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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 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
Securities Registered Pursuant to Section 12(b):
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, par value $1.00 per share New York Stock Exchange
and Chicago Stock Exchange
Rights to Purchase Series A Participating New York Stock Exchange
Cumulative Preferred Stock and Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g): None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
At October 31, 2000, based on the New York Stock Exchange closing
price, the aggregate market value of voting stock held by non-affiliates of
the Registrant was approximately $2,268,150,178. In determining this
amount, the Registrant has assumed that its directors and executive
officers are affiliates. Such assumption shall not be deemed conclusive for
any other purpose.
At October 31, 2000, there were 69,669,072 shares of Registrant's
common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the fiscal
year ended September 30, 2000 are incorporated by reference into Parts I,
II and IV.
Portions of Registrant's definitive Proxy Statement for its January
25, 2001 Annual Meeting of Shareholders are incorporated by reference into
Part III.
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TABLE OF CONTENTS
Page
PART I
Item 1. Business .................................................. 1
Corporate Developments................................. 1
APAC................................................... 2
Ashland Distribution................................... 2
Ashland Specialty Chemical............................. 3
Valvoline.............................................. 4
Refining and Marketing................................. 5
Miscellaneous.......................................... 8
Item 2. Properties................................................. 10
Item 3. Legal Proceedings.......................................... 11
Item 4. Submission of Matters to a
Vote of Security Holders................................. 11
Item X. Executive Officers of Ashland.............................. 11
PART II
Item 5. Market for Registrant's Common Stock and Related
Security Holder Matters.................................. 12
Item 6. Selected Financial Data.................................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 13
Item 8. Financial Statements and Supplementary Data............... 13
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.................. 13
PART III
Item 10. Directors and Executive Officers of the Registrant........ 13
Item 11. Executive Compensation.................................... 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management................................... 13
Item 13. Certain Relationships and Related Transactions............ 13
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K............................................. 14
<PAGE>
PART I
ITEM 1. BUSINESS
Ashland Inc. is a Kentucky corporation, organized on October 22, 1936,
with its principal executive offices located at 50 E. RiverCenter
Boulevard, Covington, Kentucky 41011 (Mailing Address: 50 E. RiverCenter
Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391) (Telephone: (859)
815-3333). The terms "Ashland" and the "Company" as used herein include
Ashland Inc. and its consolidated subsidiaries, except where the context
indicates otherwise.
Ashland's businesses are grouped into five industry segments: APAC,
Ashland Distribution, Ashland Specialty Chemical, Valvoline and Refining
and Marketing. Financial information about these segments for the three
fiscal years ended September 30, 2000 is set forth on pages 48 and 49 of
Ashland's Annual Report to Shareholders for the fiscal year ended September
30, 2000 ("Annual Report").
APAC performs contract construction work, including highway paving and
repair, excavation and grading, and bridge construction, and produces
asphaltic and ready-mix concrete, crushed stone and other aggregate in the
southern and midwestern United States.
Ashland Distribution distributes industrial chemicals, solvents,
plastics, fiber reinforcements and fine ingredients in North America and
plastics in Europe. Ashland Specialty Chemical manufactures and sells a
wide variety of performance chemicals, resins, products and services and
certain petrochemicals.
Valvoline is a marketer of premium-branded, packaged motor oil and
automotive chemicals, automotive appearance products, antifreeze, filters,
rust preventives and coolants. In addition, Valvoline is engaged in the
"fast oil change" business through outlets operating under the Valvoline
Instant Oil Change(R) name.
Marathon Ashland Petroleum LLC ("MAP"), a joint venture with Marathon
Oil Company, operates seven refineries with a total crude oil refining
capacity of 935,000 barrels per day. Refined products are distributed
through a network of independent and company-owned outlets in the Midwest,
the upper Great Plains and the southeastern United States. Marathon Oil
Company has a 62% interest in MAP, and Ashland holds a 38% interest.
Ashland accounts for its investment in MAP using the equity method.
At September 30, 2000, Ashland and its consolidated subsidiaries had
approximately 25,800 employees (excluding contract employees).
CORPORATE DEVELOPMENTS
On March 27, 2000, Ashland distributed 17.4 million of its 22.1
million shares of Common Stock of Arch Coal, Inc. to Ashland's shareholders
of record on March 24, 2000, in the form of a taxable dividend. Each share
of Ashland Common Stock received 0.246097 shares of Arch Coal Common Stock.
In addition, Ashland shareholders received $7.1875 per share for any
fractional shares of Arch Coal Common Stock, which was determined to be the
value of Arch Coal Common Stock on the record date. Ashland intends to
dispose of its remaining 4.7 million shares of Arch Coal Common Stock in a
transaction or transactions that qualify as a sale for federal income tax
purposes by March 2001. On September 6, 2000, Arch Coal filed a
registration statement under the Securities Act of 1933, as amended, for
the sale of these shares by Ashland in a secondary offering. As a result of
the distribution, Ashland now accounts for its investment in Arch Coal as
discontinued operations with prior periods restated.
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APAC
The APAC group of companies is the nation's largest asphalt and
concrete paving company and is a major supplier of construction materials.
APAC performs construction work, such as paving, repairing and resurfacing
highways, streets, airports, residential and commercial developments,
sidewalks and driveways, and grading and base work. In addition, it
performs a number of construction services such as excavation and related
activities in the construction of bridges and structures, drainage
facilities and underground utilities. APAC conducts its business through 48
divisions operating in 14 southern and midwestern states. Distinguished by
their local identities, these divisions provide construction services,
technologies and materials throughout the regions in which they operate.
These divisions are supported by a team of strategic managers and
administrative support staff in Atlanta, Georgia.
To deliver its services and products, APAC utilizes extensive
aggregate-producing properties and construction equipment. It currently has
32 permanent operating quarry locations, 55 other aggregate production
facilities, 66 ready-mix concrete plants, 243 hot-mix asphalt plants and a
fleet of over 17,000 mobile equipment units, including heavy construction
equipment and transportation-related equipment. As a result of recent
acquisition activities, APAC has become more vertically integrated in
certain market areas with aggregate, asphalt and ready-mix operations, all
complementing one another.
Raw aggregate generally consists of sand, gravel, granite, limestone
and sandstone. About 30% of the raw aggregate produced by APAC is used in
APAC's own contract construction work and the production of various
processed construction materials. The remainder is sold to third parties.
APAC also purchases substantial quantities of raw aggregate from other
producers whose proximity to the job site renders it economically
attractive. Most other raw materials, such as liquid asphalt, portland
cement and reinforcing steel, are purchased from third parties. APAC is not
dependent upon any one supplier or customer.
APAC has customers in both the public and private sectors.
Approximately 68% of APAC's revenues are derived directly from highway and
other public sector sources. The other 32% are derived from industrial and
commercial customers, private developers and other contractors to the
public sector. The 1998 highway funding authorization package increased
federal funding for highways by $54 billion over a six-year period. More
importantly, the states in which APAC operates should see an increase in
average annual funding of 60% based on current estimates.
Climate and weather significantly affect revenues in the construction
business. Due to its location, APAC tends to enjoy a relatively long
construction season. Most of APAC's operating income is generated during
the construction period of May to October.
Total backlog at September 30, 2000 was $1,397 million, compared to
$948 million at September 30, 1999. APAC includes a construction project in
its backlog when a contract is awarded or a firm letter of commitment is
obtained and funding is in place. The backlog at September 30, 2000 is
considered firm, and a major portion is expected to be completed during
fiscal 2001.
ASHLAND DISTRIBUTION
Ashland Distribution distributes chemicals, plastics, fiber
reinforcements and fine ingredients in North America and plastics in
Europe. Ashland Distribution owns or leases approximately 100 distribution
facilities in North America and 25 distribution facilities in 13 foreign
countries. Ashland Distribution is comprised of the following business
units:
INDUSTRIAL CHEMICALS & SOLVENTS DIVISION - This division markets
specialty and industrial chemicals, additives and solvents to industrial
chemical users in major markets through distribution centers in the United
States, Canada, Mexico and Puerto Rico. It distributes approximately 7,000
chemicals, solvents, additives and raw materials made by many of the
nation's leading chemical manufacturers and a growing number of offshore
producers. It specializes in supplying mixed truckloads and
less-than-truckload quantities to many industries, including the paint and
coatings, inks, adhesives, polymer, rubber, industrial and institutional
compounding, automotive, appliance and paper industries. The Industrial
Chemicals & Solvents division operates its own e-commerce web site at
www.go2ashland.com and also has an e-commerce alliance with eChemicals,
Inc. at www.echemicals.com.
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GENERAL POLYMERS DIVISION - This division markets a broad range of
thermoplastic resins to injection molders, extruders, blow molders, and
rotational molders in the plastics industry through distribution locations
in the United States, Canada, Mexico and Puerto Rico. It also provides
plastic material transfer and packaging services and less-than-truckload
quantities of packaged thermoplastics. The division's basic resins group
markets bulk wide-spec and off-grade thermoplastic resins to a variety of
proprietary processors in North America. The General Polymers division
offers e-commerce ordering at www.gpashland.com and also through an
alliance with Commerx, Inc. at www.plasticsnet.com.
FRP SUPPLY DIVISION - This division markets to customers in the
reinforced plastics and cultured marble industries mixed truckload and
less-than-truckload quantities of polyester resins, fiberglass and other
specialty reinforcements, catalysts and allied products from distribution
facilities located throughout North America. The FRP Supply division offers
e-commerce ordering through its web site, www.eFRP.com.
FINE INGREDIENTS DIVISION - This division distributes cosmetic and
pharmaceutical specialty chemicals and food-grade and nutritional additives
and ingredients across North America. The Fine Ingredients division offers
e-commerce ordering through its web site, www.FIDonline.com.
ASHLAND PLASTICS EUROPE - This division markets a broad range of
thermoplastics to processors in Europe. Ashland Plastics Europe has
distribution centers located in Belgium, Finland, France, Germany, Ireland,
Italy, the Netherlands, Norway, Poland, Portugal, Spain, Sweden and the
United Kingdom. The division also has a small compound manufacturing
facility located in Spain.
SERVICE BUSINESSES DIVISION - This division consists of Energy
Services and Environmental Services. Energy Services provides customized
management of energy purchasing, supply and transportation. Environmental
Services provides customers chemical waste collection, disposal and
recycling services, working in cooperation with chemical waste services
companies.
ASHLAND SPECIALTY CHEMICAL
Ashland Specialty Chemical manufactures and supplies specialty
chemical products and services to industries including the adhesives,
automotive, composites, foundry, merchant marine, paint, paper, plastics
and semiconductor fabrication industries. Ashland Specialty Chemical owns
and operates 33 manufacturing facilities and participates in 14
manufacturing joint ventures in 18 countries. Ashland Specialty Chemical is
comprised of the following business units:
COMPOSITE POLYMERS DIVISION - This division manufactures and sells a
broad range of chemical-resistant, fire-retardant and general-purpose
grades of unsaturated polyester and vinyl ester resins for the reinforced
plastics industry. Key markets include the transportation, construction and
marine industries. It has manufacturing plants in Jacksonville, Arkansas;
Los Angeles, California; Bartow, Florida; Philadelphia, Pennsylvania;
Kelowna, British Columbia, Canada; Benicarlo, Spain; and, through a joint
venture, in Jeddah, Saudi Arabia and Sao Paolo, Brazil. In addition, the
division also manufactures products through other Ashland Specialty
Chemical facilities located in Mississauga, Ontario, Canada and Neville
Island, Pennsylvania.
FOUNDRY PRODUCTS DIVISION - This division manufactures and sells
foundry chemicals worldwide, including sand-binding resin systems,
refractory coatings, release agents, engineered sand additives and riser
sleeves. This division serves the global metal casting industry from 24
manufacturing locations in 18 countries and recently opened a manufacturing
facility in Changzhou, China.
DREW INDUSTRIAL DIVISION - This division supplies specialized
chemicals and consulting services for the treatment of boiler water,
cooling water, steam, fuel and waste streams. It also supplies process
chemicals and technical services to the pulp and paper and mining
industries and additives to manufacturers of latex and paint. It conducts
operations throughout North America, Europe and the Far East through
subsidiaries, joint venture companies and distributors. The division has
manufacturing plants in Kearny, New Jersey; Houston, Texas; Ajax, Ontario,
Canada; Somercotes, England; Singapore; Sydney and Perth, Australia; and
Auckland, New Zealand.
ELECTRONIC CHEMICALS DIVISION - This division manufactures and sells a
variety of ultrapure chemicals for the worldwide semiconductor industry
through various manufacturing locations and also custom blends and packages
ultrapure liquid chemicals to customer specifications. In August 2000, the
division acquired MicroClean, Inc., which provides full-service equipment
parts-cleaning, refurbishment and management services to the semiconductor
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manufacturing industry. The division operates manufacturing plants in
Tempe, Arizona; Pueblo, Colorado; Easton, Pennsylvania; Austin and Dallas,
Texas; Milan, Italy; and Pyongtaek-Shi, Kyonggi-Do, Korea. In addition, it
enters into long-term agreements to provide complete on-site chemical
management services, including purchasing, warehousing and delivering
chemicals for in-plant use, at major facilities of large consumers of high
purity chemicals. Through a joint venture with Union Petrochemical
Corporation, the division also operates in Taiwan an ultrapure-process
chemicals manufacturing facility, which was commissioned in October 2000.
SPECIALTY POLYMERS & ADHESIVES DIVISION - This division manufactures
and sells specialty phenolic resins for paper impregnation and friction
material bonding; acrylic polymers for pressure-sensitive adhesives;
emulsion polymer isocyanate adhesives for structural wood bonding;
polyurethane and epoxy structural adhesives for bonding fiberglass
reinforced plastics, composites, thermoplastics and metals in automotive,
recreational, and industrial applications; induction bonding systems for
thermoplastic materials; elastomeric polymer adhesives and butyl rubber
roofing tapes for commercial roofing applications; and vapor-curing,
high-performance urethane coatings systems. It has manufacturing plants in
Calumet City, Illinois; Norwood and Totowa, New Jersey; and Ashland and
Columbus, Ohio.
DREW MARINE DIVISION - This division supplies specialty chemicals for
water and fuel treatment and general maintenance, as well as sealing
products, welding and refrigerant products and fire fighting and safety
services to the world's merchant marine fleet. Drew Marine currently
provides shipboard technical service for more than 11,000 vessels from more
than 100 locations serving approximately 900 ports throughout the world.
PETROCHEMICALS DIVISION - This division manufactures maleic anhydride
at Neal, West Virginia, and Neville Island, Pennsylvania, and also markets
maleic anhydride and methanol in North America.
OTHER MATTERS
For information on Ashland Distribution and Ashland Specialty Chemical
and federal, state and local statutes and regulations governing releases
into, or protection of, the environment, see "Item 1. Business -
Miscellaneous - Environmental Matters" and "Item 3. Legal Proceedings -
Environmental Proceedings."
VALVOLINE
The Valvoline Company, a division of Ashland, is a marketer of
premium-branded automotive and industrial oils, automotive chemicals,
automotive appearance products and automotive services, with sales in more
than 140 countries. The Valvoline(R) trademark was federally registered in
1873 and is the oldest trademark for a lubricating oil in the United
States. Valvoline is comprised of the following business units:
NORTH AMERICAN PRODUCTS - This unit, Valvoline's largest division,
markets automotive, commercial, and industrial lubricants, automotive
chemicals and automotive appearance products to a broad network of North
American customers. This unit markets Valvoline-branded motor oil, one of
the top selling brands in the U.S. private passenger car and light truck
market, and premium synthetic SynPower(R) automobile chemicals for
"under-the-hood" use.
North American Products also markets Eagle One(R) premium automotive
appearance products, Zerex(R) antifreeze and Pyroil(R) automotive
chemicals. Zerex is the second leading antifreeze brand in the United
States. This division also markets R-12, an automotive refrigerant that was
phased out of production in 1995. R-12 is being replaced in the market by a
new generation of refrigerants.
The domestic commercial and specialty products group of the North
American Products unit has a strategic alliance with Cummins Engine Company,
Inc. to distribute heavy-duty lubricants to the commercial market.
EAGLE ONE - Eagle One is a brand of premium automobile appearance
chemicals for "above-the-hood" applications. Products include waxes,
polishes and wheel cleaners. Managed by Valvoline as a separate business
unit, Eagle One markets its products through Valvoline's North American
Products and Valvoline International divisions.
VALVOLINE INTERNATIONAL - Valvoline International markets Valvoline
branded products, TECTYL(R) rust preventives and Eagle One automotive
appearance products through company-owned affiliates or divisions in
Argentina, Australia, Austria, Belgium, Brazil, Denmark, Finland, France,
Germany, Great Britain, Italy, the
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Netherlands, Poland, South Africa, Sweden and Switzerland. Licensees and
distributors market certain products in other parts of Europe, Mexico,
Central and South America, the Far East, the Middle East and certain
African countries. Joint ventures have been established in China, Ecuador,
India, Thailand and Venezuela. Packaging and blending plants and
distribution centers in Australia, Canada, the Netherlands and the United
States supply international customers.
VALVOLINE INSTANT OIL CHANGE(R) ("VIOC") - VIOC is one of the largest
competitors in the expanding U.S. "fast oil change" service business,
providing Valvoline with a significant share of the installed segment of
the passenger car and light truck motor oil market. As of September 30,
2000, 358 company-owned and 272 franchised service centers were operating
in 34 states.
VIOC has continued its customer service innovation through its Maximum
Vehicle Performance program ("MVP"). MVP is a computer-based program that
maintains system-wide service records on all customer vehicles. MVP also
contains a database on all car models, which allows employees to make
service recommendations based on vehicle owner's manual recommendations.
REFINING AND MARKETING
Refining and Marketing operations are conducted by MAP and its
subsidiaries, including its wholly-owned subsidiaries, Speedway
SuperAmerica LLC and Marathon Ashland Pipe Line LLC. Marathon Oil Company
holds a 62% interest in MAP and Ashland holds a 38% interest in MAP.
REFINING
MAP owns and operates seven refineries with an aggregate refining
capacity of 935,000 barrels of crude oil per calendar day. The table below
sets forth the location and daily throughput capacity (measured in barrels)
of each of MAP's refineries as of September 30, 2000:
Garyville, Louisiana.............................232,000
Catlettsburg, Kentucky...........................222,000
Robinson, Illinois...............................192,000
Detroit, Michigan................................ 74,000
Canton, Ohio..................................... 73,000
Texas City, Texas................................ 72,000
St. Paul Park, Minnesota......................... 70,000
---------
Total.................................935,000
=========
MAP's refineries include crude oil atmospheric and vacuum
distillation, fluid catalytic cracking, catalytic reforming,
desulfurization and sulfur recovery units. The refineries have the
capability to process a wide variety of crude oils and to produce typical
refinery products, including reformulated gasoline ("RFG"). In addition to
typical refinery products, the Catlettsburg refinery manufactures
lubricating oils and a wide range of petrochemicals. For the twelve months
ended September 30, 2000, 76% of MAP's production of lubricating oils was
purchased by Valvoline and 39% of MAP's production of petrochemicals was
purchased by Ashland Distribution.
MAP also produces a wide range of asphalt products, petroleum pitch
(primarily used in the graphite electrode, clay target and refractory
industries), aromatics, aliphatic hydrocarbons, cumene, base oil and slack
wax.
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The table below sets forth MAP's refinery input and refinery
production by product group for the twelve months ended September 30, 2000,
September 30, 1999 and for the nine months ended September 30, 1998.
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended Nine Months Ended
-------------------- -------------------- -----------------
September 30, 2000 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------
<S> <C> <C> <C>
Refinery Input (in thousands
----------------------------
of barrels per day) 1,033.4 1,034.0 1,023.3
--------------------
Refined Product Yields
----------------------
(in thousands of barrels per day)
----------------------------------
Gasoline.......................... 559.0 565.5 539.8
Distillates....................... 271.5 265.6 269.2
Propane........................... 21.0 22.2 20.9
Feedstocks & Special Products.... 68.9 64.9 71.7
Heavy Fuel Oils................... 41.2 45.1 47.4
Asphalt........................... 73.3 70.4 69.3
------ -------- ---------
Total........ 1,034.9 1,033.7 1,018.3
======= ======== =========
</TABLE>
Planned maintenance activities requiring temporary shutdown of certain
refinery operating units ("turnarounds") are periodically performed at each
refinery. MAP completed a major turnaround at the Catlettsburg refinery in
the twelve months ended September 30, 2000.
MAP is constructing a delayed coker unit at its Garyville, Louisiana
refinery. This unit will allow for the use of heavier, lower cost crude and
reduce the production of heavy fuel oil. To supply this new unit, MAP
reached an agreement with P.M.I. Comercio Internacional, S.A. de C.V., an
affiliate of Petroleos Mexicanos, to purchase approximately 90,000 barrels
per day of heavy Maya crude oil. This agreement is multi-year and will
begin upon completion of the delayed coker unit in the fourth quarter of
2001.
MARKETING
MAP's principal marketing areas for gasoline, kerosene and light oils
include the Midwest, the upper Great Plains and the southeastern United
States. Gasoline, kerosene and light fuel oils are sold in 29 states.
Gasoline is sold at wholesale primarily to independent marketers, jobbers
and chain retailers who resell these products through several thousand
retail outlets principally under their own names. MAP also supplies 3,637
jobber-dealer, open-dealer and lessee-dealer locations using the
Marathon(R) and Ashland(R) brand names.
Gasoline, kerosene, distillates and aviation products are also sold to
utilities, railroads, river towing companies, commercial fleet operators,
airlines and governmental agencies.
Retail sales of gasoline and diesel fuel are made through MAP's
wholly-owned subsidiary, Speedway SuperAmerica LLC ("SSA"). SSA has 2,382
retail outlets (gasoline stations, convenience store-gasoline stations and
travel centers) in 20 states in the Southeast and Midwest under brand names
including Speedway(R) and SuperAmerica(R). The convenience store-gasoline
locations offer consumers gasoline, diesel fuel (at selected locations) and
a broad mix of other products and services, such as tobacco, soft drinks,
health and beauty aids, groceries, fresh-baked goods, automated teller
machines, automotive accessories and a line of private-label items. The
travel centers offer diesel fuel, gasoline and a variety of other services
associated with such locations. Several travel centers and convenience
store locations also have on-premises brand-name restaurants such as Subway
and Taco Bell.
In December 1999, MAP purchased from Ultramar Diamond Shamrock ("UDS")
178 UDS owned-and-operated convenience stores and five product terminals.
In addition, MAP was assigned supply contracts with UDS jobbers, who supply
242 total-branded jobber stations in Michigan.
MAP plans to sell approximately 270 gasoline stations located in the
Midwest and Southeast. These non-core assets comprise less than 12% of
MAP's owned and operated SSA retail network. By September 30, 2000, 25 of
these stations had been sold. Most of the remaining stations are expected
to be sold by December 31, 2000.
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During the twelve months ended September 30, 2000, 67% of the revenues
(excluding excise taxes) of the SSA stores were derived from the sale of
gasoline and diesel fuel, and 33% of such revenues were derived from the
sale of merchandise.
The table below shows the volume of MAP's consolidated refined product
sales for the twelve months ended September 30, 2000, September 30, 1999
and the nine months ended September 30, 1998.
<TABLE>
<CAPTION>
Twelve Months Ended Twelve Months Ended Nine Months Ended
-------------------- -------------------- -----------------
September 30, 2000 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------
<S> <C> <C> <C>
Refined Product Sales
---------------------
(in thousands of barrels per day)
---------------------------------
Gasoline.......................... 752.1 699.3 659.1
Distillates....................... 351.2 324.6 312.9
Propane........................... 21.6 22.4 20.8
Feedstocks & Special Products.... 67.6 65.1 68.8
Heavy Fuel Oils................... 40.9 44.9 48.4
Asphalt........................... 75.1 74.3 73.7
------ -------- ---------
Total........ 1,308.5 1,230.6 1,183.7
======= ======= =======
Matching Buy/Sell Volumes
included in above.................... 41.4 47.7 38.4
</TABLE>
MAP sells RFG in parts of its marketing territory, primarily Chicago,
Illinois; Louisville, Kentucky; Northern Kentucky; Maryland; Virginia; and
Milwaukee, Wisconsin. MAP also markets low-vapor-pressure gasolines in all
or parts of eleven states.
SUPPLY AND TRANSPORTATION
The crude oil processed in MAP's refineries is obtained from
negotiated lease, contract and spot purchases or exchanges. For the twelve
months ended September 30, 2000, MAP's negotiated lease, contract and spot
purchases of U.S. crude oil for refinery input averaged 395,400 barrels per
day (1 barrel = 42 United States gallons), including an average of 20,200
barrels per day acquired from Marathon Oil Company. For the twelve months
ended September 30, 2000, MAP's foreign crude oil requirements were met
largely through purchases from various foreign national oil companies,
producing companies and traders. Purchases of foreign crude oil represented
56% of MAP's crude oil requirements for the twelve months ended September
30, 2000.
MAP's ownership or interest in domestic pipeline systems in its
refining and marketing areas is significant. MAP owns, leases or has an
ownership interest in 6,685 miles of active pipeline in 13 states. This
network transports crude oil and refined products to and from terminals,
refineries and other pipelines. It includes 170 miles of crude oil
gathering lines, 3,659 miles of crude oil trunk lines and 2,856 miles of
refined product lines.
MAP has a 46.7% ownership interest in LOOP LLC ("LOOP"), which is the
owner and operator of the only U.S. deepwater port facility capable of
receiving crude oil from very large crude carriers. Ashland has retained a
4% ownership interest in LOOP. MAP also owns a 49.9% ownership interest in
LOCAP INC. ("LOCAP"), which is the owner and operator of a crude oil
pipeline connecting LOOP to the Capline system. Ashland has retained an
8.6% ownership interest in LOCAP. In addition, MAP has a 37.169% ownership
interest in the Capline system. These port and pipeline systems provide MAP
with access to common carrier transportation from the Louisiana Gulf Coast
to Patoka, Illinois. At Patoka, the Capline system connects with other
common carrier pipelines owned or leased by MAP that provide transportation
to MAP's refineries in Illinois, Kentucky, Michigan and Ohio.
MAP's subsidiary, Ohio River Pipe Line LLC ("ORPL"), plans to build a
pipeline from Kenova, West Virginia, to Columbus, Ohio. ORPL is a common
carrier pipeline company and the pipeline will be an interstate common
carrier pipeline. The pipeline is expected to initially move about 50,000
barrels per day of refined products into the central Ohio region.
Construction is currently expected to begin in the second half of calendar
2001. However, the construction schedule is largely dependent on obtaining
the necessary rights-of-way, of which approximately 92%
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have been obtained to date, and final regulatory approvals. ORPL is still
negotiating with various landowners to obtain the remaining rights-of-way.
In addition, where appropriate, ORPL has brought condemnation actions to
acquire rights-of-way. These actions are at various stages of litigation
and appeal.
In March 2000, MAP announced it joined CMS Energy Corporation and
TEPPCO Partners, L.P., in an agreement to form a limited liability company,
Centennial Pipeline LLC, with equal ownership to operate an interstate
refined petroleum products pipeline extending from the U.S. Gulf of Mexico
to the Midwest. Centennial Pipeline LLC plans to build a 70-mile,
24-inch-diameter pipeline connecting TEPPCO's facility in Beaumont, Texas,
with an existing 720 mile, 26 inch diameter pipeline extending from
Longville, Louisiana, to Bourbon, Illinois. The system, which will pass
through seven states, is expected to be completed by the end of calendar
2001.
MAP also has a stock interest in Minnesota Pipe Line Company, which
owns a crude oil pipeline in Minnesota. Minnesota Pipe Line Company
provides MAP with access to crude oil common carrier transportation from
Clearbrook, Minnesota, to Cottage Grove, Minnesota, which is in the
vicinity of MAP's St. Paul Park, Minnesota refinery.
MAP's marine transportation operations include towboats and barges
that transport refined products on the Ohio, Mississippi and Illinois
rivers, their tributaries and the Intracoastal Waterway. In January 2000,
MAP exercised contract provisions to terminate the long-term charters on
two single-hulled 80,000-deadweight-ton tankers and returned the vessels to
the owners. These vessels had been "bare boat sub-chartered" to a
third-party operator. The initial term of these charters was scheduled to
expire in 2001 and 2002, subject to certain renewal options.
MAP leases or owns rail cars in various sizes and capacities for
movement and storage of petroleum products. MAP also owns or leases a large
number of tractor-trailers, tank trailers and general service trucks.
In addition, MAP owns and operates 93 terminal facilities from which
it sells a wide range of petroleum products. These facilities are supplied
by a combination of barges, pipeline, truck and rail.
OTHER MATTERS
MAP experiences normal seasonal variations in its sales and operating
results. This seasonality is due primarily to increased demand for gasoline
during the summer driving season, higher demand for distillate during the
winter heating season and increased demand for asphalt from the road paving
industry during the construction season.
For information on MAP and federal, state and local statutes and
regulations governing releases into the environment or protection of the
environment, see "Item 1. Miscellaneous - Business - Environmental
Matters."
MISCELLANEOUS
ENVIRONMENTAL MATTERS
Ashland has implemented a company-wide environmental policy overseen
by the Public Policy - Environmental Committee of Ashland's Board of
Directors. Ashland's Environmental, Health and Safety group has the
responsibility to ensure that Ashland's operating groups maintain
environmental compliance in accordance with applicable laws and
regulations.
Federal, state and local laws and regulations relating to the
protection of the environment have a significant impact on how Ashland
conducts its businesses. These laws and regulations include the Clean Air
Act ("CAA") with respect to air emissions; the Clean Water Act ("CWA") with
respect to water discharges; the Resource Conservation and Recovery Act
("RCRA") with respect to solid and hazardous waste generation, treatment,
storage and disposal; the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") and the Superfund Amendments and
Reauthorization Act of 1986 ("SARA") with respect to releases and
remediation of hazardous substances (CERCLA and SARA are sometimes referred
to collectively as "Superfund"); the Toxic Substances Control Act ("TSCA")
with respect to chemical formulation and use; the Oil Pollution Act of 1990
("OPA 90") with respect to oil pollution, spill response and financial
assurance requirements for marine operations; the Federal Occupational
Safety and Health Act ("OSHA") with respect to workplace health and safety
standards; and various other federal, state and local laws related to the
environment, health and safety. New laws are being enacted and regulations
are being adopted by various regulatory agencies on a continuing basis, and
the costs of compliance with these new rules cannot be estimated until the
manner in which they will be implemented has been more accurately
8
<PAGE>
defined. In addition, most foreign countries in which Ashland conducts
business have laws dealing with similar matters.
At September 30, 2000, Ashland's reserves for on-site and off-site
environmental assessments and remediation efforts were $163 million,
reflecting Ashland's estimates of the most likely costs which will be
incurred over an extended period to remediate identified environmental
conditions for which the costs are reasonably estimable, without regard to
any third-party recoveries. Expenditures for investigatory and remedial
efforts in future years are subject to the uncertainties associated with
environmental exposures, including identification of new sites at which
cleanup is required and changes in laws and regulations and their
application. Such expenditures, however, are not expected to have a
material adverse effect on Ashland's consolidated financial position, cash
flow or liquidity.
In connection with the formation of MAP, Marathon and Ashland each
retained responsibility for certain environmental costs arising out of
their respective prior ownership and operation of the facilities
transferred to MAP. In certain situations, various threshold provisions
apply, eliminating or reducing the financial responsibility of the
contributing party until certain levels of expenditure have been reached.
In other situations, sunset provisions gradually diminish the level of
financial responsibility of the contributing party over time.
AIR - The CAA imposes stringent limits on air emissions, establishes a
federally mandated operating permit program, and allows for civil and
criminal enforcement actions. Additionally, it establishes air quality
attainment deadlines and control requirements based on the severity of air
pollution in a given geographical area. Various state clean air acts
implement, complement and, in some instances, add to the requirements of
the federal CAA. The requirements of the CAA and its state counterparts
have a significant impact on the daily operation of Ashland's businesses
and, in many cases, on product formulation and other long-term business
decisions. Ashland's businesses maintain numerous permits pursuant to these
clean air laws and have implemented systems to oversee ongoing compliance
efforts.
In July 1997, the United States Environmental Protection Agency
("EPA") promulgated revisions to the National Ambient Air Quality Standards
for ground level ozone and particulate matter. These revisions, if they are
implemented by the states, could have a significant effect on certain of
Ashland's chemical manufacturing and distribution businesses, and on MAP.
However, EPA's authority and scientific basis to promulgate these standards
were challenged by industry and overturned by the federal Court of Appeals
for the District of Columbia. Litigation is continuing, as are efforts by
EPA and other regulatory and law enforcement agencies to achieve the
objectives of these standards through other means. It is not currently
possible to estimate any potential financial impact that any revised
standards may have on Ashland's operations.
WATER - Ashland's businesses maintain numerous discharge permits, as
the National Pollutant Discharge Elimination System of the CWA and state
programs require, and have implemented systems to oversee their compliance
efforts. In addition, several of MAP's operations, in particular its barge
and terminal facilities, are regulated under OPA 90.
SOLID WASTE - Ashland's businesses are subject to RCRA, which
establishes standards for the management of solid and hazardous wastes.
Besides affecting current waste disposal practices, RCRA also addresses the
environmental effects of certain past waste disposal operations, the
recycling of wastes and the storage of regulated substances in underground
tanks.
REMEDIATION - Ashland currently or has in the past operated various
facilities where, during the normal course of operations, releases of
hazardous substances have occurred. Federal and state laws, including but
not limited to RCRA and various remediation laws, require that
contamination caused by such releases be assessed and, if necessary,
remediated to meet applicable standards. MAP operates, and in the past has
operated, certain retail outlets where, during the normal course of
operations, releases of petroleum products from underground storage tanks
have occurred. Federal and state laws require that contamination caused by
such releases at these sites be assessed and, if necessary, remediated to
meet applicable standards.
9
<PAGE>
RESEARCH
Ashland conducts a program of research and development to invent and
improve products and processes and to improve environmental controls for
its existing facilities. It maintains its primary research facilities in
Dublin, Ohio; Lexington, Kentucky; and Atlanta, Georgia. Research and
development costs are expensed as they are incurred and totaled $33 million
in fiscal 2000 ($30 million in 1999 and $28 million in 1998).
COMPETITION
In all its operations, Ashland is subject to intense competition both
from companies in the industries in which it operates and from products of
companies in other industries. The majority of the business for which APAC
competes is obtained by competitive bidding. There are a substantial number
of competitors in the markets in which APAC operates and, as a result, all
of APAC's goods and services are marketed under highly competitive
conditions. Ashland Distribution's chemicals and solvents distribution
businesses compete with national, regional and local companies throughout
North America, while its plastics distribution businesses compete
worldwide. Ashland Specialty Chemical's businesses compete globally in
selected niche markets, largely on the basis of technology and service,
while holding proprietary technology in virtually all its specialty
chemicals businesses. Ashland Specialty Chemical's petrochemicals business
is largely a commodities business, with pricing and quality being the most
important factors. Valvoline competes primarily with domestic oil companies
and, to a lesser extent, with international oil companies on a worldwide
basis. Valvoline's brand recognition and increasing market share in the
"fast oil change" market are important competitive factors.
MAP competes primarily with other domestic refiners and, to a lesser
extent, with imported products. MAP's refineries are located close to its
market areas, giving MAP a geographic advantage in supplying these regions.
MAP's retail operations compete with major oil companies, independent oil
companies and independent marketers.
FORWARD-LOOKING STATEMENTS
This Form 10-K and the documents incorporated by reference contain
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, including various information within the "Capital Resources,"
"Derivative Instruments," "Outlook" and "Conversion to the Euro" sections
in Management's Discussion and Analysis in Ashland's Annual Report. Words
such as "anticipates," "believes," "estimates," "expects," "is likely,"
"predicts," and variations of such words and similar expressions are
intended to identify such forward-looking statements. Although Ashland
believes that its expectations are based on reasonable assumptions, it
cannot assure that the expectations contained in such statements will be
achieved. Important factors which could cause actual results to differ
materially from those contained in such statements are discussed under
"Risks and Uncertainties" in Note A of Notes to Consolidated Financial
Statements in Ashland's Annual Report. Other factors and risks affecting
Ashland's revenues and operations are discussed below, as well as in other
portions of this Form 10-K.
Ashland's operations are affected by domestic and international
political, legislative, regulatory and legal actions. Such actions may
include changes in the policies of OPEC or other developments affecting
oil-producing countries, changes in tax laws, and changes in environmental,
health and safety laws.
Domestic and international economic conditions, such as recessionary
trends, inflation, interest and monetary exchange rates, as well as changes
in demand for products and services, can also have a significant effect on
Ashland's operations. Although Ashland maintains reserves for anticipated
liabilities and carries various levels of insurance, Ashland could be
affected by civil, criminal, regulatory or administrative actions, claims
or proceedings. In addition, climate and weather can significantly affect
Ashland in several of its operations such as its APAC construction
activities and MAP's heating oil businesses.
ITEM 2. PROPERTIES
Ashland's corporate headquarters, which is leased, is located in
Covington, Kentucky. Principal offices of other major operations are
located in Atlanta, Georgia (APAC); Dublin, Ohio (Ashland Distribution and
Ashland Specialty Chemical); Lexington, Kentucky (Valvoline); and Russell,
Kentucky (Administrative Services), all of which are leased, except for the
Russell office, which is owned. Principal manufacturing, marketing and
other materially important physical properties of Ashland and its
subsidiaries are described under the appropriate segment under Item 1.
Additional information concerning certain leases may be found in Note J of
Notes to Consolidated Financial Statements in Ashland's Annual Report.
10
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL PROCEEDINGS - As of September 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
associated with 84 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 activities 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended September
30, 2000.
ITEM X. EXECUTIVE OFFICERS OF ASHLAND
The following is a list of Ashland's executive officers, their ages
and their positions and offices during the last five years (listed
alphabetically after the Chief Executive Officer as to other Senior Vice
Presidents, Administrative Vice Presidents and other executive officers).
PAUL W. CHELLGREN* (age 57) is Chairman of the Board, Chief Executive
Officer and Director of Ashland and has served in such capacities since
1997, 1996 and 1992, respectively. During the past five years, he has also
served as President and Chief Operating Officer of Ashland.
JAMES R. BOYD* (age 54) is Senior Vice President and Group Operating
Officer - APAC, Inc. having served in such capacities since 1990 and 1993,
respectively.
DAVID J. D'ANTONI* (age 55) is Senior Vice President and Group
Operating Officer - Ashland Distribution Company and Ashland Specialty
Chemical Company and has served in such capacities since 1988 and 1999,
respectively. During the past five years, he has also served as President
of Ashland Chemical Company.
JAMES J. O'BRIEN (age 46) is Senior Vice President of Ashland and
President of The Valvoline Company and has served in such capacities since
1997 and 1995, respectively. During the past five years, he has also served
as Vice President of Ashland.
CHARLES F. POTTS (age 56) is Senior Vice President of Ashland and
President of APAC, Inc. and has served in such capacities since 1992.
J. MARVIN QUIN* (age 53) is Senior Vice President and Chief Financial
Officer of Ashland and has served in such capacities since 1992.
KENNETH L. AULEN (age 51) is Administrative Vice President and
Controller of Ashland and has served in such capacities since 1992.
PHILIP W. BLOCK* (age 53) is Administrative Vice President - Human
Resources of Ashland and has served in such capacity since 1992.
--------------------------------
*Member of Ashland's Executive Committee
11
<PAGE>
PETER M. BOKACH (age 54) is Vice President of Ashland and President of
Ashland Distribution Company and has served in such capacities since 1999.
During the past five years, he has also served as Group Vice President -
Distribution Division of Ashland Chemical Company.
JAMES A. DUQUIN (age 53) is Vice President of Ashland and President of
Ashland Specialty Chemical Company and has served in such capacities since
1999. During the past five years, he has also served as Group Vice
President - Specialty Chemical Division and Vice President - IC&S Division
of Ashland Chemical Company.
DAVID L. HAUSRATH* (age 48) is Vice President and General Counsel of
Ashland and has served in such capacities since 1998 and 1999,
respectively. During the past five years, he has also served as Associate
General Counsel and Assistant General Counsel of Ashland.
J. DAN LACY* (age 53) is Vice President - Corporate Affairs of Ashland
and has served in such capacity since 1986.
RICHARD P. THOMAS* (age 54) is Vice President and Secretary of Ashland
and has served in such capacities since 1998 and 1999, respectively. During
the past five years, he has also served as Associate General Counsel of
Ashland and Administrative Vice President and General Counsel of Ashland
Petroleum Company.
LAMAR M. CHAMBERS (age 46) is Auditor of Ashland and has served in
such capacity since 1998. During the past five years, he has also served as
Vice President, Finance and Controller of MAP, Administrative Vice
President - Finance of Ashland Petroleum Company and Executive Assistant to
the Chief Executive Officer of Ashland.
Each executive officer is elected by the Board of Directors of Ashland
to a term of one year, or until his successor is duly elected, at the
annual meeting of the Board of Directors, except in those instances where
the officer is elected other than at an annual meeting of the Board of
Directors, in which case his tenure will expire at the next annual meeting
of the Board of Directors unless the officer is re-elected.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
There is hereby incorporated by reference the information appearing in
Note P of Notes to Consolidated Financial Statements in Ashland's Annual
Report.
At September 30, 2000, there were approximately 19,600 holders of
record of Ashland's Common Stock. Ashland Common Stock is listed on the New
York and Chicago stock exchanges (ticker symbol ASH) and has trading
privileges on the Boston, Cincinnati, Pacific and Philadelphia stock
exchanges.
During the quarter ended September 30, 2000, Ashland issued 54,083
shares of its Common Stock, par value $1.00 per share, in connection with
the acquisition of Buster Paving Company, Inc. The shares were issued in a
transaction exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, and the regulations thereunder.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing
under the caption "Five-Year Selected Financial Information" on page 50 in
Ashland's Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
There is hereby incorporated by reference the information appearing
under the caption "Management's Discussion and Analysis" on pages 22 to 29
in Ashland's Annual Report.
----------------------------------------------------------------------------
*Member of Ashland's Executive Committee
12
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There is hereby incorporated by reference the information appearing
under the caption "Derivative Instruments" on pages 27 and 28 in Ashland's
Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the consolidated financial
statements appearing on pages 31 through 49 in Ashland's Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information to appear
under the caption "Ashland Inc.'s Board of Directors - Nominees for
Election at the 2001 Annual Meeting" and the information regarding Section
16 beneficial ownership reporting compliance in Ashland's definitive Proxy
Statement for its January 25, 2001 Annual Meeting of Shareholders, which
will be filed with the SEC within 120 days after September 30, 2000 ("Proxy
Statement"). See also the list of Ashland's executive officers and related
information under "Executive Officers of Ashland" in Part I - Item X
herein.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information to appear
under the captions "Executive Compensation," "Compensation of Directors"
and "Miscellaneous - Personnel and Compensation Committee Interlocks and
Insider Participation" in Ashland's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information to appear
under the caption "Ashland Common Stock Ownership of Directors and Certain
Officers of Ashland" and the information regarding the ownership of
securities of Ashland in Ashland's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information to appear
under the caption "Miscellaneous - Business Relationships" in Ashland's
Proxy Statement.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report
(1) and (2) Financial Statements and Financial Schedule
The consolidated financial statements and financial schedule of
Ashland presented or incorporated by reference in this report are listed in
the index on page 18.
(3) Exhibits
3.1 - Second Restated Articles of Incorporation of Ashland, as
amended to January 30, 1998 (filed as Exhibit 3 to
Ashland's Form 10-Q for the quarter ended December 31, 1997
and incorporated herein by reference).
3.2 - By-laws of Ashland, as amended to January 26, 2000 (filed
as Exhibit 3.2 to Ashland's Form 10-Q for the quarter ended
December 31, 1999 and incorporated herein by reference).
4.1 - Ashland agrees to provide the SEC, upon request, copies
of instruments defining the rights of holders of long-term
debt of Ashland and all of its subsidiaries for which
consolidated or unconsolidated financial statements are
required to be filed with the SEC.
4.2 - Indenture, dated as of August 15, 1989, as amended and
restated as of August 15, 1990, between Ashland and
Citibank, N.A., as Trustee (filed as Exhibit 4(a) to
Ashland's Form 10-K for the fiscal year ended September 30,
1991 and incorporated herein by reference).
4.3 - Rights Agreement, dated as of May 16, 1996, between
Ashland Inc. and the Rights Agent, together with Form of
Right Certificate (filed as Exhibits 4(a) and 4(c),
respectively, to Ashland's Form 8-A filed with the SEC on
May 16, 1996 and incorporated herein by reference).
The following Exhibits 10.1 through 10.16 are compensatory plans or
arrangements or management contracts required to be filed as exhibits
pursuant to Item 601(b)(10)(ii)(A) of Regulation S-K.
10.1 - Amended Stock Incentive Plan for Key Employees of Ashland
Inc. and its Subsidiaries (filed as Exhibit 10.1 to
Ashland's Form 10-K for the fiscal year ended September 30,
1999 and incorporated herein by reference).
10.2 - Ashland Inc. Deferred Compensation Plan for Non-Employee
Directors (filed as Exhibit 10.2 to Ashland's Form 10-K for
the fiscal year ended September 30, 1999 and incorporated
herein by reference).
10.3 - Tenth Amended and Restated Ashland Inc. Supplemental
Early Retirement Plan for Certain Employees (filed as
Exhibit 10.3 to Ashland's Form 10-K for the fiscal year
ended September 30, 1999 and incorporated herein by
reference).
10.4 - Ashland Inc. Incentive Compensation Program (filed as
Exhibit 10.6 to Ashland's Form 10-K for the fiscal year
ended September 30, 1993 and incorporated herein by
reference).
10.5 - Ashland Inc. Salary Continuation Plan (filed as Exhibit
10(c).11 to Ashland's Form 10-K for the fiscal year ended
September 30, 1988 and incorporated herein by reference).
10.6 - Form of Ashland Inc. Executive Employment Contract
between Ashland Inc. and certain executive officers of
Ashland (filed as Exhibit 10.6 to Ashland's Form 10-K for
the fiscal year ended September 30, 1999 and incorporated
herein by reference).
14
<PAGE>
10.7 - Form of Indemnification Agreement between Ashland Inc.
and each member of its Board of Directors (filed as Exhibit
10(c).13 to Ashland's Form 10-K for the fiscal year ended
September 30, 1990 and incorporated herein by reference).
10.8 - Ashland Inc. Nonqualified Excess Benefit Pension Plan
(filed as Exhibit 10.11 to Ashland's Form 10-K for the
fiscal year ended September 30, 1998 and incorporated
herein by reference).
10.9 - Ashland Inc. Long-Term Incentive Plan.
10.10- Ashland Inc. Directors' Charitable Award.
10.11- Ashland Inc. 1993 Stock Incentive Plan.
10.12- Ashland Inc. 1995 Performance Unit Plan.
10.13- Ashland Inc. Incentive Compensation Plan for Key Executives
(filed as Exhibit 10.13 to Ashland's Form 10-K for the
fiscal year ended September 30, 1999 and incorporated
herein by reference).
10.14- Ashland Inc. Deferred Compensation Plan.
10.15- Ashland Inc. 1997 Stock Incentive Plan.
10.16- Ashland Inc. Incentive Plan (filed as Exhibit 10.1 to
Ashland's Form 10-Q for the quarter ended December 31, 1999
and incorporated herein by reference).
10.17- Amended and Restated Limited Liability Company Agreement
of Marathon Ashland Petroleum LLC dated as of December 31,
1998 (filed as Exhibit 10.17 to Ashland's Form 10-K for the
fiscal year ended September 30, 1999 and incorporated
herein by reference).
10.18- Put/Call, Registration Rights and Standstill Agreement as
amended to December 31, 1998 among Marathon Oil Company,
USX Corporation, Ashland Inc. and Marathon Ashland
Petroleum (filed as Exhibit 10.18 to Ashland's Form 10-K
for the fiscal year ended September 30, 1999 and
incorporated herein by reference).
11 - Computation of Earnings Per Share (appearing on page 37
of Ashland's Annual Report to Shareholders, incorporated by
reference herein, for the fiscal year ended September 30,
2000).
12 - Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
13 - Portions of Ashland's Annual Report to Shareholders,
incorporated by reference herein, for the fiscal year ended
September 30, 2000.
21 - List of subsidiaries.
23 - Consent of independent auditors.
24 - Power of Attorney, including resolutions of the Board of
Directors.
27 - Financial Data Schedule for the fiscal year ended September 30,
2000.
Upon written or oral request, a copy of the above exhibits will be
furnished at cost.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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)
By:
/s/ Kenneth L. Aulen
-------------------------------------------
(Kenneth L. Aulen, Administrative
Vice President and Controller)
Date: December 1, 2000
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT, IN THE CAPACITIES INDICATED, ON DECEMBER 1, 2000.
SIGNATURES CAPACITY
---------- --------
/s/ PAUL W. CHELLGREN
------------------------ Chairman of the Board, Chief Executive Officer
PAUL W. CHELLGREN and Director
/s/ J. MARVIN QUIN
------------------------ Senior Vice President and Chief Financial Officer
J. MARVIN QUIN
/s/ KENNETH L. AULEN
------------------------ Administrative Vice President, Controller and
KENNETH L. AULEN Principal Accounting Officer
*
------------------------ Director
SAMUEL C. BUTLER
*
------------------------ Director
FRANK C. CARLUCCI
*
------------------------ Director
ERNEST H. DREW
*
------------------------ Director
JAMES B. FARLEY
*
------------------------ Director
BERNADINE P. HEALY
16
<PAGE>
*
------------------------ Director
MANNIE L. JACKSON
*
------------------------ Director
PATRICK F. NOONAN
*
------------------------ Director
JANE C. PFEIFFER
*
------------------------ Director
WILLIAM L. ROUSE , JR.
*
------------------------ Director
THEODORE M. SOLSO
* By: /s/ David L. Hausrath
--------------------------
David L. Hausrath
Attorney-in-Fact
Date: December 1, 2000
17
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULE
Page
----
Consolidated financial statements:
Statements of consolidated income ...............................*
Consolidated balance sheets .....................................*
Statements of consolidated stockholders' equity .................*
Statements of consolidated cash flows ...........................*
Notes to consolidated financial statements ......................*
Information by industry segment .................................*
Report of independent auditors .................................19
Consolidated financial schedule:
Schedule II - Valuation and qualifying account..................20
-----------
*The consolidated financial statements appearing on pages 31
through 49 in Ashland's Annual Report are incorporated by reference in this
Annual Report on Form 10-K.
Schedules other than that listed above have been omitted because
of the absence of the conditions under which they are required or because
the information required is shown in the consolidated financial statements
or the notes thereto. Separate financial statements for MAP required by
Rule 3-09 of Regulation S-X will be filed as an amendment to this Form 10-K
within 90 days after the end of MAP's fiscal year ending December 31, 2000.
Separate financial statements of other unconsolidated affiliates are
omitted because each company does not constitute a significant subsidiary
using the 20% tests when considered individually. Summarized financial
information for such affiliates is disclosed in Note F of Notes to
Consolidated Financial Statements in Ashland's Annual Report.
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements and schedule of
Ashland Inc. and consolidated subsidiaries listed in the accompanying index
to financial statements and financial schedule (Item 14(a)). These
financial statements and schedule are the responsibility of Ashland's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying
index to financial statements (Item 14(a)) present fairly, in all material
respects, the consolidated financial position of Ashland Inc. and
consolidated subsidiaries at September 30, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended September 30, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
Ernst & Young LLP
Cincinnati, Ohio
November 1, 2000
19
<PAGE>
<TABLE>
<CAPTION>
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Ashland Inc. and Consolidated Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
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(In millions) Balance at Provisions Balance
beginning charged to Reserves Other at end
Description of year earnings utilized changes of year
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 2000
Reserves deducted from asset accounts
Accounts receivable $ 23 $ 15 $(12)(1) $ (1) $ 25
Inventories 15 3 (5) - 13
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YEAR ENDED SEPTEMBER 30, 1999
Reserves deducted from asset accounts
Accounts receivable $ 19 $ 12 $ (8)(1) $ - $ 23
Inventories 11 7 (3) - 15
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YEAR ENDED SEPTEMBER 30, 1998
Reserves deducted from asset accounts
Accounts receivable $ 25 $ 8 $(10)(1) $ (4) $ 19
Inventories 11 2 (2) - 11
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</TABLE>
(1) Uncollected amounts written off, net of recoveries of $1 million in
2000 and $2 million in 1999 and 1998.
20
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.9 - Ashland Inc. Long-Term Incentive Plan.
10.10 - Ashland Inc. Directors' Charitable Award.
10.11 - Ashland Inc. 1993 Stock Incentive Plan.
10.12 - Ashland Inc. 1995 Performance Unit Plan.
10.14 - Ashland Inc. Deferred Compensation Plan.
10.15 - Ashland Inc. 1997 Stock Incentive Plan.
12 - Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
13 - Portions of Ashland's Annual Report to Shareholders,
incorporated by reference herein, for the fiscal
year ended September 30, 2000.
21 - List of subsidiaries.
23 - Consent of independent auditors.
24 - Power of Attorney, including resolutions of the Board of
Directors.
27 - Financial Data Schedule for the fiscal year ended
September 30, 2000.
