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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 DECEMBER 31, 2003
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
Indicate by checkmark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). X
At January 31, 2004, there were 69,504,506 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.
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
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Three months ended
December 31
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(In millions except per share data) 2003 2002
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REVENUES
Sales and operating revenues $ 1,923 $ 1,738
Equity income 38 35
Other income 13 18
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1,974 1,791
COSTS AND EXPENSES
Cost of sales and operating expenses 1,518 1,373
Selling, general and administrative expenses 316 334
Depreciation, depletion and amortization 48 52
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1,882 1,759
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OPERATING INCOME 92 32
Net interest and other financial costs (30) (32)
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 62 -
Income taxes (23) (1)
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INCOME (LOSS) FROM CONTINUING OPERATIONS 39 (1)
Results from discontinued operations (net of income taxes) - Note B (5) (91)
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NET INCOME (LOSS) $ 34 $ (92)
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BASIC EARNINGS (LOSS) PER SHARE - Note A
Income (loss) from continuing operations $ .56 $ (.02)
Results from discontinued operations (.07) (1.33)
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Net income (loss) $ .49 $ (1.35)
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DILUTED EARNINGS (LOSS) PER SHARE - Note A
Income (loss) from continuing operations $ .56 $ (.02)
Results from discontinued operations (.07) (1.33)
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Net income (loss) $ .49 $ (1.35)
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DIVIDENDS PAID PER COMMON SHARE $ .275 $ .275
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31 September 30 December 31
(In millions) 2003 2003 2002
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ASSETS
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CURRENT ASSETS
Cash and cash equivalents $ 201 $ 223 $ 119
Accounts receivable 1,083 1,170 975
Allowance for doubtful accounts (38) (35) (36)
Inventories - Note A 483 441 474
Deferred income taxes 110 142 83
Assets of discontinued operations held for sale - - 201
Other current assets 103 144 89
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1,942 2,085 1,905
INVESTMENTS AND OTHER ASSETS
Investment in Marathon Ashland Petroleum LLC (MAP) 2,335 2,448 2,300
Goodwill 527 523 511
Asbestos insurance receivable (noncurrent portion) 403 399 402
Other noncurrent assets 355 340 328
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3,620 3,710 3,541
PROPERTY, PLANT AND EQUIPMENT
Cost 2,999 2,959 2,917
Accumulated depreciation, depletion and amortization (1,780) (1,748) (1,653)
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1,219 1,211 1,264
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$ 6,781 $ 7,006 $ 6,710
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Debt due within one year $ 145 $ 102 $ 228
Trade and other payables 1,123 1,371 1,022
Liabilities of discontinued operations held for sale - - 34
Income taxes 56 11 22
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1,324 1,484 1,306
NONCURRENT LIABILITIES
Long-term debt (less current portion) 1,429 1,512 1,598
Employee benefit obligations 399 385 518
Deferred income taxes 221 291 150
Reserves of captive insurance companies 173 168 174
Asbestos litigation reserve (noncurrent portion) 562 560 525
Other long-term liabilities and deferred credits 355 353 364
Commitments and contingencies - Notes D and F
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3,139 3,269 3,329
COMMON STOCKHOLDERS' EQUITY 2,318 2,253 2,075
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$ 6,781 $ 7,006 $ 6,710
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY
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Accumulated
other
Common Paid-in Retained comprehensive
(In millions) stock capital earnings loss Total
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BALANCE AT OCTOBER 1, 2002 $ 68 $ 338 $ 1,961 $ (194) $ 2,173
Total comprehensive income (loss) (1) (92) 8 (84)
Cash dividends (19) (19)
Issued common stock under
stock incentive plans 5 5
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BALANCE AT DECEMBER 31, 2002 $ 68 $ 343 $ 1,850 $ (186) $ 2,075
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BALANCE AT OCTOBER 1, 2003 $ 68 $ 350 $ 1,961 $ (126) $ 2,253
Total comprehensive income (1) 34 30 64
Cash dividends (19) (19)
Issued common stock under
stock incentive plans 1 19 20
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BALANCE AT DECEMBER 31, 2003 $ 69 $ 369 $ 1,976 $ (96) $ 2,318
============== ============== ============== ============== =========
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(1) Reconciliations of net income (loss) to total comprehensive income
(loss) follow.
Three months ended
December 31
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(In millions) 2003 2002
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Net income (loss) $ 34 $ (92)
Unrealized translation adjustments 29 7
Related tax benefits 1 1
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Total comprehensive income (loss) $ 64 $ (84)
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At December 31, 2003, the accumulated other comprehensive loss of $96 million (after tax) was comprised of net unrealized
translation gains of $20 million and a minimum pension liability of $116 million.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
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Three months ended
December 31
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(In millions) 2003 2002
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CASH FLOWS FROM OPERATIONS
Income (loss) from continuing operations $ 39 $ (1)
Expense (income) not affecting cash
Depreciation, depletion and amortization 48 52
Deferred income taxes 21 14
Equity income from affiliates (38) (35)
Distributions from equity affiliates 148 82
Change in operating assets and liabilities (1) (150) (57)
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68 55
CASH FLOWS FROM FINANCING
Proceeds from issuance of common stock 17 1
Repayment of long-term debt (38) (45)
Increase in short-term debt - 64
Dividends paid (19) (19)
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(40) 1
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (53) (23)
Purchase of operations - net of cash acquired - (5)
Proceeds from sale of operations - 5
Other - net 9 -
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(44) (23)
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CASH PROVIDED (USED) BY CONTINUING OPERATIONS (16) 33
Cash used by discontinued operations (6) (4)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (22) 29
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 223 90
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 201 $ 119
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(1) Excludes changes resulting from operations acquired or sold.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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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, 2003. Results of operations for the
period ended December 31, 2003, are not necessarily indicative of results
to be expected for the year ending September 30, 2004.
INVENTORIES
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December 31 September 30 December 31
(In millions) 2003 2003 2002
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Chemicals and plastics $ 372 $ 333 $ 351
Construction materials 61 67 70
Petroleum products 71 66 63
Other products 53 48 48
Supplies 4 5 5
Excess of replacement costs over LIFO carrying values (78) (78) (63)
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$ 483 $ 441 $ 474
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EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings (loss) per share (EPS) from continuing operations.
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Three months ended
December 31
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(In millions except per share data) 2003 2002
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NUMERATOR
Numerator for basic and diluted EPS - Income (loss)
from continuing operations $ 39 $ (1)
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DENOMINATOR
Denominator for basic EPS - Weighted average
common shares outstanding 69 68
Common shares issuable upon exercise of stock options - -
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Denominator for diluted EPS - Adjusted weighted
average shares and assumed conversions 69 68
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BASIC EPS $ .56 $ (.02)
DILUTED EPS $ .56 $ (.02)
6
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE B - DISCONTINUED OPERATIONS
Ashland is subject to liabilities from claims alleging personal injury
caused by exposure to asbestos. Such claims result primarily from
indemnification obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation, a former subsidiary. During the quarter ended
December 31, 2002, Ashland increased its reserve for asbestos claims by
$390 million to cover litigation defense and claim settlement costs
expected to be paid through December 2012. Because insurance provides
reimbursements for most of these costs and coverage-in-place agreements
exist with the insurance companies that provide substantially all of the
coverage currently being accessed, the increase in the asbestos reserve was
offset in part by probable insurance recoveries valued at $235 million. The
resulting $155 million pretax charge to income, net of deferred income tax
benefits of $60 million, was reflected as an after-tax loss from
discontinued operations of $95 million in the Statement of Consolidated
Income for the three months ended December 31, 2002. Additional reserves
have been provided since then to maintain the reserve to cover the expected
costs on a rolling ten-year basis. See Note F for further discussion of
Ashland's asbestos-related litigation.
On August 29, 2003, Ashland sold the net assets of its Electronic Chemicals
business and certain related subsidiaries in a transaction valued at
approximately $300 million before tax. Electronic Chemicals was a part of
Ashland Specialty Chemical, providing ultra pure chemicals and other
products and services to the worldwide semiconductor industry, with
revenues of $215 million in 2003, $217 million in 2002 and $212 million in
2001. The sale reflects Ashland's strategy to optimize its business mix and
focus greater attention on the remaining chemical and transportation
construction operations where it can achieve strategic advantage. Ashland's
after-tax proceeds were used primarily to reduce debt. All assets and
liabilities of Electronic Chemicals are classified as current in the
December 31, 2002 balance sheet. Assets of $201 million were composed of
current assets of $54 million, investments and other assets of $23 million,
and property, plant and equipment of $124 million. Liabilities of $34
million were composed of current liabilities of $21 million and noncurrent
liabilities of $13 million.
Components of amounts reflected in the income statements related to
discontinued operations are presented in the following table.
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Three months ended
December 31
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(In millions) 2003 2002
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PRETAX INCOME (LOSS) FROM DISCONTINUED OPERATIONS
Reserves for asbestos-related litigation $ (7) $ (155)
Electronic Chemicals - 5
INCOME TAXES
Reserves for asbestos-related litigation 2 60
Electronic Chemicals - (1)
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RESULTS FROM DISCONTINUED OPERATIONS (NET OF INCOME TAXES) $ (5) $ (91)
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NOTE C - UNCONSOLIDATED AFFILIATES
Separate financial statements for MAP required by Rule 3-09 of Regulation
S-X will be filed as an amendment to Ashland's Annual Report on Form 10-K
within 90 days after the end of MAP's fiscal year, which ended December 31,
2003. Unaudited income statement information for MAP is shown below.
7
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE C - UNCONSOLIDATED AFFILIATES (CONTINUED)
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
that will be incurred by its parents.
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Three months ended
December 31
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(In millions) 2003 2002
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Sales and operating revenues $ 9,558 $ 7,078
Income from operations 99 94
Net income 96 92
Ashland's equity income 32 31
NOTE D - LEASES AND OTHER COMMITMENTS
LEASES
Under various operating leases, Ashland has guaranteed the residual value
of the underlying property that had an unamortized cost totaling $99
million at December 31, 2003. If Ashland had cancelled those leases at that
date, its maximum obligations under the residual value guarantees would
have amounted to $86 million. Ashland does not expect to incur any
significant charge to earnings under these guarantees, $19 million of which
relates to real estate. These lease agreements are with unrelated third
party lessors and Ashland has no additional contractual or other
commitments to any party to the leases.
OTHER COMMITMENTS
Ashland has guaranteed 38% of MAP's payments for certain crude oil
purchases, up to a maximum guarantee of $95 million. At December 31, 2003,
Ashland's contingent liability under this guarantee amounted to $62
million. Although Ashland has not made and does not expect to make any
payments under this guarantee, it has recorded the fair value of the
guarantee obligation, which is not significant.
NOTE E - EMPLOYEE BENEFIT PLANS
The following table details the components of pension and other
postretirement benefit costs.
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Other postretirement
Pension benefits benefits
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(In millions) 2003 2002 2003 2002
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THREE MONTHS ENDED DECEMBER 31
Service cost $ 12 $ 9 $ 4 $ 3
Interest cost 17 14 6 6
Expected return on plan assets (15) (11) - -
Other amortization and deferral 7 7 (4) (2)
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$ 21 $ 19 $ 6 $ 7
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Presently, Ashland anticipates contributing $120 million to its pension
plans during fiscal 2004. As of December 31, 2003, $54 million of
contributions have been made.
8
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE E - EMPLOYEE BENEFIT PLANS (CONTINUED)
On January 12, 2004, the Financial Accounting Standards Board issued Staff
Position No. FAS 106-1, "Accounting and Disclosure Requirements Related to
the Medicare Prescription Drug, Improvement and Modernization Act of 2003."
In accordance with that Staff Position, Ashland has elected to defer the
impact of the Medicare Prescription Drug, Improvement and Modernization Act
of 2003 (Act) until authoritative guidance on the accounting is issued. As
a result, the accumulated postretirement benefit obligation or net periodic
postretirement benefit costs in the financial statements or accompanying
notes do not reflect the effects of the Act, which are not yet reasonably
determinable.
NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES
ASBESTOS-RELATED LITIGATION
Ashland is subject to liabilities from claims alleging personal injury
caused by exposure to asbestos. Such claims result primarily from
indemnification obligations undertaken in 1990 in connection with the sale
of Riley Stoker Corporation (Riley), a former subsidiary. Although Riley
was neither a producer nor a manufacturer of asbestos, its industrial
boilers contained some asbestos-containing components provided by other
companies.
A summary of asbestos claims activity follows. Because claims are
frequently filed and settled in large groups, the amount and timing of
settlements, as well as the number of open claims, can fluctuate
significantly from period to period.
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Three months ended
December 31 Years ended September 30
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(In thousands) 2003 2002 2003 2002 2001
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Open claims - beginning of period 198 160 160 167 118
New claims filed 7 22 66 45 52
Claims settled (2) (3) (7) (15) (2)
Claims dismissed (5) (8) (21) (37) (1)
----------- ----------- ----------- ----------- -----------
Open claims - end of period 198 171 198 160 167
=========== =========== =========== =========== ===========
Since October 1, 2000, Riley has been dismissed as a defendant in 71% of
the resolved claims. Amounts spent on litigation defense and claim
settlements totaled $13 million for the quarter ended December 31, 2003,
compared to $17 million for the quarter ended December 31, 2002, and annual
costs of $45 million in 2003, $38 million in 2002 and $15 million in 2001.
During the December 2002 quarter, Ashland increased its reserve for
litigation defense and claim settlement costs related to asbestos claims by
$390 million. After that increase, Ashland's asbestos reserve covered the
costs expected to be paid through December 2012, and additional reserves
have been provided since then to maintain the reserve to cover the expected
costs on a rolling ten-year basis. Prior to December 31, 2002, the asbestos
reserve was based on the estimated costs that would be incurred to settle
open claims. The estimates of future asbestos claims and related costs were
developed with the assistance of Hamilton, Rabinovitz & Alschuler, Inc.
(HR&A), nationally recognized experts in that field. Reflecting the
additional provisions, Ashland's reserve for asbestos claims on an
undiscounted basis amounted to $612 million at December 31, 2003, compared
to $575 million at December 31, 2002.
9
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED)
The methodology used by HR&A to project future asbestos costs was based
largely on Ashland's recent experience, including claim-filing and
settlement rates, disease mix, open claims, and litigation defense and
claim settlement costs. Ashland's claim experience was compared to the
results of previously conducted epidemiological studies estimating the
number of people likely to develop asbestos-related diseases. Those studies
were undertaken in connection with national analyses of the population
expected to have been exposed to asbestos. Using that information, HR&A
estimated the number of future claims that would be filed, as well as the
related costs that would be incurred in resolving those claims.
Projecting future asbestos costs is subject to numerous variables that are
extremely difficult to predict. In addition to the significant
uncertainties surrounding the number of claims that might be received,
other variables include the type and severity of the disease alleged by
each claimant, the long latency period associated with asbestos exposure,
dismissal rates, costs of medical treatment, the impact of bankruptcies of
other companies that are co-defendants in claims, uncertainties surrounding
the litigation process from jurisdiction to jurisdiction and from case to
case, and the impact of potential changes in legislative or judicial
standards. Furthermore, any predictions with respect to these variables are
subject to even greater uncertainty as the projection period lengthens. In
light of these inherent uncertainties, Ashland believes that ten years is
the most reasonable period for recognizing a reserve for future costs, and
that costs that might be incurred after that period are not reasonably
estimable.
Ashland has insurance coverage for most of the litigation defense and claim
settlement costs incurred in connection with its asbestos claims, and
coverage-in-place agreements exist with the insurance companies that
provide substantially all of the coverage currently being accessed. As a
result, increases in the asbestos reserve have been largely offset by
probable insurance recoveries. The amounts not recoverable are generally
due from insurers that are insolvent, rather than as a result of uninsured
claims or the exhaustion of Ashland's insurance coverage.
Ashland retained the services of Tillinghast-Towers Perrin to assist
management in the estimation of probable insurance recoveries. Such
recoveries are based on assumptions and estimates surrounding the available
insurance coverage; one assumption of which is that all solvent insurance
carriers remain solvent. Although coverage limits are resolved in the
coverage-in-place agreement with Equitas Limited (Equitas) and other London
companies, which collectively provide a significant portion of Ashland's
insurance coverage for asbestos claims, there is a disagreement with these
companies over the timing of recoveries. The resolution of this
disagreement could have a material effect on the value of insurance
recoveries from those companies. In estimating the value of future
recoveries, Ashland has used the least favorable interpretation of this
agreement, which results in a significant discount being applied to value
those recoveries. Ashland will continue to apply this methodology until
such time as the disagreement is resolved.
At December 31, 2003, Ashland's receivable for recoveries of litigation
defense and claim settlement costs from its insurers amounted to $433
million, of which $34 million relates to costs previously paid. Receivables
from insurance companies amounted to $427 million at December 31, 2002.
About 35% of the estimated receivables from insurance companies at December
31, 2003, are expected to be due from Equitas and other London companies.
Of the remainder, over 90% is expected to come from companies or groups
that are rated A or higher by A. M. Best.
10
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED)
ENVIRONMENTAL PROCEEDINGS
Ashland is subject to various federal, state and local environmental laws
and regulations that require environmental assessment or remediation
efforts (collectively environmental remediation) at multiple locations. At
December 31, 2003, such locations included 102 waste treatment or disposal
sites where Ashland has been identified as a potentially responsible party
under Superfund or similar state laws, approximately 135 current and former
operating facilities (including certain operating facilities conveyed to
MAP) and about 1,220 service station properties. Ashland's reserves for
environmental remediation amounted to $173 million at December 31, 2003,
and $175 million at December 31, 2002. Such amounts reflect Ashland's
estimates of the most likely costs that will be incurred over an extended
period to remediate identified conditions for which the costs are
reasonably estimable, without regard to any third-party recoveries.
Engineering studies, probability techniques, historical experience and
other factors are used to identify and evaluate remediation alternatives
and their related costs in determining the estimated reserves for
environmental remediation.
Environmental remediation reserves are subject to numerous inherent
uncertainties that affect Ashland's ability to estimate its share of the
costs. 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. Ashland regularly adjusts its reserves as environmental remediation
continues.
No individual remediation location is material to Ashland as its largest
reserve for any site is less than 10% of the remediation reserve. As a
result, Ashland's exposure to adverse developments with respect to any
individual site is not expected to be material, and these sites are in
various stages of ongoing remediation. Although environmental remediation
could have a material effect on results of operations if a series of
adverse developments occurs in a particular quarter or fiscal year, Ashland
believes that the chance of such developments occurring in the same quarter
or fiscal year is remote.
OTHER LEGAL PROCEEDINGS
In addition to the matters described above, there are various claims,
lawsuits and administrative proceedings pending or threatened against
Ashland and its current and former subsidiaries. Such actions are with
respect to commercial matters, product liability, toxic tort liability, and
other environmental matters, which seek remedies or damages, some of which
are for substantial amounts. While these actions are being contested, their
outcome is not predictable.
11
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
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Three months ended
December 31
------------------------
(In millions) 2003 2002
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REVENUES
Sales and operating revenues
APAC $ 650 $ 558
Ashland Distribution 696 637
Ashland Specialty Chemical 311 283
Valvoline 290 281
Intersegment sales
Ashland Distribution (5) (5)
Ashland Specialty Chemical (19) (16)
---------- ----------
1,923 1,738
Equity income
APAC 4 2
Ashland Specialty Chemical 2 2
Refining and Marketing 32 31
---------- ----------
38 35
Other income
APAC 4 3
Ashland Distribution 5 10
Ashland Specialty Chemical 2 3
Valvoline 1 1
Refining and Marketing (1) -
Corporate 2 1
---------- ----------
13 18
---------- ----------
$ 1,974 $ 1,791
========== ==========
OPERATING INCOME
APAC $ 30 $ -
Ashland Distribution 13 9
Ashland Specialty Chemical 23 13
Valvoline 20 15
Refining and Marketing (1) 26 24
Corporate (20) (29)
---------- ----------
$ 92 $ 32
========== ==========
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(1) Includes Ashland's equity income from MAP, amortization related to
Ashland's excess investment in MAP, and other activities
associated with refining and marketing.
12
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ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended
December 31
------------------------
2003 2002
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OPERATING INFORMATION
APAC
Construction backlog at December 31 (millions) (1) $ 1,659 $ 1,697
Net construction job revenues (millions) (2) $ 366 $ 304
Hot-mix asphalt production (million tons) 8.4 7.1
Aggregate production (million tons) 6.8 7.1
Ready-mix concrete production (million cubic yards) .5 .5
Ashland Distribution (3)
Sales per shipping day (millions) $ 11.2 $ 10.3
Gross profit as a percent of sales 14.9% 15.9%
Ashland Specialty Chemical (3)
Sales per shipping day (millions) $ 5.0 $ 4.6
Gross profit as a percent of sales 33.5% 34.9%
Valvoline
Lubricant sales (million gallons) 43.7 44.3
Premium lubricants (percent of U.S. branded volumes) 19.3% 16.9%
Refining and Marketing (4)
Refinery runs (thousand barrels per day)
Crude oil refined 899 831
Other charge and blend stocks 184 163
Refined product yields (thousand barrels per day)
Gasoline 612 565
Distillates 296 278
Asphalt 68 64
Other 116 90
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Total 1,092 997
Refined product sales (thousand barrels per day) (5) 1,355 1,306
Refining and wholesale marketing margin (per barrel) (6) $ 1.71 $ 1.93
Speedway SuperAmerica (SSA)
Retail outlets at December 31 1,775 2,006
Gasoline and distillate sales (million gallons) 806 897
Gross margin - gasoline and distillates (per gallon) $ .1145 $ .1010
Merchandise sales (millions) (7) $ 547 $ 583
Merchandise margin (as a percent of sales) 24.8% 24.1%
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(1) Includes APAC's proportionate share of the backlog of
unconsolidated joint ventures.
(2) Total construction job revenues, less subcontract costs.
(3) Sales are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and
operating expenses, and depreciation and amortization relative to
manufacturing assets.
(4) Amounts represent 100% of MAP's operations, in which Ashland owns
a 38% interest.
(5) Total average daily volume of all refined product sales to MAP's
wholesale, branded and retail (SSA) customers.
(6) Sales revenue less cost of refinery inputs, purchased products and
manufacturing expenses, including depreciation.
(7) Effective January 1, 2003, SSA adopted EITF 02-16, "Accounting by
a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor," which requires rebates from vendors to be
recorded as reductions to cost of sales. Rebates from vendors
recorded in SSA merchandise sales for periods prior to January 1,
2003 have not been restated and included $46 million in the three
months ended December 31, 2002.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Ashland reported net income of $34 million for the quarter ended December
31, 2003, compared to a net loss of $92 million for the quarter ended
December 31, 2002. Ashland's income from continuing operations amounted to
$39 million for the quarter ended December 31, 2003, compared to a loss of
$1 million for the quarter ended December 31, 2002. Results from
discontinued operations, consisting primarily of charges for asbestos
liabilities, accounted for the difference in net income and income from
continuing operations.
Ashland's performance during the December 2003 quarter was very encouraging
to management. As the first quarter performance shows, Ashland is growing
sales volumes while lowering selling, general and administrative expenses.
The overall performance of Ashland's wholly owned businesses demonstrates
the strength of the corporate strategy. Ashland Paving And Construction,
Inc. (APAC), Ashland Distribution, Ashland Specialty Chemical, and
Valvoline continued to lower fixed costs and increase revenues. APAC also
benefited from closer-to-normal weather, which enabled construction
efficiencies and higher asphalt production. An analysis of operating income
by industry segment follows.
APAC
APAC reported operating income of $30 million for the December 2003
quarter, compared to near break-even results for the December 2002 quarter.
In many of the states in which APAC operates, rainfall during the December
2002 quarter was among the highest levels on record. In addition to
hampering the overall level of construction activity, the weather
conditions resulted in significant levels of rework and created significant
inefficiencies in completing the construction work performed. Reflecting
more normal weather conditions in the December 2003 quarter, net
construction job revenues (total construction job revenues, less
subcontract costs) increased 20% from the prior year period, while
production of hot-mix asphalt increased 18%. Aggregate production declined
4%, due in part to the completion of a major highway job, which consumed a
large quantity of aggregate during its construction. Lower equipment costs
coupled with the positive impact of other cost-reduction efforts also
contributed to APAC's improved performance. Construction backlog, or jobs
awarded but not yet completed, was $1.7 billion at December 31, 2003, a
level comparable to a year ago.
APAC will continue to focus on improving its operating performance in
fiscal 2004. As was recently announced, Garry M. Higdem was named senior
vice president of Ashland Inc. and president of APAC effective January 12,
2004. Higdem will utilize his background in construction management, large
projects and branch operations to continue APAC's strategic progress to
leverage its strong construction capabilities with both small and large
projects.
ASHLAND DISTRIBUTION
Ashland Distribution reported operating income of $13 million for the
December 2003 quarter, a 44% improvement compared to $9 million for the
December 2002 quarter. Successful efforts to lower costs contributed to the
improvement. Ashland Distribution also demonstrated its ability to grow
faster than its markets, with sales per shipping day up 9% and sales
volumes up 6%. The favorable effects of the higher sales were partially
offset by a lower gross profit percentage, reflecting lower margins across
all business units. Income from litigation settlements and asset sales
amounted to $2 million in the December 2003 quarter compared to $6 million
in the December 2002 quarter.
14
- --------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
ASHLAND SPECIALTY CHEMICAL
Operating income for Ashland Specialty Chemical was $23 million in the
December 2003 quarter, a 77% improvement over the $13 million reported for
the December 2002 quarter. Results from the thermoset core businesses
(Casting Solutions, Composite Polymers, Specialty Polymers and Adhesives,
and Maleic Anhydride) increased 32%, while the water treatment core
businesses (Drew Industrial and Drew Marine) increased 29%. These increases
were driven by improved sales volumes, due in part to Specialty Chemical's
continuing penetration of high value markets, such as foundry sleeves,
cultured marble for the construction industry, clear label adhesives and
pathogen control in waterborne systems. The favorable effects of higher
sales volumes were partially offset by lower gross profit percentages,
reflecting higher raw material costs. Most noticeable were the steady
increases in styrene prices since May 2003 and butane prices since April
2003. Styrene is a major component of unsaturated polyester resins and
butane is the feedstock for maleic anhydride.
VALVOLINE
Valvoline reported a record December quarter with operating income of $20
million, a 33% improvement over the $15 million reported in the December
2002 quarter. Valvoline-branded lubricant sales volumes improved 5% on the
strength of a 20% increase in sales volumes for premium products (MaxLife,
Durablend and SynPower). Valvoline Instant Oil Change (VIOC) had its best
quarter ever. VIOC's operating income rose 49% due in part to a 9% increase
in revenues from transmission, cooling, fuel and air quality system
services and a 7% increase in premium lubricant oil changes.
REFINING AND MARKETING
Operating income from Refining and Marketing, which consists primarily of
equity income from Ashland's 38% ownership interest in MAP, amounted to $26
million for the quarter ended December 31, 2003, compared to $24 million
for the December 2002 quarter. Equity income from MAP's refining and
wholesale marketing operations declined $4 million, due to a sharp increase
in crude oil costs during December, which resulted in lower margins,
particularly in MAP's primary Midwest market. The effects of the resulting
22 cents per barrel decline in MAP's refining and wholesale marketing
margin were partially offset by the impact of higher refinery throughput.
Less planned maintenance during the December 2003 quarter enabled MAP to
process about 8 million more barrels of crude oil and other feedstocks. The
increased throughput and lower expenses resulted in a $5 million increase
in equity income from MAP's transportation operations. Equity income from
MAP's retail operations (Speedway SuperAmerica and a 50% interest in the
Pilot Travel Centers joint venture) increased $1 million, due to the net
effects of higher product and merchandise margins, partially offset by
lower volumes reflecting the sale of SSA's southern stores in the June 2003
quarter.
CORPORATE
Corporate expenses amounted to $20 million in the quarter ended December
31, 2003, compared to $29 million in the December 2002 quarter. The
decrease reflects an $8 million charge in the December 2002 quarter for
severance and other transition costs related to Ashland's program to reduce
general and administrative costs.
NET INTEREST AND OTHER FINANCIAL COSTS
Net interest and other financial costs declined to $30 million in the
December 2003 quarter, compared to $32 million in the December 2002
quarter, reflecting a reduction in the average level of debt outstanding.
15
- --------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
As described in Notes B and F to the Condensed Consolidated Financial
Statements, Ashland's results from discontinued operations include charges
associated with estimated future asbestos liabilities less probable
insurance recoveries, as well as net income from the discontinued
operations of its Electronic Chemicals business. Such amounts are
summarized below.
- ------------------------------------------------------------------------------------------------------------------------
Three months ended
December 31
-----------------------
(In millions) 2003 2002
- ------------------------------------------------------------------------------------------------------------------------
PRETAX INCOME (LOSS) FROM DISCONTINUED OPERATIONS
Reserves for asbestos-related litigation $ (7) $ (155)
Electronic Chemicals - 5
INCOME TAXES
Reserves for asbestos-related litigation 2 60
Electronic Chemicals - (1)
---------- ----------
RESULTS FROM DISCONTINUED OPERATIONS (NET OF INCOME TAXES) $ (5) $ (91)
========== ==========
FINANCIAL POSITION
LIQUIDITY
Cash flows from operations, a major source of Ashland's liquidity, amounted
to $68 million for the three months ended December 31, 2003, compared to
$55 million for the three months ended December 31, 2002. Cash
distributions from MAP amounting to $146 million in the 2003 period
compared to $82 million in the 2002 period. Partially offsetting this
increase were $54 million in contributions to Ashland's pension plans in
the December 2003 quarter, compared to no such contributions in the
December 2002 quarter. Ashland's cash flows from operations exceeded its
capital requirements for net property additions and dividends by $4 million
for the three months ended December 31, 2003.
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 (S&P). In August 2003,
S&P revised its outlook on Ashland to negative from stable, and lowered
Ashland's commercial paper rating to A-3 from A-2. This action materially
restricts, and could at times eliminate, the availability of the commercial
paper market to Ashland. Ashland has two revolving credit agreements
providing for up to $350 million in borrowings. Although Ashland borrowed
$175 million under these agreements to repay commercial paper shortly after
the S&P downgrade, the revolving credit agreements were not used during the
quarter ended December 31, 2003. While the revolving credit agreements
contain covenants limiting new borrowings based on Ashland's stockholders'
equity, these agreements would have permitted an additional $1.8 billion of
borrowings at December 31, 2003. Additional permissible borrowings are
increased (decreased) by 150% of any increase (decrease) in stockholders'
equity.
At December 31, 2003, working capital (excluding debt due within one year)
amounted to $763 million, compared to $703 million at September 30, 2003,
and $827 million at December 31, 2002. The amount at December 31, 2002
included net assets of $167 million of the discontinued Electronic Chemical
operations held for sale. Ashland's working capital is affected by its use
of the LIFO method of inventory valuation. That method valued inventories
below their replacement costs by $78 million at December 31, 2003 and
September 30, 2003, and $63 million at December 31, 2002. Liquid assets
(cash, cash equivalents and
16
- --------------------------------------------------------------------------------
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
LIQUIDITY (CONTINUED)
accounts receivable) amounted to 94% of current liabilities at December 31,
2003, compared to 92% at September 30, 2003, and 81% at December 31, 2002.
CAPITAL RESOURCES
For the three months ended December 31, 2003, property additions amounted
to $53 million, compared to $23 million for the same period last year. The
increase reflects a $33 million buyout of an operating lease for a portion
of the buildings on Ashland's Dublin, Ohio campus. Ashland anticipates
meeting its remaining 2003 capital requirements for property additions and
dividends from internally generated funds.
Ashland's debt level amounted to $1.6 billion at December 31 and September
30, 2003, and $1.8 billion at December 31, 2002. Debt as a percent of
capital employed amounted to 40.4% at December 31, 2003, compared to 41.7%
at September 30, 2003, and 46.8% at December 31, 2002. At December 31,
2003, Ashland's debt included $33 million of floating-rate obligations, and
the interest rates on an additional $183 million of fixed-rate, medium-term
notes were effectively converted to floating rates through interest rate
swap agreements. In addition, Ashland's costs under its sale of receivables
program and various operating leases are based on the floating-rate
interest costs on $181 million of third-party debt underlying those
transactions. As a result, Ashland was exposed to fluctuations in
short-term interest rates on $397 million of debt obligations at December
31, 2003.
ASBESTOS-RELATED LITIGATION AND ENVIRONMENTAL REMEDIATION
For a discussion of Ashland's asbestos-related litigation and environmental
remediation matters, see Note F to the Condensed Consolidated Financial
Statements.
FORWARD LOOKING STATEMENTS
Management's Discussion and Analysis (MD&A) 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
various information in the Results of Operations, Capital Resources,
Asbestos-Related Litigation and Environmental Remediation sections of this
MD&A. Estimates as to operating performance, earnings, and scope and effect
of asbestos and environmental liabilities are based upon a number of
assumptions, including those mentioned in MD&A. Such estimates are also
based upon internal forecasts and analyses of current and future market
conditions and trends, management plans and strategies, weather, operating
efficiencies and economic conditions, such as prices, supply and demand,
cost of raw materials, and legal proceedings and claims (including asbestos
and environmental matters). Although Ashland believes its expectations are
based on reasonable assumptions, it cannot assure the expectations
reflected in MD&A will be achieved. This forward-looking information may
prove to be inaccurate and actual results may differ significantly from
those anticipated if one or more of the underlying assumptions or
expectations proves to be inaccurate or is unrealized, or if other
unexpected conditions or events occur. Other factors and risks affecting
Ashland are contained in Risks and Uncertainties in Note A to the
Consolidated Financial Statements in Ashland's Annual Report on Form 10-K
for the fiscal year ended September 30, 2003. Ashland undertakes no
obligation to subsequently update or revise these forward-looking
statements.
17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Ashland's market risk exposure at December 31, 2003 is generally consistent
with the types and amounts of market risk exposures presented in Ashland's
Annual Report on Form 10-K for the fiscal year ended September 30, 2003.
ITEM 4. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this quarterly report,
Ashland, under the supervision and with the participation of its
management, including Ashland's Chief Executive Officer and its
Chief Financial Officer, evaluated the effectiveness of Ashland's
disclosure controls and procedures pursuant to Rule 13a-15(b) and
15d-15(b) promulgated under the Securities Exchange Act of 1934,
as amended. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that the
disclosure controls and procedures were effective.
(b) There were no significant changes in Ashland's internal control
over financial reporting, or in other factors, that occurred
during the period covered by this quarterly report that have
materially affected, or are reasonably likely to materially
affect, Ashland's internal control over financial reporting.
18
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
ENVIRONMENTAL PROCEEDINGS - (1) Under the federal Comprehensive
Environmental Response Compensation and Liability Act (as amended) and
similar state laws, Ashland may be subject to joint and several liability
for clean-up costs in connection with alleged releases of hazardous
substances at sites where it has been identified as a "potentially
responsible party" ("PRP"). As of December 31, 2003, Ashland had been named
a PRP at 102 waste treatment or disposal sites. These sites are currently
subject to ongoing investigation and remedial activities, overseen by the
United States Environmental Protection Agency ("USEPA") 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. The ultimate costs are not predictable with
assurance. For additional information regarding environmental matters and
reserves, see Note F to the Condensed Consolidated Financial Statements in
this quarterly report on Form 10-Q.
(2) On May 13, 2002, Ashland entered into a plea agreement with the
U.S. Attorney's Office for the District of Minnesota and the Environmental
Crimes Section of the U.S. Department of Justice regarding a May 16, 1997
sewer fire at the St. Paul Park, Minnesota refinery, which is now owned by
MAP. As part of the plea agreement, Ashland entered guilty pleas to two
federal misdemeanors, paid a $3.5 million fine related to violations of the
Clean Air Act ("CAA"), paid $3.55 million as restitution to the employees
injured in the fire, and paid $200,000 as restitution to the responding
rescue units. Ashland also agreed to complete certain upgrades to the St.
Paul Park refinery's process sewers, junction boxes and drains to meet
standards established by Subpart QQQ of the New Source Performance
Standards of the CAA (the "Refinery Upgrades").
In addition, as part of the plea agreement, Ashland entered into a
deferred prosecution agreement, wherein prosecution of a separate count of
the indictment charging Ashland with violating Subpart QQQ was deferred for
four years. The deferred prosecution agreement provides that if Ashland
satisfies the terms and conditions of the plea agreement and completes the
Refinery Upgrades, the deferred prosecution agreement will terminate and
the United States will dismiss that count with prejudice. If, however, it
is determined by the court that Ashland willfully violated any term or
condition of the plea agreement during the deferral period, the United
States may re-initiate prosecution of the deferred count of the indictment,
using an admission made by Ashland for purposes of the plea agreement that
Ashland knowingly operated the St. Paul Park refinery in violation of
certain Subpart QQQ standards.
As part of its sentence, Ashland was placed on probation for five
years. The primary condition of probation is an obligation not to commit
future federal, state, or local crimes. If Ashland were to commit such a
crime, it would be subject not only to prosecution for that new violation,
but the government could also seek to revoke Ashland's probation. The
probation office has retained an independent environmental consultant to
review and monitor Ashland's compliance with applicable environmental
requirements and the terms and conditions of probation. The court also
included other customary terms and restrictions of probation in its
probation order.
(3) Pursuant to a 1988 RCRA Administrative Consent Order ("Consent
Order"), Ashland is remediating soil and groundwater at a former chemical
distribution facility site in Lansing, Michigan. The USEPA has asserted
that Ashland has not complied with certain provisions of the Consent Order
and, although Ashland disputes this assertion, Ashland and the USEPA have
agreed to resolve the dispute. Ashland has agreed to payment of a $650,000
penalty, pending agreement on settlement terms and conditions. Ashland is
continuing to work with the USEPA to define Ashland's continuing
obligations under the Consent Order. No formal penalty proceeding has been
initiated.
19
ASBESTOS-RELATED LITIGATION - For additional information regarding
liabilities arising from asbestos-related litigation, see Note F to the
Condensed Consolidated Financial Statements in this quarterly report on
Form 10-Q.
SHAREHOLDER DERIVATIVE LITIGATION - On August 16, 2002, Central
Laborers' Pension Fund, derivatively as a shareholder of Ashland,
instituted an action in the Circuit Court of Kentucky in Kenton County
against Ashland's then-serving Board of Directors. On motion of Ashland and
the other defendants, the case was removed to the United States District
Court, Eastern District of Kentucky, Covington Division. Plaintiff has
moved to remand the case to the state court. The action is purportedly
filed on behalf of Ashland, and asserts the following causes of action
against the Directors: breach of fiduciary duty, abuse of control, gross
mismanagement, and waste of corporate assets. The suit also names Paul W.
Chellgren, the then-serving Chief Executive Officer and Chairman of the
Board, and James R. Boyd, former Senior Vice President and Group Operating
Officer, as individual defendants, and it seeks to recover an unstated sum
from them individually alleging unjust enrichment from various transactions
completed during their tenure with Ashland. The suit further seeks an
unspecified sum from Mr. Chellgren individually based upon alleged
usurpation of corporate opportunities. The suit also names J. Marvin Quin,
Ashland's Chief Financial Officer, as well as three former employees of
Ashland's wholly-owned subsidiary, APAC, as individual defendants and
alleges that they participated in the preparation and filing of false
financial statements during fiscal years 1999 - 2001. The suit further
names Ernst & Young LLP ("E&Y"), as a defendant, alleging professional
accounting malpractice and negligence in the conduct of its audit of
Ashland's 1999 and 2000 financial statements, respectively, as well as
alleging that E&Y aided and abetted the individual defendants in their
alleged breach of duties. The complaint seeks to recover, jointly and
severally, from defendants an unstated sum of compensatory and punitive
damages. The complaint seeks equitable and/or injunctive relief to avoid
continuing harm from alleged ongoing illegal acts, and seeks a disgorgement
of defendants' alleged insider-trading gains, in addition to the reasonable
cost and expenses incurred in bringing the complaint, including attorneys'
and experts' fees.
OTHER LEGAL PROCEEDINGS - In addition to the matters described above,
there are various claims, lawsuits and administrative proceedings pending
or threatened against Ashland and its current and former subsidiaries. Such
actions are with respect to commercial matters, product liability, toxic
tort liability, and other environmental matters, which seek remedies or
damages, some of which are for substantial amounts. While these actions are
being contested, their outcome is not predictable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Ashland's Annual Meeting of Shareholders was held on January 29,
2004 at the Metropolitan Club, 50 E. RiverCenter Boulevard,
Covington, Kentucky at 10:30 a.m.
(b) Ashland's shareholders at said meeting elected four directors
(Ernest H. Drew, Mannie L. Jackson, Theodore M. Solso and Michael
J. Ward) to serve a three-year term.
Votes
-----
Affirmative Withheld
----------- ---------
Ernest H. Drew 60,050,247 1,303,734
Mannie L. Jackson 59,924,937 1,429,044
Theodore M. Solso 60,065,095 1,288,886
Michael J. Ward 58,516,407 2,837,574
Directors who continued in office: Bernadine P. Healy, M.D., James J.
O'Brien, W. L. Rouse, Roger W. Hale, Patrick F.Noonan, Jane C. Pfeiffer and
George A. Schaefer, Jr.
20
(c) Ashland's shareholders at said meeting ratified the appointment of
E&Y as independent auditors for fiscal year 2004 by a vote of
58,537,728 affirmative, to 2,313,206 negative and 503,047
abstention votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
12 Computation of Ratio of Earnings to Fixed Charges.
31.1 Certificate of James J. O'Brien, Chief Executive Officer of
Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350.
31.2 Certificate of J. Marvin Quin, Chief Financial Officer of Ashland
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, U.S.C.
Section 1350.
32 Certificate of James J. O'Brien, chief Executive Officer of
Ashland, and J. Marvin Quin, Chief Financial Officer of Ashland,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
-------------------
During the quarter ended December 31, 2003, and between such date and the
filing of this quarterly report on Form 10-Q, Ashland furnished the
following reports on Form 8-K:
(1) A report on Form 8-K dated October 1, 2003 containing a Regulation
FD disclosure.
(2) A report on Form 8-K dated October 21, 2003 reporting Ashland's
fourth quarter and fiscal 2003 results.
(3) A report on Form 8-K dated October 23, 2003 containing a
Regulation FD disclosure.
(4) A report on Form 8-K dated November 26, 2003, as amended by a Form
8-K/A dated November 26, 2003, containing a Regulation FD
disclosure.
(5) A report on Form 8-K dated December 12, 2003 containing a
Regulation FD disclosure.
(6) A report on Form 8-K dated December 19, 2003 containing a
Regulation FD disclosure.
(7) A report on Form 8-K dated January 7, 2004 announcing that Garry
M. Higdem was named to succeed David J. D'Antoni as President of
Ashland Paving And Construction, Inc.
(8) A report on Form 8-K dated January 26, 2004 containing a
Regulation FD disclosure.
(9) A report on Form 8-K dated January 26, 2004 reporting Ashland's
first quarter fiscal 2004 results.
21
SIGNATURE
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: February 12, 2004 /s/ J. Marvin Quin
------------------------------------------
J. Marvin Quin
Senior Vice President and Chief Financial
Officer (on behalf of the Registrant and
as principal financial officer)
22
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
12 Computation of Ratio of Earnings to Fixed Charges.
31.1 Certificate of James J. O'Brien, Chief Executive Officer of
Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certificate of J. Marvin Quin, Chief Financial Officer of Ashland
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certificate of James J. O'Brien, Chief Executive Officer of
Ashland, and J. Marvin Quin, Chief Financial Officer of Ashland,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C.
Section 1350.
23