 $ 468 $ 326
MAP inventory valuation adjustments - 24 - 63
----------- ----------- ------------ ------------
Operating income as reported $ 268 $ 197 $ 468 $ 389
=========== =========== ============ ============
Net income before unusual items $ 129 $ 84 $ 195 $ 137
Income (loss) from discontinued operations - 1 (215) -
Costs of spin-off of discontinued operations - - (3) -
Extraordinary loss on early retirement of debt - - (3) -
MAP inventory valuation adjustments - 15 - 39
----------- ----------- ------------ ------------
Net income (loss) as reported $ 129 $ 100 $ (26) $ 176
=========== =========== ============ ============
Diluted earnings per share before unusual items $ 1.83 $ 1.14 $ 2.73 $ 1.83
Impact of unusual items - .21 (3.09) .52
----------- ----------- ------------ ------------
Diluted earnings (loss) per share as reported $ 1.83 $ 1.35 $ (.36) $ 2.35
=========== =========== ============ ============
</TABLE>
NOTE C - UNCONSOLIDATED AFFILIATES
Ashland is required by Rule 3-09 of Regulation S-X to file
separate financial statements for its significant unconsolidated
affiliate, Marathon Ashland Petroleum LLC (MAP). Ashland's
ownership position in Arch Coal, Inc. met those same filing
requirements prior to the spin-off described in Note B. Financial
statements for MAP and Arch Coal for the year ended December 31,
1999, were filed on a Form 10-K/A on March 21, 2000. Unaudited
income statement information for MAP is shown below.
MAP is organized as a limited liability company that has elected
to be taxed as a partnership. Therefore, the parents are
responsible for income taxes applicable to their share of MAP's
taxable income. The net income reflected below for MAP does not
include any provision for income taxes which will be incurred by
its parents.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
------------------------------- -----------------------------
(In millions) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAP
Sales and operating revenues $ 7,535 $ 4,639 $ 20,053 $ 13,521
Income from operations 533 299 786 591
Net income
Including inventory valuation adjustments 532 296 789 589
Excluding inventory valuation adjustments 532 233 789 422
Ashland's equity income
Including inventory valuation adjustments 196 106 280 203
Excluding inventory valuation adjustments 196 82 280 140
</TABLE>
8
<PAGE>
-----------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
NOTE D - LITIGATION, CLAIMS AND CONTINGENCIES
Ashland is subject to various federal, state and local
environmental laws and regulations that require remediation
efforts at multiple locations, including current operating
facilities, operating facilities conveyed to MAP, previously owned
or operated facilities, and Superfund or other waste sites. For
information regarding environmental reserves, see the
"Miscellaneous - Environmental Matters" section of Ashland's Form
10-K.
Environmental reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share
of the ultimate costs of required remediation efforts. Such
uncertainties involve the nature and extent of contamination at
each site, the extent of required cleanup efforts under existing
environmental regulations, widely varying costs of alternate
cleanup methods, changes in environmental regulations, the
potential effect of continuing improvements in remediation
technology, and the number and financial strength of other
potentially responsible parties at multiparty sites. Reserves are
regularly adjusted as environmental assessments and remediation
efforts proceed.
In addition to these matters, Ashland and its subsidiaries are
parties to numerous other claims and lawsuits, some of which are
for substantial amounts. While these actions are being contested,
the outcome of individual matters is not predictable with
assurance.
Ashland does not believe that any liability resulting from any of
the above matters, after taking into consideration its insurance
coverage and amounts already provided for, will have a material
adverse effect on its consolidated financial position, cash flows
or liquidity. However, such matters could have a material effect
on results of operations in a particular quarter or fiscal year as
they develop or as new issues are identified.
NOTE E - ACQUISITIONS
In October 1999, Ashland completed its tender offer for Superfos
a/s, a Denmark based industrial company. In November 1999, in a
series of transactions, Ashland sold the businesses of Superfos,
other than its U.S. construction operations, to a unit of Industri
Kapital, a European private equity fund. In the November
transactions, Ashland received from Industri Kapital a short-term
note for $285 million, which was redeemed in the March 2000
quarter. Ashland's net cost for the U.S. construction business of
Superfos was approximately $537 million. Prior to Ashland's
acquisition, these operations generated sales and operating
revenues of $557 million and operating income of $30 million
during the year ended September 30, 1999.
Primarily as a result of this acquisition, APAC's total assets
increased from $996 million at September 30, 1999, to $1.664
billion at June 30, 2000. APAC's capital employed increased from
$663 million at September 30, 1999, to $1.223 billion at June 30,
2000. The acquisition was funded with short-term debt and a $600
million, floating-rate bank credit agreement that matures in
increasing payments between 2000 and 2004. Ashland repaid $285
million of the bank credit agreement in the March 2000 quarter
upon redemption of the note described above, and repaid an
additional $47 million in the June 2000 quarter. Primarily as a
result of this new debt and the charges to equity related to Arch
Coal (see Note B), Ashland's debt amounted to 56% of capital
employed at June 30, 2000, compared to 46% at September 30, 1999.
9
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
------------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
----------------------------- ------------------------------
(In millions) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales and operating revenues
APAC $ 701 $ 458 $ 1,738 $ 1,149
Ashland Distribution 841 754 2,421 2,175
Ashland Specialty Chemical 327 322 963 935
Valvoline 264 289 788 773
Intersegment sales
Ashland Distribution (9) (8) (28) (25)
Ashland Specialty Chemical (21) (18) (60) (58)
Valvoline - (1) (1) (4)
------------ ------------ ------------ ------------
2,103 1,796 5,821 4,945
Equity income
Ashland Specialty Chemical 1 1 4 4
Valvoline - - 1 1
Refining and Marketing 196 106 280 203
------------ ------------ ------------ ------------
197 107 285 208
Other income
APAC 5 2 11 7
Ashland Distribution 1 2 6 5
Ashland Specialty Chemical 8 4 21 13
Valvoline 2 2 6 5
Refining and Marketing - 3 5 15
Corporate 1 2 4 9
------------ ------------ ------------ ------------
17 15 53 54
------------ ------------ ------------ ------------
$ 2,317 $ 1,918 $ 6,159 $ 5,207
============ ============ ============ ============
OPERATING INCOME (1)
APAC $ 41 $ 35 $ 79 $ 63
Ashland Distribution 20 17 47 42
Ashland Specialty Chemical 23 33 76 82
Valvoline 20 24 54 48
Refining and Marketing 184 102 262 199
Corporate (20) (14) (50) (45)
------------ ------------ ------------ ------------
$ 268 $ 197 $ 468 $ 389
============ ============ ============ ============
------------------------------------------------------------------------------------------------------------------------------------
(1) See Note B to the Condensed Consolidated Financial Statements for a discussion of unusual items.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
June 30 June 30
----------------------------- -----------------------------
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING INFORMATION
APAC
Construction backlog at June 30 (millions) $ 1,410 $ 912
Hot mix asphalt production (million tons) 9.7 7.2 23.7 17.1
Aggregate production (million tons) 7.9 5.3 19.8 14.6
Ready-mix concrete production (thousand cubic yards) 673 342 1,899 963
Ashland Distribution (1)
Sales per shipping day (millions) $ 13.4 $ 12.0 $ 12.8 $ 11.6
Gross profit as a percent of sales 15.5% 15.9% 15.5% 16.0%
Ashland Specialty Chemical (1)
Sales per shipping day (millions) $ 5.2 $ 5.1 $ 5.1 $ 5.0
Gross profit as a percent of sales 34.0% 37.7% 34.8% 36.4%
Valvoline lubricant sales (thousand barrels per day) 12.2 13.0 12.2 12.3
Refining and Marketing (2)
Refined products sold (thousand barrels per day) 1,345 1,259 1,295 1,207
Crude oil refined (thousand barrels per day) 965 939 880 883
Merchandise sales (millions) $ 607 $ 524 $ 1,691 $ 1,470
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses, less depreciation and amortization relative to
manufacturing assets.
(2) Amounts represent 100 percent of the volumes of MAP, in which Ashland
owns a 38 percent interest.
11
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Current Quarter - Ashland's net income was $129 million for the
quarter ended June 30, 2000, compared to $100 million for the
quarter ended June 30, 1999. Excluding unusual items described in
Note B to the Condensed Consolidated Financial Statements, net
income amounted to $129 million in the 2000 period, compared to
$84 million in the 1999 period. The increase reflected improved
refining margins for Marathon Ashland Petroleum (MAP), which more
than offset the impact of rising hydrocarbon costs on Ashland's
wholly owned businesses. APAC reported record results, reflecting
higher revenues due to recent acquisitions and high equipment and
manpower utilization rates. However, rising liquid asphalt prices
and higher fuel costs significantly reduced operating income from
what it would have been otherwise. Ashland Distribution reported a
21% increase in operating income due primarily to improved
performance from its European plastics operations. Ashland
Specialty Chemical reported a 31% decline in operating income as
unsaturated polyester resins, Ashland's largest specialty
business, continued to experience margin compression due to rising
raw material prices. Valvoline's operating income declined 19% due
primarily to lower sales of R-12 automotive refrigerant. Partially
offsetting the overall improvement in operating income was higher
net interest and other financial costs, resulting primarily from
debt incurred to purchase the U.S. construction operations of
Superfos a/s.
Year-to-Date - For the nine months ended June 30, 2000, Ashland
recorded a net loss of $26 million, compared to net income of $176
million for the nine months ended June 30, 1999. Excluding unusual
items, net income amounted to $195 million in the 2000 period,
compared to $137 million in the 1999 period. The improvement
reflects a 9% increase in combined operating income from Ashland's
wholly owned businesses and improved refining margins for MAP.
Three of the four wholly owned businesses improved, with Ashland
Specialty Chemical showing the only decline. APAC's results
benefited from the acquisition of Superfos and other recent
acquisitions, and a change in estimated depreciable lives and
salvage values for its construction equipment. Ashland
Distribution was up despite margin compression in the chemicals
and solvents business, reflecting strong performances in the
plastics and fine ingredients units. Valvoline's improvement
reflects the net effects of higher earnings from the sales of R-12
refrigerant and antifreeze, improved international results, record
earnings from VIOC, and reduced lubricant margins. The decline in
Ashland Specialty Chemical reflects increased raw material costs
for unsaturated polyester resins and higher butane costs for
petrochemicals, partially offset by strong improvements in
adhesives and electronic chemicals. The increase in operating
income was partially offset by higher net interest and other
financial costs, resulting primarily from increased debt levels.
APAC
Current Quarter - Operating income from APAC's construction
operations amounted to a record $41 million for the June 2000
quarter, compared to $35 million in the June 1999 quarter. The
improvement reflects a 53% increase in revenues due to the
acquired U.S. construction operations of Superfos (see Note E to
the Condensed Consolidated Financial Statements) and a high level
of construction activity and asphalt production. In addition, the
current period includes a reduction of approximately $5 million in
depreciation expense related to changes in the estimated useful
lives and salvage values of APAC's construction equipment. These
favorable variances more than offset the adverse effects of
significant increases in APAC's liquid asphalt and fuel costs.
12
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
APAC (CONTINUED)
Year-to-Date - For the nine months ended June 30, 2000, APAC
reported operating income of $79 million, compared to $63 million
for the same period of 1999. The increase reflects the same
factors described in the current quarter comparison above, with
the change in depreciation adding approximately $15 million to
year-to-date results. Revenues increased 51%, as production of hot
mix asphalt was up 39%, crushed aggregate was up 36%, and
ready-mix concrete was up 97% from the 1999 period. The
construction backlog at June 30, 2000, amounted to $1.41 billion,
up 55% from a year ago and the highest in company history. This
growth reflects APAC's acquisitions, as well as robust highway
funding.
Due to the unanticipated increases in the cost of liquid asphalt,
gasoline, diesel fuel, and other fuels, it is not likely that APAC
will meet its previously projected $170 million in operating
income for fiscal year 2000. Nevertheless, Ashland expects APAC's
operating income for fiscal 2000 to be a record and a substantial
increase compared to the $108 million recorded for 1999.
ASHLAND DISTRIBUTION
Current Quarter - Ashland Distribution reported operating income
of $20 million for the quarter ended June 30, 2000, compared to
$17 million for last year's June quarter. The 21% increase was due
primarily to improved performance from European plastics
operations. In North America, chemical distribution margins -
especially of commodities - were adversely affected by rising
costs for hydrocarbon-based raw materials. To a lesser extent,
margins in plastics distribution also encountered some pressure.
However, unit volumes were strong across all of the North American
distribution businesses.
Year-to-Date - For the nine months ended June 30, 2000, Ashland
Distribution reported operating income of $47 million, compared to
$42 million for the same period of 1999. Sales volumes were up
over the prior year, but much of that increase was offset by lower
gross profit percentages, due to higher product costs. Results
from IC&S declined due to higher costs for hydrocarbon-based raw
materials that adversely affected margins, but the effects were
more than offset by better results from each of the other
distribution businesses. European plastics and fiber reinforced
plastics operations showed the biggest improvements.
ASHLAND SPECIALTY CHEMICAL
Current Quarter - For the quarter ended June 30, 2000, Ashland
Specialty Chemical reported operating income of $23 million,
compared to $33 million reported for the June 1999 quarter.
Composite Polymers continued to experience margin compression due
to higher costs for styrene and other raw materials. The price of
styrene, a key raw material in polyester resins, is up more than
60% from a year ago. Although Composite Polymers has implemented
multiple price increases over the past year, selling prices have
not kept pace with increased costs. Results for Petrochemicals
have also declined reflecting reduced margins for maleic
anhydride, caused by significant increases in butane costs.
Overall, unit volumes are healthy in each of the specialty
chemical product lines, with particular strength being shown in
the adhesives and electronic chemicals businesses.
13
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
ASHLAND SPECIALTY CHEMICAL (CONTINUED)
Year-to-Date - For the nine months ended June 30, 2000, Ashland
Specialty Chemical reported operating income of $76 million,
compared to $82 million for the first nine months of 1999. On the
positive side, Electronic Chemicals has recovered strongly from
the worldwide semiconductor recession experienced during the first
half of fiscal 1999. Specialty Polymers & Adhesives is up on the
strength of increased sales volumes and margins. However, these
improvements were more than offset by declines in Composite
Polymers and Petrochemicals due to the same factors discussed in
the current quarter comparison above.
VALVOLINE
Current Quarter - For the quarter ended June 30, 2000, Valvoline
reported operating income of $20 million, compared to $24 million
for the June 1999 quarter. The decrease was primarily the result
of lower sales volumes of R-12 automotive refrigerant. In total,
Valvoline expects R-12 profits in fiscal 2000 to be comparable
with last year. However, this year the bulk of R-12 sales occurred
in the March quarter versus in the June quarter of 1999.
Valvoline's lubricants business continued to experience rising
base lube stock costs, which are not easily passed on to
customers. On the positive side, Valvoline Instant Oil Change
(VIOC) posted record June quarter results, reflecting higher car
counts, improvement in the average ticket price, and gains on the
sale of certain company owned units. Improvements in Valvoline
International earnings reflect better results from operations in
Europe and Latin America.
Year-to-Date - For the nine months ended June 30, 2000, Valvoline
reported operating income of $54 million, compared to $48 million
for the same period of 1999. Contributing to the improvement were
better R-12 automotive refrigerant results, as well as increased
antifreeze sales revenues, partially offset by compressed
lubricant margins attributed to increasing raw material costs.
Valvoline International earnings improved due to better results
from operations in Europe, Asia and Latin America. In addition,
VIOC reported record income for the nine months, primarily due to
improvements in franchise royalty income and gains on the sale of
certain company owned units. The elimination of losses incurred by
First Recovery in 1999 also contributed to Valvoline's
improvement.
REFINING AND MARKETING
Current Quarter - Operating income from Refining and Marketing
amounted to $184 million for the quarter ended June 30, 2000. This
compares to $78 million for the quarter ended June 30, 1999
(excluding $24 million in favorable inventory market valuation
adjustments). Results for both periods include Ashland's 38% share
of MAP's earnings, amortization of Ashland's excess investment in
MAP, and results of certain retained refining and marketing
activities. Refining margins were very strong, particularly when
compared to depressed levels of a year ago when industry
conditions led to the worst margins in at least a decade. In the
June 2000 quarter, strong demand, pipeline problems and logistical
difficulties associated with new reformulated gasoline
requirements resulted in volatile markets and unusually strong
product margins, particularly in the Midwest where MAP is a
leading petroleum product marketer.
Year-to-Date - Operating income from Refining and Marketing
amounted to $262 million for the nine months ended June 30, 2000.
This compares to $136 million for the nine months ended June 30,
1999 (excluding $63 million in favorable inventory market
valuation adjustments). The increase in operating income reflects
improved refining margins, higher refined product sales volumes,
and increased merchandise sales volumes. These improvements were
partially offset by decreased retail product margins.
14
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
CORPORATE
Corporate expenses amounted to $20 million in the quarter ended
June 30, 2000, compared to $14 million for the quarter ended June
30, 1999. Corporate expenses on a year-to-date basis amounted to
$50 million in the 2000 period, compared to $45 million in the
1999 period. The higher level of expenses reflects increases in
incentive and deferred compensation costs.
NET INTEREST AND OTHER FINANCIAL COSTS
For the quarter ended June 30, 2000, net interest and other
financial costs totaled $50 million, compared to $36 million for
the June 1999 quarter. For the year-to-date, net interest and
other financial costs amounted to $138 million in the 2000 period,
compared to $103 million in the 1999 period. The increases reflect
higher debt levels resulting primarily from the debt used to
finance the acquisition of the U.S. construction operations of
Superfos and higher interest rates on floating-rate debt. In
addition, the 2000 periods include costs associated with a $150
million sale of receivables program initiated in March 2000.
DISCONTINUED OPERATIONS
As described in Note B to the Condensed Consolidated Financial
Statements, in March 2000 Ashland distributed to Ashland
shareholders the major portion of its common shares of Arch Coal.
The spin-off resulted in no gain or loss, but Ashland accrued $3
million in after-tax costs related to the transaction. As a
result, the former Arch Coal segment is now shown as a
discontinued operation, with prior periods restated.
For the nine months ended June 30, 2000, Ashland recorded a net
loss of $215 million from its investment in Arch Coal, compared to
breakeven results in the June 1999 period. The current year loss
includes a $203 million net charge in the December quarter related
to asset impairment and restructuring costs. The charge was
largely due to the write-down of assets at Arch's Dal-Tex and
Hobet 21 mining operations and certain coal reserves in central
Appalachia.
EXTRAORDINARY LOSS
During the nine months ended June 30, 2000, Ashland refunded $36
million of pollution control revenue bonds and repaid $332 million
of the $600 million floating-rate bank credit agreement used to
fund the acquisition of the U.S. construction operations of
Superfos. The redemption premium on the bonds and write-off of
unamortized deferred debt issuance expenses resulted in pretax
charges totaling $4 million which, net of income tax benefits of
$1 million, resulted in an extraordinary loss on early retirement
of debt of $3 million.
FINANCIAL POSITION
LIQUIDITY
Ashland's financial position has enabled it to obtain capital for
its financing needs and to maintain investment grade ratings on
its senior debt of Baa2 from Moody's and BBB from Standard &
Poor's. Ashland has two revolving credit agreements providing for
up to $425 million in borrowings, neither of which was in use at
June 30, 2000. Under a shelf registration, Ashland can also issue
an additional $600 million in debt and equity securities should
future opportunities or needs arise. Furthermore, Ashland has
15
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
LIQUIDITY (CONTINUED)
access to various uncommitted lines of credit and commercial paper
markets, under which $426 million of short-term borrowings were
outstanding at June 30, 2000. The revolving credit agreements
contain a covenant limiting new borrowings. Primarily due to the
debt incurred to finance the acquisition of the U.S. construction
operations of Superfos, the $203 million charge to earnings
resulting from Arch Coal's asset impairment write-down and
restructuring costs, and the Arch Coal spin-off, additional debt
permissible has been reduced from $1.454 billion at September 30,
1999, to $438 million at June 30, 2000.
Cash flows from operations, a major source of Ashland's liquidity,
amounted to $195 million for the nine months ended June 30, 2000,
compared to $131 million for the nine months ended June 30, 1999.
The increase reflects the sale of $150 million of accounts
receivable under a new program initiated in March 2000. Ashland's
cash flows from operations exceeded its capital requirements for
net property additions and dividends by $2 million for the nine
months ended June 30, 2000.
Operating working capital (accounts receivable and inventories,
less trade and other payables) at June 30, 2000, was $493 million,
compared to $548 million at September 30, 1999, and $512 million
at June 30, 1999. Liquid assets (cash, cash equivalents and
accounts receivable) amounted to 67% of current liabilities at
June 30, 2000, compared to 95% at September 30, 1999, and 80% at
June 30, 1999. Ashland's working capital is affected by its use of
the LIFO method of inventory valuation, which valued inventories
$70 million below their replacement costs at June 30, 2000.
CAPITAL RESOURCES
For the nine months ended June 30, 2000, property additions
amounted to $161 million, compared to $158 million for the same
period last year. Property additions and cash dividends for the
remainder of fiscal 2000 are estimated at $90 million and $20
million. Under Ashland's share repurchase program initiated in
August 1998, Ashland repurchased 8.3 million shares through June
30, 2000. On July 19, 2000, Ashland's board of directors approved
a fourth authorization in the program and increased the number of
shares available for repurchase to a total of three million. The
number of shares ultimately purchased and the prices Ashland will
pay for its stock are subject to periodic review by management.
Ashland anticipates meeting its remaining 2000 capital
requirements for property additions, dividends and scheduled debt
repayments of $17 million from internally generated funds.
However, external financing may be necessary to fund common stock
repurchases and acquisitions.
At June 30, 2000, Ashland's debt level amounted to $2.425 billion,
compared to $1.846 billion at September 30, 1999. The increase
reflects a floating-rate bank credit agreement and short-term debt
incurred to finance the acquisition of the U.S. construction
operations of Superfos. Common stockholders' equity decreased by
$292 million during the nine months ended June 30, 2000,
reflecting the $203 million charge to earnings resulting from Arch
Coal's asset impairment write-down and restructuring costs, and
the spin-off of Arch Coal shares. As a result, debt as a percent
of capital employed amounted to 56% at June 30, 2000, compared to
46% at September 30, 1999. Ashland's long-term debt included $408
million of floating-rate debt at June 30, 2000. As a result,
Ashland's interest costs for the remainder of 2000 will fluctuate
based on short-term interest rates on that portion of its
long-term debt outstanding, as well as on any short-term notes and
commercial paper.
16
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
ENVIRONMENTAL MATTERS
Federal, state and local laws and regulations relating to the
protection of the environment have resulted in higher operating
costs and capital investments by the industries in which Ashland
operates. Because of the continuing trends toward greater
environmental awareness and ever increasing regulations, Ashland
believes that expenditures for environmental compliance will
continue to have a significant effect on its businesses. Although
it cannot accurately predict how such trends will affect future
operations and earnings, Ashland believes the nature and
significance of its ongoing compliance costs will be comparable to
those of its competitors. For information on certain specific
environmental proceedings and investigations, see the "Legal
Proceedings" section of this Form 10-Q. For information regarding
environmental reserves, see the "Miscellaneous - Environmental
Matters" section of Ashland's Form 10-K.
Environmental reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share
of the ultimate costs of required remediation efforts. Such
uncertainties involve the nature and extent of contamination at
each site, the extent of required cleanup efforts under existing
environmental regulations, widely varying costs of alternate
cleanup methods, changes in environmental regulations, the
potential effect of continuing improvements in remediation
technology, and the number and financial strength of other
potentially responsible parties at multiparty sites. Reserves are
regularly adjusted as environmental assessments and remediation
efforts proceed.
Ashland does not believe that any liability resulting from
environmental matters, after taking into consideration its
insurance coverage and amounts already provided for, will have a
material adverse effect on its consolidated financial position,
cash flows or liquidity. However, such matters could have a
material effect on results of operations in a particular quarter
or fiscal year as they develop or as new issues are identified.
CONVERSION TO THE EURO
On January 1, 1999, certain member countries of the European
Economic and Monetary Union (EMU) established fixed conversion
rates between their existing currencies and the EMU's common
currency, the Euro. Entities in the participating countries can
conduct their business operations in either their existing
currencies or the Euro until December 31, 2001. After that date,
all non-cash transactions will be conducted in Euros and
circulation of Euro notes and coins for cash transactions will
commence. National notes and coins will be withdrawn no later than
June 30, 2002.
Ashland conducts business in all of the participating countries
and is addressing the issues associated with the Euro. The more
important issues include converting information technology
systems, reassessing currency risk, and processing accounting and
tax records. Based on the progress to date, Ashland believes that
the use of the Euro will not have a significant impact on the
manner in which it conducts its business and processes its
accounting records. Accordingly, the use of the Euro is not
expected to have a material effect on Ashland's consolidated
financial position, results of operations or cash flows.
17
<PAGE>
-------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
FORWARD LOOKING STATEMENTS
This Form 10-Q 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, with respect to
Ashland's operating performance and earnings. Estimates as to
operating performance and earnings are based upon a number of
assumptions, including (among others) prices, supply and demand,
market conditions, cost of raw materials, weather and operating
efficiencies. Although Ashland believes that its expectations are
based on reasonable assumptions, it cannot assure that the
expectations reflected herein will be achieved. This
forward-looking information may prove to be inaccurate, and actual
results may differ significantly from those anticipated. Other
factors and risks affecting Ashland are contained in Ashland's
Form 10-K for the fiscal year ended September 30, 1999.
18
<PAGE>
PART II - OTHER INFORMATION
-------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
Environmental Proceedings - (1) As of June 30, 2000, Ashland had
been identified as a "potentially responsible party" ("PRP") under
Superfund or similar state laws for potential joint and several
liability for clean-up costs in connection with alleged releases
of hazardous substances in connection with 87 waste treatment or
disposal sites. These sites are currently subject to ongoing
investigation and remedial activities, overseen by the EPA or a
state agency, in which Ashland is typically participating as a
member of a PRP group. Generally, the type of relief sought
includes remediation of contaminated soil and/or groundwater,
reimbursement for past costs of site clean-up and administrative
oversight, and/or long-term monitoring of environmental conditions
at the sites. Ashland carefully monitors the investigatory and
remedial activity at many of these sites. Based on its experience
with site remediation, its familiarity with current environmental
laws and regulations, its analysis of the specific hazardous
substances at issue, the existence of other financially viable
PRPs and its current estimates of investigatory, clean-up and
monitoring costs at each site, Ashland believes that its liability
at these sites, either individually or in the aggregate, after
taking into account its insurance coverage and established
financial reserves, will not have a material adverse effect on
Ashland's consolidated financial position, cash flow or liquidity.
However, such matters could have a material effect on Ashland's
results of operations in a particular quarter or fiscal year as
they develop or as new issues are identified. Estimated costs for
these matters are recognized in accordance with generally accepted
accounting principles governing the likelihood that costs will be
incurred and Ashland's ability to reasonably estimate future
costs.
(2) Pursuant to a 1990 Agreed Order with the Commonwealth of
Kentucky's Natural Resources and Environmental Protection Cabinet
("NREPC"), Ashland has conducted source investigation and remedial
activities related to hydrocarbon contamination of the groundwater
beneath the Catlettsburg, Kentucky refinery, operated since 1998
by a subsidiary of Marathon Ashland Petroleum LLC ("MAP"). In
connection with the formation of MAP, Ashland agreed to retain
responsibility for this matter. In 1999, Ashland and the NREPC
initiated negotiations for a new Agreed Order which would identify
future investigative efforts and establish timetables for remedial
activities. This Order is expected to also include a monetary
penalty, reimbursement of state oversight costs and a supplemental
environmental project. With negotiations nearing conclusion,
Ashland believes that the settlement will have no material adverse
effect on Ashland's consolidated financial position, cash flow or
liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
12 Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
27 Financial Data Schedule for the quarter ended June 30,
2000.
(b) Reports on Form 8-K
None.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Ashland Inc.
----------------------------------
(Registrant)
Date: August 9, 2000 /s/ Kenneth L. Aulen
----------------------------------
Kenneth L. Aulen
Administrative Vice President and
Controller (Chief Accounting Officer)
Date: August 9, 2000 /s/ David L. Hausrath
----------------------------------
David L. Hausrath
Vice President and General Counsel
20
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- --------------------------------------------------------
12 Computation of Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends
27 Financial Data Schedule for the quarter ended June 30, 2000.
