Filed by
Ashland Inc.
Pursuant
to Rule 425
Under the
Securities Act of 1933
Subject
Company
Hercules
Incorporated
Commission
File Number 333-152911
News
Release 
| Media Relations: |
Investor
Relations:
|
||
| Jim Vitak |
Eric
Boni
|
||
| (614) 790-3715 |
(859)
815-4454
|
||
| jevitak@ashland.com |
enboni@ashland.com
|
||
|
FOR IMMEDIATE
RELEASE:
|
|||
|
October
28, 2008
|
|||
Ashland
Inc. reports fourth-quarter operating income of $28 million and loss from
continuing operations of 1 cent per share
COVINGTON,
Ky. – Ashland Inc. (NYSE: ASH) today announced a preliminary1 loss
from continuing operations of $1 million, or 1 cent per share, for the quarter
ended Sept. 30, 2008, the fourth quarter of Ashland’s fiscal year, as compared
with income of $32 million, or 51 cents per share, in the year-ago
quarter. The September 2008 quarter also included a loss from discontinued
operations of $9 million, or 14 cents per share, which primarily consisted of
various adjustments to asbestos-related insurance
receivables resulting from Ashland’s ongoing assessment of
these matters. In total, Ashland recorded a net loss of $10 million, or
15 cents per share, versus net income of $32 million, or 51 cents per
share, in the same prior-year quarter.
Ashland’s
operating income for the September 2008 quarter totaled $28 million and compares
with operating income of $26 million in the year-ago quarter. Operating income
for both periods contained a number of key items. (See page 5 of financial
information for details of the impact of each of these key items on Ashland and
its operating segments.)
Excluding
key items, operating income totaled $24 million for the September 2008 quarter
and $40 million for the 2007 quarter. Ashland believes the use of these adjusted
operating income figures enhances understanding of its current and future
performance.
Earnings
before interest, taxes, depreciation and amortization2 (EBITDA)
totaled $68 million in the September 2008 quarter as compared with $76 million
in the same prior-year quarter, a decline of 11 percent.
Ashland's
tax provision in the fourth quarter reflected adjustments to achieve the
full-year effective tax rate of 33 percent. This negatively affected earnings by
approximately 30 cents per share.
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
2
Business
Summary
Commenting
on Ashland’s fourth-quarter results, Chairman and Chief Executive Officer James
J. O’Brien said, “Our performance for the fourth quarter continued to reflect
the difficult economic environment, which particularly affected Ashland
Performance Materials’ composites business, both from a demand and raw materials
cost perspective, and Ashland Water Technologies, which suffered from
significant declines in gross profit percentage. We continue to be encouraged by
Ashland Distribution, which recorded an additional $10.6 million of operating
income versus the prior-year quarter, excluding key items, reflecting the
positive impact of the changes we’ve made in its structure and pricing
processes. Valvoline’s operating income declined 27 percent versus the year-ago
quarter, as we received significant base oil and additive cost increases in the
early to mid summer, creating margin compression through much of the quarter.
Price increases implemented in August and September fully mitigated the impact
of raw material increases for only the latter portion of the quarter. All that
said, Valvoline completed its second-best year ever for operating income, just
slightly below the record set last year, and we believe the business model
changes we made in 2006 enabled Valvoline to better manage the volatility in the
raw materials market.
Continuing,
O’Brien said, “We generated cash flows from operations of $144 million in the
September 2008 quarter, driven by our strong emphasis on working capital
management. Since June, our internal benchmark of operating-segment trade
working capital to sales decreased by nearly 1.6 percent of annualized sales,
excluding the impact of working capital added through acquisitions. Overall, we
have reduced working capital by 13 percent in fiscal 2008 while revenue
increased by 8 percent. We are pleased with this progress and continue to focus
on maximizing cash flow.”
Business
Performance
Performance
Materials’ operating income of $1.6 million for the September 2008 quarter
compares with $7.2 million in the year-ago quarter. Excluding key items in both
periods, Performance Materials’ operating income was $6.3 million for the 2008
September quarter versus $13.9 million for the 2007 quarter. Sales and operating
revenue of $427 million declined 3 percent versus the September 2007 quarter.
Both revenue and volume comparisons are affected by a number of factors: an
extra month of non-North American business in 2007, volume gained from the
acquisition of a line of business from Air Products in 2008, the transfer of
certain sales to Water Technologies, and currency translation. Excluding the
effects of these factors, revenue increased 3 percent over the September 2007
quarter, largely due to price
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
3
increases, and volume per day decreased 6 percent. Total gross profit versus the prior-year quarter declined primarily as a result of the lower volume.
Distribution’s operating
income increased to $12.6 million for the September 2008 quarter as compared
with an operating loss of $4.5 million, or income of $2.0 million when
adjusted for key items, in the same prior-year quarter. Volume per day
declined 7 percent, excluding the extra month of non-North American business in
2007. Sales and operating revenue increased 10 percent versus the prior-year
September quarter, but excluding the additional month of non-North American
revenue in 2007 and currency translation, operating revenue would have increased
by 14 percent. Average unit selling price increased by 20 percent. Gross profit
as a percent of sales increased by 1.1 percentage points to 8.1 percent from 7.0
percent in the prior-year quarter, and gross profit per pound increased from 5.7
cents to 8.0 cents and improved by 0.9 cent over the June 2008 quarter. These
improvements were partially offset by a 4-percent increase in selling, general
and administrative expenses.
Valvoline’s fourth-quarter
operating income of $13.1 million compares with $17.9 million in the year-ago
quarter, a 27-percent decline. Sales and operating revenue of $454 million
increased 18 percent over the September 2007 quarter, largely due to price
increases. Valvoline’s total lubricant volume was essentially even with the
prior-year quarter. Do-It-Yourself volumes increased approximately 7 percent
versus a weak September quarter last year, and international volumes increased 9
percent, primarily due to the commencement of a tolling contract in Europe.
Meanwhile, the Do-It-For-Me installer channel lost approximately 8 percent in
volume versus the prior-year quarter. Gross profit as a percent of sales
declined 5.4 percentage points versus the 2007 September quarter, primarily a
result of the lag in timing of price increases to customers relative to base oil
and additive cost increases received by Valvoline.
Water
Technologies reported an operating loss of $5.9 million for the September 2008
quarter as compared with a loss of $1.5 million in the prior-year quarter. When
adjusted for key items in both quarters, Water Technologies’ operating loss was
$3.3 million in the 2008 quarter as compared with income of $6.6 million in the
prior-year quarter. Sales and operating revenue of $226 million was 9 percent
lower than the 2007 September quarter. Revenue comparisons were affected by an
extra month of non-North American business in 2007, the transfer of certain
sales from Performance Materials, and currency translation. Excluding these
factors, revenue increased 1 percent. Gross profit as a percent of sales
decreased by 6.8 percentage points versus the year-ago quarter, primarily
reflecting increased raw material costs, as well as unfavorable adjustments
related to the resolution of invoice accuracy issues.
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
4
For the
2008 fourth quarter, Unallocated and Other amounted to $6.4 million of income as
compared with $7.1 million of income in the same prior-year quarter. When
adjusted for key items, Unallocated and Other was an expense of $4.9 million and
$0.9 million, respectively, for the September 2008 and 2007
quarters.
In total,
key items affecting operating income had a net favorable impact on the September
2008 quarter of $4.0 million and a net unfavorable impact on the September 2007
quarter of $14.2 million. Key items for the September 2007 quarter included $5.2
million of income from Ashland’s elimination of a one-month financial reporting
lag for wholly owned entities outside North America, which created a four-month
quarter and 13-month year for certain of Ashland’s non-North American businesses
in 2007.
Net
interest and other financing income was $2 million in the September 2008 quarter
as compared with $12 million in the same prior-year quarter, the difference
being primarily the result of lower interest rates on Ashland’s short-term cash
and investment securities.
Fiscal-Year
Results
For the
fiscal year ended Sept. 30, 2008, Ashland’s sales and operating revenue totaled
$8,381 million, an increase of 8 percent over fiscal 2007. Diluted earnings per
share totaled $2.63 as compared with $3.60 in the prior year. Income from
continuing operations amounted to $2.76 per share versus $3.15 per share in
fiscal 2007, a 12-percent reduction.
Operating
income for fiscal 2008 totaled $213 million as compared with $216 million in the
prior year. Ashland achieved EBITDA of $358 million in fiscal 2008 as compared
with $349 million of EBITDA in fiscal 2007.
Ashland
generated cash flows from operating activities from continuing operations of
$478 million in 2008, a $289 million increase over fiscal 2007.
Outlook
Commenting
on the outlook for the near term, O’Brien said, “Performance Materials will
continue to be challenged by the difficult conditions in the North American
construction and transportation markets and the downturn in the European market.
We do expect that price increases implemented during the September quarter,
combined with softness in the crude oil market, should provide some sequential
improvement to the gross profit percentage of the business from depressed levels
during the past few months, as long as volume reductions are not significant.
Substantial improvements in Performance Materials’ cost structure as a result of
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
5
decreases
in personnel, as well as reductions in the hours of operation at certain
manufacturing facilities, should help cushion the impact of economic
conditions.
“Distribution’s future
performance will continue to be affected by weakness in North American
industrial output. We remain concerned about the level of business
activity of our customers due to the current global economic environment.
That said, we expect our continued focus on pricing and margins should help the
business mitigate the effects of these economic trends.
“For
Valvoline, volume challenges will likely persist marketwide; however, the
business has demonstrated the ability to outperform the market. Valvoline’s
price increases implemented during the September quarter fully offset raw
material cost increases received during the last several months. This, combined
with no significant prospects for higher base oil pricing, should enable gross
profit to improve on a unit basis from depressed levels.
“Water
Technologies has implemented a number of cost reductions in the business that
should have a positive impact on near-term results. In addition, recent price
increases, combined with softer raw material markets, should allow for gross
profit percentage expansion from the September quarter’s significantly reduced
levels, particularly starting in the second quarter after many contract renewals
are negotiated.
“We are
significantly ahead of plan in achieving our run-rate annualized cost savings of
$40 million by year-end fiscal 2009. Through the end of fiscal 2008, we have
already achieved run-rate savings of $41 million, primarily in our Water
Technologies and Performance Materials businesses. In total, we still expect to
achieve $65 million of cost-structure efficiencies in our current businesses by
the end of fiscal 2009.
Concluding
his comments, O’Brien said, “While the economic environment continues to present
an increasing challenge to near-term performance, we are making a number of
strategic moves that enable us to strengthen our profile as a specialty
chemicals company. Most important among these is the pending acquisition of
Hercules Inc., which will dramatically enhance our focus and scale in specialty
additives and ingredients and paper and water technologies. We have received all
necessary regulatory approvals and continue to work with our banks on the
structure and terms of the committed financing. The next milestone is the
Hercules shareholder vote on the transaction at their Nov. 5 special
meeting.”
Conference
Call Webcast
Today at
9 a.m. (EDT), Ashland will provide a live webcast of its fourth-quarter
conference call with securities analysts. The webcast will be accessible through
Ashland’s
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
6
website,
www.ashland.com. Following the live event, an archived version of the webcast
will be available for 12 months at www.ashland.com/investors.
Ashland Inc. (NYSE: ASH),
a diversified, global chemical company, provides quality products, services and
solutions to customers in more than 100 countries. A FORTUNE 500 company,
it operates through four divisions: Ashland Performance Materials, Ashland
Distribution, Valvoline and Ashland Water Technologies. To learn more about
Ashland, visit www.ashland.com.
-
0 -
FORTUNE
500 is a registered trademark of Time Inc.
1
Preliminary Results
Financial
results are preliminary until Ashland’s annual report on Form 10-K is filed with
the U.S. Securities and Exchange Commission.
2 Regulation
G
The
information presented in this earnings release regarding earnings before
interest, taxes, depreciation, and amortization (EBITDA) does not conform to
generally accepted accounting principles (GAAP) and should not be construed as
an alternative to the reported results determined in accordance with GAAP.
Management has included this non-GAAP information to assist in understanding the
operating performance of the company and its operating segments. The non-GAAP
information provided may not be consistent with the methodologies used by other
companies. All non-GAAP information is reconciled with reported GAAP results in
the table provided below.
|
(in
millions)
|
Q4
2008
|
Q4
2007
|
||||
|
Operating
income
|
$ 28
|
$ 26
|
||||
|
Add:
|
||||||
|
Depreciation
and amortization
|
40
|
50
|
||||
|
EBITDA
|
$ 68
|
$ 76
|
||||
|
(in
millions)
|
FY
2008
|
FY
2007
|
||||
|
Operating
income
|
$
213
|
$
216
|
||||
|
Add:
|
||||||
|
Depreciation
and amortization
|
145
|
133
|
||||
|
EBITDA
|
$
358
|
$
349
|
||||
Forward-Looking
Statements
This news
release contains forward-looking statements, within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These
–
more –
Ashland
Inc. reports fourth-quarter operating income of $28 million
and
loss from continuing operations of 1 cent per share, pg.
7
statements
include those made with respect to Ashland’s operating performance and Ashland’s
acquisition of Hercules Inc. These expectations are based upon a number of
assumptions, including those mentioned within this news release. Performance
estimates are also based upon internal forecasts and analyses of current and
future market conditions and trends, management plans and strategies, weather,
operating efficiencies and economic conditions, such as prices, supply and
demand, cost of raw materials, and legal proceedings and claims (including
environmental and asbestos matters). These risks and uncertainties may cause
actual operating results to differ materially from those stated, projected or
implied. Such risks and uncertainties with respect to Ashland’s acquisition of
Hercules include the possibility that the benefits anticipated from the Hercules
transaction will not be fully realized; the possibility the transaction may not
close, including as a result of failure to obtain the approval of Hercules'
stockholders; the possibility that financing may not be available on the terms
committed; and other risks that are described in filings made by Ashland with
the Securities and Exchange Commission (SEC) in connection with the proposed
transaction. Although Ashland believes its expectations are based on reasonable
assumptions, it cannot assure the expectations reflected herein will be
achieved. This forward-looking information may prove to be inaccurate and actual
results may differ significantly from those anticipated 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, uncertainties
and risks affecting Ashland are contained in Ashland's periodic filings made
with the SEC, including its Form 10-K for the fiscal year ended Sept. 30, 2007,
and Forms 10-Q for the quarters ended Dec. 31, 2007, and March 31
and June 30, 2008, which are available on Ashland’s Investor Relations website
at www.ashland.com/investors or the SEC’s website at www.sec.gov. Ashland
undertakes no obligation to subsequently update or revise the forward-looking
statements made in this news release to reflect events or circumstances after
the date of this news release.
ADDITIONAL
INFORMATION
In
connection with the proposed transaction, Ashland filed a registration statement
on Form S-4 (File No. 333-152911) with the SEC containing a proxy
statement/prospectus. On Oct. 6, 2008, Ashland and Hercules mailed a definitive
proxy statement/prospectus to Hercules’ shareholders containing information
about the merger. Investors and security holders are urged to read the
registration statement on Form S-4 and the proxy statement/prospectus because
they contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents and other documents
filed with the SEC by contacting Ashland Investor Relations at (859) 815-4454 or
Hercules Investor Relations at (302) 594-7151. Free copies may also be obtained
from Ashland's Investor Relations website at www.ashland.com/investors,
Hercules' website at www.herc.com or the SEC's website at
www.sec.gov.
|
Ashland
Inc. and Consolidated Subsidiaries
|
Page
1
|
||||||||||||||||
|
STATEMENTS
OF CONSOLIDATED INCOME
|
|||||||||||||||||
|
(In
millions except per share data - preliminary and
unaudited)
|
|||||||||||||||||
| Three months ended |
Year
ended
|
||||||||||||||||
| September 30 |
September
30
|
||||||||||||||||
|
|
2008
|
|
2007
|
|
2008
|
2007
|
|||||||||||
|
SALES
AND OPERATING REVENUES
|
$ | 2,216 | $ | 2,085 | $ | 8,381 | $ | 7,785 | |||||||||
|
COSTS
AND EXPENSES
|
|||||||||||||||||
|
Cost
of sales and operating expenses
|
1,898 | 1,740 | 7,056 | 6,447 | |||||||||||||
|
Selling, general and
administrative expenses (a)
|
310 | 338 | 1,166 | 1,171 | |||||||||||||
| 2,208 | 2,078 | 8,222 | 7,618 | ||||||||||||||
|
EQUITY
AND OTHER INCOME
|
20 | 19 | 54 | 49 | |||||||||||||
|
OPERATING
INCOME
|
28 | 26 | 213 | 216 | |||||||||||||
|
Gain (loss) on the MAP
Transaction (b)
|
(3 | ) | - | 20 | (3 | ) | |||||||||||
|
Net
interest and other financing income
|
2 | 12 | 28 | 46 | |||||||||||||
|
INCOME
FROM CONTINUING OPERATIONS
|
|||||||||||||||||
|
BEFORE
INCOME TAXES
|
27 | 38 | 261 | 259 | |||||||||||||
|
Income
taxes
|
28 | 6 | 86 | 58 | |||||||||||||
|
INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
(1 | ) | 32 | 175 | 201 | ||||||||||||
|
Income (loss) from discontinued
operations (net of income taxes) (c)
|
(9 | ) | - | (8 | ) | 29 | |||||||||||
|
NET
INCOME (LOSS)
|
$ | (10 | ) | $ | 32 | $ | 167 | $ | 230 | ||||||||
|
DILUTED
EARNINGS PER SHARE
|
|||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | (.01 | ) | $ | .51 | $ | 2.76 | $ | 3.15 | ||||||||
|
Income
(loss) from discontinued operations
|
(.14 | ) | - | (.13 | ) | .45 | |||||||||||
|
Net
income (loss)
|
$ | (.15 | ) | $ | .51 | $ | 2.63 | $ | 3.60 | ||||||||
|
AVERAGE
COMMON SHARES AND ASSUMED CONVERSIONS
|
63 | 63 | 64 | 64 | |||||||||||||
|
SALES
AND OPERATING REVENUES
|
|||||||||||||||||
|
Performance
Materials
|
$ | 427 | $ | 438 | $ | 1,621 | $ | 1,580 | |||||||||
|
Distribution
|
1,151 | 1,050 | 4,374 | 4,031 | |||||||||||||
|
Valvoline
|
454 | 384 | 1,662 | 1,525 | |||||||||||||
|
Water
Technologies
|
226 | 249 | 893 | 818 | |||||||||||||
|
Intersegment
sales
|
(42 | ) | (36 | ) | (169 | ) | (169 | ) | |||||||||
| $ | 2,216 | $ | 2,085 | $ | 8,381 | $ | 7,785 | ||||||||||
|
OPERATING
INCOME
|
|||||||||||||||||
|
Performance
Materials
|
$ | 2 | $ | 7 | $ | 52 | $ | 89 | |||||||||
|
Distribution
|
13 | (4 | ) | 51 | 41 | ||||||||||||
|
Valvoline
|
13 | 18 | 83 | 86 | |||||||||||||
|
Water
Technologies
|
(6 | ) | (2 | ) | 10 | 16 | |||||||||||
|
Unallocated and other
(a)
|
6 | 7 | 17 | (16 | ) | ||||||||||||
| $ | 28 | $ | 26 | $ | 213 | $ | 216 | ||||||||||
|
(a)
|
The
year ended September 30, 2007 includes a $25 million charge for costs
associated with Ashland's voluntary severance offer.
|
||||||||||||||||
|
(b)
|
"MAP
Transaction" refers to the June 30, 2005 transfer of Ashland’s 38%
interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses
to Marathon Oil Corporation. The income for the current year ended
September 30 is primarily due to a $23 million gain associated with a tax
settlement agreement entered into with Marathon Oil Corporation, relating
to four specific tax areas, that supplement the original Tax Matters
Agreement from the initial MAP Transaction. The loss in the current
quarter and prior year period presented reflects adjustments in the
recorded receivable for future estimated tax deductions related primarily
to environmental and other postretirement reserves.
|
||||||||||||||||
|
(c)
|
The
current quarter after-tax charge of $9 million relates to adjustments in
Ashland's asbestos insurance receivable. The year ended September 30,
2008 includes an after-tax charge of $7 million from various tax
adjustments to the gain on the sale of APAC. The year ended September
30, 2007 includes after-tax income of $35 million from an increase in
Ashland's asbestos insurance
receivable.
|
||||||||||||||||
|
Ashland
Inc. and Consolidated Subsidiaries
|
Page
2
|
|||||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||||
|
(In
millions - preliminary and unaudited)
|
||||||||||
|
September
30
|
||||||||||
|
2008
|
2007
|
|||||||||
|
ASSETS
|
||||||||||
|
Current
assets
|
||||||||||
|
Cash
and cash equivalents
|
$
|
886
|
$
|
897
|
||||||
|
Available-for-sale
securities
|
-
|
155
|
||||||||
|
Accounts
receivable
|
1,469
|
1,467
|
||||||||
|
Inventories
|
494
|
610
|
||||||||
|
Deferred
income taxes
|
97
|
69
|
||||||||
|
Other
current assets
|
86
|
78
|
||||||||
|
3,032
|
3,276
|
|||||||||
|
Investments
and other assets
|
||||||||||
|
Auction
rate securities
|
243
|
-
|
||||||||
|
Goodwill
and other intangibles
|
408
|
377
|
||||||||
|
Asbestos
insurance receivable (noncurrent portion)
|
428
|
458
|
||||||||
|
Deferred
income taxes
|
154
|
157
|
||||||||
|
Other
noncurrent assets
|
394
|
435
|
||||||||
|
1,627
|
1,427
|
|||||||||
|
Property,
plant and equipment
|
||||||||||
|
Cost
|
2,297
|
2,125
|
||||||||
|
Accumulated
depreciation and amortization
|
(1,185
|
) |
(1,142
|
)
|
||||||
|
1,112
|
983
|
|||||||||
|
$
|
5,771
|
$
|
5,686
|
|||||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
|
Current
liabilities
|
||||||||||
|
Current
portion of long-term debt
|
$
|
21
|
$
|
5
|
||||||
|
Trade
and other payables
|
1,209
|
1,141
|
||||||||
|
Income
taxes
|
-
|
6
|
||||||||
|
1,230
|
1,152
|
|||||||||
|
Noncurrent
liabilities
|
||||||||||
|
Long-term
debt (noncurrent portion)
|
45
|
64
|
||||||||
|
Employee
benefit obligations
|
344
|
255
|
||||||||
|
Asbestos
litigation reserve (noncurrent portion)
|
522
|
560
|
||||||||
|
Other
noncurrent liabilities and deferred credits
|
428
|
501
|
||||||||
|
1,339
|
1,380
|
|||||||||
|
Stockholders’
equity
|
3,202
|
3,154
|
||||||||
|
$
|
5,771
|
$
|
5,686
|
|||||||
|
Ashland
Inc. and Consolidated Subsidiaries
|
Page
3
|
||||||||
|
STATEMENTS
OF CONSOLIDATED CASH FLOWS
|
|||||||||
|
(In
millions - preliminary and unaudited)
|
|||||||||
|
Year
ended
|
|||||||||
|
September
30
|
|||||||||
|
|
2008
|
2007
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
|
|||||||||
|
Net
income
|
$
|
167
|
$
|
230
|
|||||
|
Loss
(income) from discontinued operations (net of income
taxes)
|
8
|
(29
|
)
|
||||||
|
Adjustments
to reconcile income from continuing operations to
|
|||||||||
|
cash
flows from operating activities
|
|||||||||
|
Depreciation
and amortization
|
145
|
133
|
|||||||
|
Deferred
income taxes
|
44
|
22
|
|||||||
|
Equity
income from affiliates
|
(23
|
) |
(15
|
)
|
|||||
|
Distributions
from equity affiliates
|
13
|
10
|
|||||||
|
Gain
from the sale of property and equipment
|
(2
|
) |
(4
|
)
|
|||||
|
Stock
based compensation expense
|
12
|
16
|
|||||||
|
(Gain)
loss on the MAP Transaction
|
(20
|
) |
3
|
||||||
|
Change in operating assets and
liabilities (a)
|
134
|
(177
|
)
|
||||||
|
478
|
189
|
||||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
|
|||||||||
|
Additions
to property, plant and equipment
|
(205
|
) |
(154
|
)
|
|||||
|
Proceeds
from the disposal of property, plant and equipment
|
10
|
27
|
|||||||
|
Purchase
of operations - net of cash acquired
|
(129
|
) |
(75
|
)
|
|||||
|
Proceeds
from sale of operations
|
26
|
-
|
|||||||
|
Purchases
of available-for-sale securities
|
(435
|
) |
(484
|
)
|
|||||
|
Proceeds
from sales and maturities of available-for-sale securities
|
315
|
680
|
|||||||
|
(418
|
) |
(6
|
)
|
||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
|
|||||||||
|
Proceeds
from the exercise of stock options
|
3
|
19
|
|||||||
|
Excess
tax benefits related to share-based payments
|
1
|
9
|
|||||||
|
Repayment
of long-term debt
|
(5
|
) |
(13
|
)
|
|||||
|
Repurchase
of common stock
|
-
|
(288
|
)
|
||||||
|
Cash
dividends paid
|
(69
|
) |
(743
|
)
|
|||||
|
(70
|
) |
(1,016
|
)
|
||||||
|
CASH
USED BY CONTINUING OPERATIONS
|
(10
|
) |
(833
|
)
|
|||||
|
Cash
used by discontinued operations
|
|||||||||
|
Operating
cash flows
|
(8
|
) |
(3
|
)
|
|||||
|
Investing
cash flows
|
-
|
(92
|
)
|
||||||
|
(8
|
) |
(95
|
)
|
||||||
|
Effect
of currency exchange rate changes on cash and cash
equivalents
|
7 | 5 | |||||||
|
DECREASE
IN CASH AND CASH EQUIVALENTS
|
$
|
(11
|
) |
$
|
(923
|
)
|
|||
|
DEPRECIATION
AND AMORTIZATION
|
|||||||||
|
Performance
Materials
|
$
|
42
|
$
|
36
|
|||||
|
Distribution
|
24
|
22
|
|||||||
|
Valvoline
|
32
|
31
|
|||||||
|
Water
Technologies
|
26
|
27
|
|||||||
|
Unallocated
and other
|
21
|
17
|
|||||||
|
$
|
145
|
$
|
133
|
||||||
|
ADDITIONS
TO PROPERTY, PLANT AND EQUIPMENT
|
|||||||||
|
Performance
Materials
|
$
|
48
|
$
|
56
|
|||||
|
Distribution
|
27
|
29
|
|||||||
|
Valvoline
|
42
|
28
|
|||||||
|
Water
Technologies
|
17
|
24
|
|||||||
|
Unallocated
and other
|
71
|
17
|
|||||||
|
$
|
205
|
$
|
154
|
||||||
|
(a)
|
Excludes
changes resulting from operations acquired or sold.
|
|
Ashland
Inc. and Consolidated Subsidiaries
|
Page
4
|
|||||||||||||||
|
INFORMATION
BY INDUSTRY SEGMENT
|
||||||||||||||||
|
(In
millions - preliminary and unaudited)
|
||||||||||||||||
|
Three
months ended
|
Year
ended
|
|||||||||||||||
|
September
30
|
September
30
|
|||||||||||||||
|
|
2008 |
|
2007 |
|
2008
|
|
2007
|
|||||||||
|
PERFORMANCE
MATERIALS (a) (b)
|
||||||||||||||||
|
Sales
per shipping day
|
$
|
6.7
|
$
|
6.1
|
$
|
6.4
|
$
|
6.1
|
||||||||
|
Pounds
sold per shipping day
|
5.2
|
4.8
|
4.9
|
4.9
|
||||||||||||
|
Gross
profit as a percent of sales
|
14.6%
|
18.4%
|
17.0%
|
20.5%
|
||||||||||||
|
DISTRIBUTION
(a) (b)
|
||||||||||||||||
|
Sales
per shipping day
|
$
|
18.0
|
$
|
15.9
|
$
|
17.3
|
$
|
15.9
|
||||||||
|
Pounds
sold per shipping day
|
18.2
|
19.6
|
18.8
|
19.6
|
||||||||||||
|
Gross
profit as a percent of sales
|
8.1%
|
7.0%
|
7.8%
|
7.9%
|
||||||||||||
|
VALVOLINE
(a) (b)
|
||||||||||||||||
|
Lubricant
sales (gallons)
|
43.5
|
43.3
|
169.2
|
167.1
|
||||||||||||
|
Premium
lubricants (percent of U.S. branded volumes)
|
26.1%
|
23.5%
|
24.9%
|
23.3%
|
||||||||||||
|
Gross
profit as a percent of sales
|
19.2%
|
24.6%
|
23.0%
|
24.8%
|
||||||||||||
|
WATER
TECHNOLOGIES (a) (b)
|
||||||||||||||||
| Sales per shipping day |
$
|
3.5
|
$
|
3.3
|
$
|
3.5
|
$
|
3.1
|
||||||||
|
Gross
profit as a percent of sales
|
32.9%
|
39.7%
|
36.7%
|
39.2%
|
||||||||||||
|
(a)
|
Sales
are defined as sales and operating revenues. Gross profit is
defined as sales and operating revenues, less cost of sales and operating
expenses.
|
|||||||||||||||
|
(b)
|
Excludes
amounts resulting from the elimination of the previous one month financial
reporting lag for wholly owned entities outside North America, which was
recorded in the three months ended September 30,
2007.
|
|||||||||||||||
|
Ashland
Inc. and Consolidated Subsidiaries
|
Page
5
|
|||||||||||||||||||||||
|
COMPONENTS
OF OPERATING INCOME
|
||||||||||||||||||||||||
|
(In
millions - preliminary and unaudited)
|
||||||||||||||||||||||||
| Three Months Ended September 30, 2008 | ||||||||||||||||||||||||
|
Performance
|
Water
|
Unallocated
|
||||||||||||||||||||||
|
Materials
|
Distribution
|
Valvoline
|
Technologies
|
& Other |
Total
|
|||||||||||||||||||
|
OPERATING
INCOME
|
||||||||||||||||||||||||
|
Severance
|
$ | (4.7 | ) | $ | - | $ | - | $ | (2.6 | ) | $ | - | $ | (7.3 | ) | |||||||||
|
Self-insurance
reserve adjustment
|
- | - | - | - | 11.3 | 11.3 | ||||||||||||||||||
|
All
other operating income
|
6.3 | 12.6 | 13.1 | (3.3 | ) | (4.9 | ) | 23.8 | ||||||||||||||||
| $ | 1.6 | $ | 12.6 | $ | 13.1 | $ | (5.9 | ) | $ | 6.4 | $ | 27.8 | ||||||||||||
| Three Months Ended September 30, 2007 | ||||||||||||||||||||||||
|
Performance
|
Water
|
Unallocated
|
||||||||||||||||||||||
|
Materials
|
Distribution
|
Valvoline
|
Technologies
|
&
Other
|
Total
|
|||||||||||||||||||
|
OPERATING
INCOME
|
||||||||||||||||||||||||
|
Postretirement
benefit obligation adjustment
|
$ | (3.3 | ) | $ | (5.6 | ) | $ | (0.9 | ) | $ | (1.5 | ) | $ | - | $ | (11.3 | ) | |||||||
|
Self-insurance
reserve adjustment
|
- | - | - | - | 8.0 | 8.0 | ||||||||||||||||||
|
Asset
impairments - PathGuard® equipment
|
- | - | - | (10.6 | ) | - | (10.6 | ) | ||||||||||||||||
|
Non-North
American entities reporting lag elimination
|
2.1 | (0.9 | ) | - | 4.0 | - | 5.2 | |||||||||||||||||
|
Litigation
reserve adjustment
|
(5.5 | ) | - | - | - | - | (5.5 | ) | ||||||||||||||||
|
All
other operating income
|
13.9 | 2.0 | 18.8 | 6.6 | (0.9 | ) | 40.4 | |||||||||||||||||
| $ | 7.2 | $ | (4.5 | ) | $ | 17.9 | $ | (1.5 | ) | $ | 7.1 | $ | 26.2 | |||||||||||